2009-03-12
When Chicken Feed Isn't,...well, Chicken Feed.
The expression "chicken feed" used to mean that it was cheap and didn't cost very much.
But try and tell that to chicken and hog farmers who buy corn feed for their stock in the past year.
The policy by the Bush Administration and congress to support the use of corn in the production of ethanol caused the price of corn to go up to over $7.50 a bushel in July 2008. This was after averaging $2.28 for twenty years. Last year's price increase was so much that it hurt livestock growers.
There is a sweeter way for ethanol to go, and I won't sugar coat it for you. Oh, or maybe I will, it is sugar.
Corn is the second most used crop in the world for human consumption behind wheat. But, according the USDA, corn is "the most widely produced feed grain in the United States, accounting for more than 90 percent of total value and production of feed grains."
Sugar has gone up too in this decade, spiking to near $0.20 in December 2005, but not at the level of corn. And this was after languishing at 30-year lows. Sugar had traded in a $0.05 to $0.15 range (before that 2005 run up) for twenty years.
We need to repeal all the legislation endorsing the use of corn in the production of ethanol and switch that to sugar.
Here is why:
1) Sugar is closer to record low prices than corn
2) Hog, chicken, and beef growers are going broke and out of business (this leads to higher pork, beef, and poultry prices at the check out lane)
3) Sugar is a more efficient source of fuel in the production ethanol than is corn
4) The price of corn based products like cereal are up noticeably
5) As a country like China raises it's standard of living, the Chinese consumers will switch to more meat products from grain products (mostly rice) for their diet, pushing prices even higher
6) The American economy is also not as dependent on sugar as it is on corn
7) Using sugar for ethanol just might benefit the obesity problem with children in America
And my number one favorite reason to switch from corn to sugar:
8) Haiti
Haiti as been the ghetto block of North America for decades. And I for one have been ashamed at the United States' lack of effort to raise the standard of living in that country. We go half way around the world to do things, when we should helped have fixed this slum in our own backyard years ago.
I have a philosophy that I call "JOB ONE." The idea of JOB ONE is that you take the worst -what ever it is- and attack it first. If you are the police you go after the worst house in the worst neighborhood in the city. The one with the most police calls with drugs and/or violence. You go in, condemn it, clean it out or level it, then get a contractor to fix it or build a new one in its place. Then you move on to the next house. You start one house at a time. Narrow it down to one problem at a time.
Haiti is (or should be) North America's JOB ONE. The U.S. should find one country on each continent, the worst one, and then identify the worst city in that country, and label them JOB ONE. Then go in and clean up that city, then the country. Then move on to the next targeted JOB ONE.
While corn has backed off considerably because of the fall in the economy, back to around $3.50, feed prices to livestock farmers stayed high because of a lag in the pipeline. Feed dealers had paid the higher price for the corn back in the summer, but prices for pork, chicken, and beef fell along with the wider economy, causing a squeeze to farmers. Higher cost for feed and lower prices for stock. This has caused a rash of bankruptcies for the livestock farmer. I don't need to tell you about less supply and more demand from economics 101.
There is no doubt that when the economy improves, and the emerging countries like the BRIC (Brazil, Russia, India, and China) nations and their peripheral neighbors (Taiwan, Singapore, South Korea, Indonesia, Japan, etc.) start to improve their standard of living, that corn prices will head back to $6.00 dollars, and then more. When this happens we'll be back to higher prices for cereals and meat products again. Hurting the average American, but also hurting the livestock growers even more.
While I want the corn growers to have better in life, I don't want it to be at the expense of their livestock raising cousins, nor do I want it to be hurtful for all Americans, especially the poorest Americans.
Subsidies on corn must be replaced with sugar. Not only will it help us out, it will help out Puerto Rico, Jamaica, the Dominican Republic, and yes, dare I say it Cuba. But it also just might help that little country on our North American block that needs it the most, Haiti.
As we raise the level of income of the average worker in the Caribbean, they just might spend some of it with the United States? And buy a cell phone or an iPod.
-----------------------
DISCLOSURES: I am not a farmer of any kind. I have not invested in either corn, sugar, or ethanol. I do own 100 shares of the Rogers International Commodity Agriculture ETN (RJA), but this would actually be hurt by my policy because it has a larger weighting for corn (13.61%) versus sugar (5.73%). But, I do eat pork, chicken, beef, and tortilla chips.
