Witness Walter Lukken of the Commodity Futures Trading Commission (CFTC) testified before the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies. Lukken tried to explain the multitude of issues contributing to rising oil, corn, and other commodity prices and what the CFTC is doing to address the problem. (more…)
Corn, apparently, is many things. It is animal feed, human food, and ethanol. I spoke with George Chadima in Fairfax, a farm owner near Cedar Rapids, Iowa. Excessive moisture has caused the nitrogen to be leeched from the soil, which is requiring farmers to buy biologically active fertilizer. The corn that was planted already has been “drowned” by water pooling in areas, and much of the rest was also damaged by a recent hailstorm. Crops, he said, would probably yield 75-80% of what they normally do.
I was shown a warehouse that housed large containers of soybeans yet to be planted. The planting schedule is three weeks behind already due to the weather, and hopefully, he said, they’ll be able to plant within the next couple of days. This is happening to many farmers in Iowa, and the result is going to mean higher prices- in everything.
Corn prices, of course, will go up, since using corn for “human food” or exporting it elsewhere, essentially removes corn from the chain of production. Ethanol, surprisingly, does not create that problem, because after the grain alcohol is removed there are still co-products from the corn, such as animal feed, plastics, and oils. The chain of production includes feeding that corn to animals, and then using the byproducts as fertilizer. Because it is costing more to harvest the corn, and there will be less of it, this will cause beef prices to rise.
Jack Huttner, Vice President of Biorefinery Business Development at Genencor, describes how the unused cobs and stalks of corn can be used to produce biofuels, which would increase the output of each acre of corn and help tame food prices. (0:36)
The Senate Energy and Natural Resources Committee held a hearing on renewable fuels and their effect on food prices. The chairman of the Committee, Senator Jeff Bingaman (D-NM), said that the U.S. must be mindful of any impacts of biofuel production. He said that between four and five percent of the 45 percent global increase in food prices in the last year was because of U.S. biofuels policy alone. Bingaman added that it is essential to ensure that U.S. biofuels policy does not harm the world’s poor. (more…)
