Sarpy Sam has a good post on the rapidly rising price of corn, which is being blamed on ethanol production. The Chicago corn price is the highest today that it has been since 1996. At the same time, world wide corn supplies are the lowest they have been since 1978.
With farm gate milk prices about what they were in 1970, this is creating a horrendous crunch for dairy farmers. We feed about two and a half tons of grain a week to our milk cows, heifers and calves here at Northview. The price we pay for it is skyrocketing, higher every time we get a bill.
The feeding of grain to dairy cows isn't really optional. Cows need grain to make milk. Calves need protein and energy to grow. Here in the Northeast, forages such as the hay and corn that we grew are very low in nutrient value because the incessant rain this summer leached minerals and other nutrients from the soil. Forages are in short supply as well, because excess rain this year prevented normal planting, growth and harvest.
I am not sure how this is all going to shake out, but I suspect by spring there are going to be a lot fewer dairy farms in Upstate New York. It's sad, but there comes a point when there is nothing more to be done.
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Thanks for bringing this economic reality to my breakfast table. Wow. You've helped me understand this situation in a way that I hadn't.
ReplyDeleteI have always said that there is one fundamental problem with automobiles powered by ethanol: WHERE ARE WE GOING TO GET ALL THE CORN?! We need corn to feed our families and livestock...we need corn to make cornmeal and grits. We need corn for other things. I can't believe people do not see this obvious problem.
ReplyDeleteHello standing and thanks for visiting and for taking time to comment. The effects of how different commodities are used are amazing in the extent of their effect. I am thinking that ethanol production, rather than decreasing our cost of living by lowering energy costs, will instead increase it by raising the price of food. Corn is used in so many products, particularly as corn syrup and corn starch, that a cost increase will affect many things besides corn flakes and cow grain.
ReplyDeleteHey there HT...you sure were right about that. It caught me napping. I never imagined ethanol plants would be brought on line so rapidly and with such devastating effects.
You've hit my whole point about this. When are people going to realize that there drive for cheaper energy they are going to drive food prices up to a point it is going to be a lose/lose situation for them. High food prices and high energy prices.
ReplyDeleteI don't have the answer's but corn ethanol in the quantities we are going for is going to ruin production agriculture in this country. Pretty sad state of affairs.
Hello Sarpy Sam, I have been enjoying your posts on this topic and it has been in the newspapers here too. I don't think they will let food prices rise too much though, although they sure don't care about grain costs.
ReplyDeleteYea, I agree, they won't let food costs get too high. They will just subsidize the consumer allowing him to buy it, an expansion of the food stamp program.
ReplyDeleteConsumers can cope with high energy prices but food prices get too high they revolt. History has taught us this and the politicians know this, they will keep food prices low, one way or another.
You are so right Sam. Farms are selling out like hot dogs at Coney Island around here right now. Normally nobody sells out their cows in the fall or dead of winter, but one after another they are going down. I hate it.
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