The Price of Ethanol

(Cross posted at Say Anything: Reader Blogs.)

Never saw this one coming did you? Below are two examples of just what "green" ethanol fuel is going to cost us.

Ethanol and the Price for Milk
New York dairy farmers are seeing higher prices for raw milk. The finding comes from the New York State Dairy Foods, a trade group that represents dairy product producers. As WRVO's Chris Ulanowski finds out, the demand for corn to produce ethanol, is driving up consumer prices for dairy products.

Ethanol byproduct can hurt pork quality: U.S. experts
Demand for distillers grain as a feed alternative has picked up following the rise in corn prices to 10-year highs this year, which has been fueled by the ethanol industry's voracious appetite for the grain.

Dry distillers' grains with solubles, or DDGS, can be used as livestock feed and has been touted as a potentially inexpensive option for producers who are being priced out of the corn market by companies that use corn to make ethanol.

Before the push for ethanol as an alternative fuel source most of the corn grown in the US went to feed livestock. Now ethanol producers are offering farmers top dollar for their corn crops. That leaves farmers who just feed the stuff to their animals also paying top dollar for what used to be a cheap food source.

This leads to you and me paying more for meat, poultry, dairy, eggs, and anything containing these items or anything containing corn byproducts (soda, juice, baked goods, etc). The push for ethanol could very likely also lead to less availability and higher prices on fruits and vegetables as well. There are likely to be many farmers who will chose to not grow other crops in favor of growing corn for ethanol production. In fact it is happening already:

Amid Ethanol Boom, Corn Is In: Farmers Nationwide Adjusting Crop Ratios To Cash In As Prices Climb
"It's the price. The price is telling you to go toward more corn," said Mike Olson, who plans to bump corn by 15 percent on his 2,750-acre Illinois farm. He harvested a 50-50 split of corn and soybeans last fall.

Ethanol seen chomping into corn crops
The surging fuel ethanol industry will gobble up 27 percent of this year's U.S. corn crop, challenging U.S. farmers' ability to satisfy food, feed and fuel demand, the U.S. government said Friday.

Even with its projection of a record 12.46 billion-bushel corn crop this year, the Agriculture Department said U.S. stockpiles will run low going into the next crop year when voracious ethanol demand will rise again.

"We keep our head just above water [this year]. We've got to swim that much harder in 2008," said analyst Mark McMinimy of Stanford Washington Research.

This article, Ethanol Makers Face High Corn Prices, makes it sound as if corn prices have risen independently of the demand from ethanol producers. However this article, Amid Ethanol Boom, Corn Is In: Farmers Nationwide Adjusting Crop Ratios To Cash In As Prices Climb, links the rise in corn prices to the demand from ethanol plants.

"It's the price. The price is telling you to go toward more corn," said Mike Olson, who plans to bump corn by 15 percent on his 2,750-acre Illinois farm. He harvested a 50-50 split of corn and soybeans last fall.

This article details some of the costs of growing corn for farmers, Farmers stampede to corn.