Here’s the scenario: Farmers grow corn, the corn is sold to dairy farmers as feed for cattle, which then produce milk for human consumption. But corn farmers are getting higher prices for their crops from ethanol plants, which means that the dairy farmers must pay more for feed and thus charge more for their milk, cheese, etc.
Makes some kind of sense, right? So while the subsidized ethanol boom, led by companies like ADM and VeraSun, may help us spend less money on petroleum products, it is unfortunately creating negative impacts elsewhere on American consumers’ lives. (However, it is a positive turn of events for farmers, who have long struggled with low grain prices.)
Other affected commodities include corn-fed beef and chicken, grain cereals, corn tortillas, and sodas containing corn syrup. Of course, as we all know, the rising price of energy in general is elevating the price of just about everything that requires fuel for processing and shipping. Other possible factors include higher export demands and a draught in Australia.
Overall, the implication that ethanol may be making more negative waves than positive ones must be examined. It’s hard to predict how long Florida’s weather will affect citrus prices. It’s also challenging to know how long we will be wincing over $4 a gallon milk. But unlike weather patterns, the amount of ethanol produced can be controlled. It seems that dairy farmers themselves may not even be benefiting from the trend.
The dilemma could be solved by corn farmers planting more rows in future years, but this may in turn impact the price of other grain crops that are sacrificed in the process. While I believe that biofuel production is a step in the direction of solving our energy crisis, I’m not sure that ethanol should remain the #1 US alternative fuel — especially when so many questions about its impact on consumers and the environment are unanswered.
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