Ethanol production has caused corn based livestock feed to go from $4.00 per 100# a year ago to $8.50 per 100# now. We are seeing this in the cost of meat, eggs, dairy products, anything that uses corn oil, or corn syrup and even canned corn and corn on the cob. Besides that, it’s more expensive than the gasoline that it is supposed to replace.
This has to rank up there with global warming as one of the stupidest things that has ever been perpetrated on the American public.
At $3.18 per bushel, corn tonight is worth $5.66 per cwt. If you’re paying $8.50, you might wanty to re-think your purchasing strategy.
Farmers’ received prices for all the things you mention have not kept up with inflation from the 70’s.
The current prices of corn (and on down the line) have not recovered to prices (adjusted for inflation) farmers received in 1973, when we went off the gold standard completely and the oil embargo started causing commodities inflation in earnest.
If we were to give farmers the inflation-adjusted price, per bushel, for dent corn that farmers were receiving in August of 1973, they would be getting just under $14/bu.
What are farmers receiving today, hmmm? I see that the September futures on the CBOT settled today about $3.21.
Less than 25% of what farmers were receiving for their product in 1973, if we adjust the value of the dollar for inflation.
And all you malthusians are running in circles, screaming and shouting about ethanol being a scam and how food prices are going up. Americans spend less of their paycheck, as a percentage, on food that ANY other industrialized society in the world, and you’d still be spending less than any other society if the prices went up by 25%. And you’ve got the balls to sit there, piss whine, moan and bitch about how much farmers are making. It isn’t just corn that has not kept up with inflation, either. Here’ a graph of slaughter steer prices from 1980 to this year. NB how through the 80’s, even as there was double-digit inflation in the early 80’s, cattle prices were cratering.
US farmers have the ability to take a profitable market and produce themselves into a losing market in only a couple of years. Doesn’t matter the commodity — if there is suddenly a big profit in cattle, corn, beans, whatever - you’ll see US farmers suddenly chase those profits and produce themselves into a surplus.
Recently, farmers are finally making a profit in some sectors. And all the American consumer wants to do is piss and whine. You consumers have this expectation that your W-2 wages will continue to adjust upwards to the cost of living increases, but the farmer can just go to hell when it comes time to keep up with the cost of inflation. And make no mistake — farming expenses are going through the roof: steel, oil lubes, rubber tires, equipment prices, diesel fuel prices, taxes, insurance, etc — they’re all going through the roof.
But when the farmer tries to pass those costs through to the consumer? Carping, whining and bitching.
If you look at a graph of of the CRB vs. US Treasury benchmark rates, you’ll see that the CRB finally decoupled from benchmark interest rates in 2002. Commodity cycles are 16 to 20 years long, and after farm commodities peaking in price back in ‘82, and cratering in ‘86 (and again in ‘98), the commodities markets are in their secular bull cycle. Ethanol is in the mix somewhere, but steel prices have nothing to do with corn for ethanol. Copper prices have nothing to do with corn for ethanol. Tire prices have nothing to do with corn for ethanol. Moly, nickel, zinc, lead, silver, gold, etc — all have nothing to do with corn for ethanol. They’re all on a tear upwards, in a bull market. American schlubs working in Cubicle-Land typically have no clue about commodities prices, because they now live lives completely insulated from anything dealing with the real physical world any more as so much manufacturing and “dirty industries” are moved off-shore.
Farmers see all these commodities prices going up, raising their input costs. In 2000, I paid only about $600 for a 18.4x38 tire. Today, it would be $1200, if I could get it.
Want cheap food? Buy your food from China. They’ll always want to be the lowest cost producer. They’ll provide you with all the food you want at the cheapest possible prices.
Please point this out to Mr Lucky - He seems to be a dairyman who operates on free money and no capital...