On meat prices, ethanol, corn . . . and cake

You can’t have your cake and eat it too. It’s a hackneyed expression that never made sense to me. If you give me cake and tell me I can’t eat it, then you and I are going to have a big problem. That old adage came to mind when I read the recent news stories blaming higher meat prices on ethanol. I’m glad livestock prices are finally recovering. I’m glad corn farmers have the livestock industry and the ethanol industry as customers keeping the price of corn from dropping below the cost of production.

Skimming headlines today, I first read a story about why corn prices are down, then I read a story about how high corn prices caused by ethanol are increasing the cost of meat. TV commentators have jumped on the bandwagon, telling consumers that they’ll be paying more for meat because the ethanol industry is using up all the corn. Really? One only has to look at the record crops, the enormous corn surplus of over 2 billion bushels, and the modest corn price, hovering just around $3.20 a bushel to know that statement is ridiculous.

A lot of this misinformation is coming from that very strange, but well-funded alliance consisting of the meat industry, environmentalists, big oil and grocery manufacturers. If corn farmers are the cake, and you want corn prices to return to below $2 a bushel, then that old adage finally makes sense–you really can’t have your cake and eat it too.

Corn Growers Call On American Meat Institute To Temper Their Beef With Ethanol

By Jere White
Executive Director
Kansas Corn Growers Association

As corn growers nationwide, and in Kansas, are lining up beside livestock producers to defend livestock on many fronts, the American Meat  Institute (AMI) is lining up beside anti-agriculture activist groups to fight against corn and ethanol. AMI’s members include the major meat processors, many with plants in Kansas.

Last month, the Kansas Corn Commission (KCC), an active supporting member of the US Meat Export Federation since the 1970s, was in Europe to fund and kick off a major promotion of US beef, processed in Kansas, at over 130 Hilton Restaurants. The Kansas Corn Commission has also funded work to restore lost markets for U.S. meat in Japan and other Asian countries.

Corn producers continue to step up to the plate to defend meat against activists and to help build markets for U.S. meats. Corn producers also have stepped up to assure we have a plentiful supply of feedgrains for all our customers including livestock, meat, ethanol and exports. The proof of this is the record harvests and corn carryover numbers in the past few years. Even in 2008, when speculators drove up corn prices on made up fears of a “corn shortage”, U.S. growers harvest the second largest crop in history. It is important to point out that AMI was a part of the coalition spreading the false fears of a corn shortage in 2008 which led to the speculator-driven corn price spike. Ironically, the AMI and its packer members ultimately fell victim to their own misguided hype.

This week , the American Meat Institute along with its close friends from the environmental activist community, oil industry and grocery manufacturers have launched a major high-dollar initiative to kill the ethanol industry.

Farmers worked to build an ethanol industry because they could not continue to sell corn for below $2 per bushel. The ethanol plants built in Kansas brought jobs and revitalized several rural Kansas communities. Many of these plants have also provided opportunities for agricultural producers to invest in and profit from ethanol production in their communities. These ethanol plants count not only crop producers as investors but also livestock producers. In addition, the ethanol plants are providing a reasonably priced, high nutrient livestock feed to local producers in the form of distillers grains.

An economic analysis on the impact of the ethanol industry was released this week. It showed a telling statistic reflecting direct and indirect job loss that would occur if the ethanol industry was lost. In Kansas, the job loss estimate was 4,422 workers. Beyond that, simply look at the direct jobs created by ethanol plants. A typical plant has a workforce of 30 to 40 people. In Washington DC, that’s not much, but in a rural Kansas community, 30 to 40 good paying jobs is critical.

It is indeed ironic that AMI is attacking corn farmers who have historically and repeatedly promoted the meat industry. At the same time, AMI, is in a coalition with groups like NRDC and EWG who have historically and repeatedly advocated against the meat industry.

If you question this, try this simple activity: do a Google search on nrdc meat. Top search responses are:
NRDC: . . . Down with Meat
NRDC: Another Reason to Eat Less Meat
NRDC: . . . Meat Free Mondays
NRDC and Garrison Institute Recommend Consuming Less Meat and Dairy

Meanwhile, corn growers will continue to defend their work to provide feedgrains for livestock and ethanol production. Consider these facts:

–Our domestic ethanol industry supported nearly 400,000 jobs in all sectors of the economy during 2009.

–Corn prices are half what they were at their peak in 2008, even with ethanol production on the rise. Ethanol demand has little to do with food prices.

–Compared to gasoline, ethanol provides significant environmental benefits, especially when it comes to reducing greenhouse gas emissions. The U.S. EPA recognizes that corn ethanol provides a GHG reduction of up to 52 percent compared to gasoline.

–The ethanol industry more than pays its way. Taking into account how much tax revenue the industry generated and the value of key tax credits, the ethanol industry generated a surplus of $3.4 billion for the federal treasury in 2009.

–In Kansas, corn and grain sorghum are used to make ethanol. The 2009 corn/sorghum crop was 844.7 million bushels. The Kansas ethanol plants used about 147 million bushels. When you consider a third of the grain returns to the feeding stream as distillers grains, over 88 percent of the Kansas feedgrain remains available for livestock and other uses.

One of AMI's partners in the fight against corn and ethanol is NRDC, certainly no fan of meat