The National Chicken Council (NCC), Washington, D.C., recently issued a warning that an increase in the use of renewable and alternative fuels could have the unintended effect of pushing up the cost of poultry and other foods of animal origin. According to NCC, corn is both the largest component of animal feed and the most commonly used feedstock for renewable fuels. The demand for corn from ethanol producers has already caused the price of corn to double.
“We estimate that ethanol demand has already increased the price of chicken by 6 cents per lb. wholesale,” says William P. Roenigk, senior vice president and chief economist, NCC. “If government continues to push corn out of livestock and poultry feed and into the energy supply, the cost of producing food will only increase.”
Production of ethanol is currently subsidized by the federal government through a tax credit of 51 cents per gal. of ethanol added by fuel blenders. In the recent State of the Union message, President Bush called for an increase in the production of renewable and alternative fuels from 7.5 billion gal. to 35 billion gal. by 2017. He also proposed $2 billion in loans for the development of fuel from sources other than corn, such as switchgrass or other “cellulosic” sources.
“While we applaud the Administration’s support for the development of alternative fuels, the fact remains that corn is the most popular feedstock for ethanol, and increasing the demand for ethanol will put additional pressure on the cost of both corn and food,” Roenigk says. “The supply of corn is not unlimited.”