But try and tell that to chicken and hog farmers who buy corn feed for their stock in the past year.
The policy by the Bush Administration and congress to support the use of corn in the production of ethanol caused the price of corn to go up to over $7.50 a bushel in July 2008. This was after averaging $2.28 for twenty years. Last year's price increase was so much that it hurt livestock growers.
There is a sweeter way for ethanol to go, and I won't sugar coat it for you. Oh, or maybe I will, it is sugar.
Corn is the second most used crop in the world for human consumption behind wheat. But, according the USDA, corn is "the most widely produced feed grain in the United States, accounting for more than 90 percent of total value and production of feed grains."
Sugar has gone up too in this decade, spiking to near $0.20 in December 2005, but not at the level of corn. And this was after languishing at 30-year lows. Sugar had traded in a $0.05 to $0.15 range (before that 2005 run up) for twenty years.
We need to repeal all the legislation endorsing the use of corn in the production of ethanol and switch that to sugar.
Here is why:
1) Sugar is closer to record low prices than corn
2) Hog, chicken, and beef growers are going broke and out of business (this leads to higher pork, beef, and poultry prices at the check out lane)
3) Sugar is a more efficient source of fuel in the production ethanol than is corn
4) The price of corn based products like cereal are up noticeably
5) As a country like China raises it's standard of living, the Chinese consumers will switch to more meat products from grain products (mostly rice) for their diet, pushing prices even higher
6) The American economy is also not as dependent on sugar as it is on corn
7) Using sugar for ethanol just might benefit the obesity problem with children in America
And my number one favorite reason to switch from corn to sugar:
8) Haiti
Haiti as been the ghetto block of North America for decades. And I for one have been ashamed at the United States' lack of effort to raise the standard of living in that country. We go half way around the world to do things, when we should helped have fixed this slum in our own backyard years ago.
I have a philosophy that I call "JOB ONE." The idea of JOB ONE is that you take the worst -what ever it is- and attack it first. If you are the police you go after the worst house in the worst neighborhood in the city. The one with the most police calls with drugs and/or violence. You go in, condemn it, clean it out or level it, then get a contractor to fix it or build a new one in its place. Then you move on to the next house. You start one house at a time. Narrow it down to one problem at a time.
Haiti is (or should be) North America's JOB ONE. The U.S. should find one country on each continent, the worst one, and then identify the worst city in that country, and label them JOB ONE. Then go in and clean up that city, then the country. Then move on to the next targeted JOB ONE.
While corn has backed off considerably because of the fall in the economy, back to around $3.50, feed prices to livestock farmers stayed high because of a lag in the pipeline. Feed dealers had paid the higher price for the corn back in the summer, but prices for pork, chicken, and beef fell along with the wider economy, causing a squeeze to farmers. Higher cost for feed and lower prices for stock. This has caused a rash of bankruptcies for the livestock farmer. I don't need to tell you about less supply and more demand from economics 101.
There is no doubt that when the economy improves, and the emerging countries like the BRIC (Brazil, Russia, India, and China) nations and their peripheral neighbors (Taiwan, Singapore, South Korea, Indonesia, Japan, etc.) start to improve their standard of living, that corn prices will head back to $6.00 dollars, and then more. When this happens we'll be back to higher prices for cereals and meat products again. Hurting the average American, but also hurting the livestock growers even more.
While I want the corn growers to have better in life, I don't want it to be at the expense of their livestock raising cousins, nor do I want it to be hurtful for all Americans, especially the poorest Americans.
Subsidies on corn must be replaced with sugar. Not only will it help us out, it will help out Puerto Rico, Jamaica, the Dominican Republic, and yes, dare I say it Cuba. But it also just might help that little country on our North American block that needs it the most, Haiti.
As we raise the level of income of the average worker in the Caribbean, they just might spend some of it with the United States? And buy a cell phone or an iPod.
-----------------------
DISCLOSURES: I am not a farmer of any kind. I have not invested in either corn, sugar, or ethanol. I do own 100 shares of the Rogers International Commodity Agriculture ETN (RJA), but this would actually be hurt by my policy because it has a larger weighting for corn (13.61%) versus sugar (5.73%). But, I do eat pork, chicken, beef, and tortilla chips.
Labels: Ethanol, Farmers, Government Policy, Renewables
# posted by Don-n-ABQ @ 2:11 AM 
