Milk Prices and More Ethanol
Where’s the Connection?
Milk prices have risen 38% since last year according to a survey conducted by Senator Chuck Schumer’s office. The survey compiled data from 90 groceries and supermarkets in Long Island and New York City.
Side effects may include: More expensive milk.
The rising costs of corn feed, which are used for livestock, are allegedly to blame. And why is the cost of corn feed soaring? A recent boost for the alternative energy industry, specifically ethanol incentives, has led to a higher demand in corn. In 2006, the United States produced almost 5 billion gallons of ethanol and used about 14% of total corn available for 2005-2006. What’s more, there is a tariff on imported ethanol, which has promised to promote domestic production, even if the base price of other (Brazilian) ethanol would be cheaper.
The True Costs of Ethanol Production
Creating a domestic corn based ethanol market is clearly raising demand for corn, which in turn is raising the cost. The United States Department of Agriculture put corn feed at a cost of $3.88 in December, which was 87 cents higher than last year. And in this particular scenario, we see milk customers as bearing the higher cost.
Without going into a rant about the need to approach our economic, trade, and environmental policies in a way that looks at them as part of one system, I’m just going to ask a simple question. Why are we still subsidizing corn based ethanol when every single expert has said that it will lead to no good and that there are more cost competitive options-that probably won’t effect the price of milk, eggs, tortillas, or any other food for that matter. Ok-One more simple question. Why are cows eating corn? That is an entirely different discussion, but worthwhile. We will return to it.
Surely, we are going to hear from domestic ethanol producers that lifting the tariff will devastate them and will promote a new type of foreign energy dependance. But I would just return to the above question. My plan of action would be: lift the tariff, use the funds that were available for subsidizing corn based ethanol for cellulosic ethanol research, rethink our agricultural policies that supply us with too much corn and stop drinking so much milk.
