Ethanol boom, rising prices divide corn lobby

But the pain is more acute for corporations like Tyson Foods Inc., the nation’s largest meat company. The Springdale, Ark.-based company’s stock fell 13 percent earlier this month when it lowered its profit projections for the year.

Part of Tyson’s problem is higher grain prices — the company said grain costs for its chicken feed shot up $113 million in the third quarter of this year alone when compared to the year before.

The American Meat Institute has taken heed. AMI spokeswoman Janet Riley said the group is “absolutely” opposed to more ethanol mandates and will continue to lobby against them. The AMI has joined dairy, egg and turkey lobbyists to fight any increase in ethanol mandates that could divert yet more feed into fuel refineries.

The coalition launched a Web site recently called “Balanced Food and Fuel.” The home page is filled with stories and editorials culled from media outlets around the county, spelling out the seemingly dire consequences of growing demand for biofuel.

Headlines on the site warn of a “spiral of rising prices” as “corn prices skyrocket.” One story outlines an ominous increase in pizza prices.

Corn growers have responded in kind. The group’s Web site features “white papers” that try to deflate fears of food inflation with charts and graphs.

Litterer said fears of rising corn prices are over-hyped. While prices did spike between 2005 and 2007 by about $1 a bushel, that doesn’t mean they’ll keep rising, he said. The higher prices have induced farmers to plant more, which increases supply and brings the price back down.

Westhoff, with FAPRI, said corn prices now stand at roughly $3.10 a bushel. The price is expected to rise to $3.38 next year but will fall again and plateau at about $3.25 a bushel by 2012, according to FAPRI estimates.

While meat companies are seeing profits dwindle, rising grain costs are not causing them to lose money overall, said Terry Francl, senior economist with the American Farm Bureau Federation.

Demand for meat remains relatively steady in spite of modest price swings, which means most of a meatpackers’ rising feed costs can be passed on to consumers, he said.

Francl noted that the ethanol industry is expected to help push overall farm income to a record level of $87.1 billion for this year. That forecast level would be an increase of 48 percent over last year when farm income was $59 billion.

Francl emphasized that that he’s not choosing sides in the argument between the Farm Bureau’s members who raise livestock or grow corn.

“It’s one of the many delicate situations we face,” as an umbrella group for farmers, Francl said.

“I am not trying to judge one versus the other.”

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