Ice-Cream Makers Frozen Out as Corn Price Rises
July 18th, 2007HAHA! Did you hear the one about Dow 14,000? HAHA!
Tell me another one.
Via: Times Online:
What’s the connection between ethanol, the biofuel produced from corn, and a cherry vanilla ice-cream?
Answer: the first is responsible for pushing up the price of the other.
This month, the price of milk in the United States surged to a near-record in part because of the increasing costs of feeding a dairy herd. The corn feed used to feed cattle has almost doubled in price in a year as demand has grown for the grain to produce ethanol.
…
The squeeze on ice-cream makers, chocolate manufacturers and pizza companies – all of whom use dairy produce as a raw material – is set to tighten as the price of a gallon of milk in the US – up 55 per cent in the past 12 months in some American states – is now the same as a gallon of petrol, with dairy prices accelerating faster than the cost of fuel.
So maybe they should go back to using sugar in the ice cream, instead of high fructose corn syrup.
The research labs at Coke in Atlanta just published a study that high fructose corn syrup actually alters the texture of foods and beverages in subtle ways so they no longer taste exactly the same.
It appears the human mouth is so sensitive, it knows the difference.
And by the way, a by product of ethanol production is clean corn meal feed.
There is a lot more to this story than meets the eye.
An early warm spring brought up the alfalfa early in the midwest, then a late freeze killed it off, putting a pinch on the livestock industry before this whole biofuel effect.
Ethanol is such a stupid idea. They’re turning food into fuel at the expense of the soil. Billions (and billions) of dollars in farm subsidies are the only reason it’s even remotely feasible.
What’s the point? If it made economic sense it wouldn’t need to be subsidized, and it doesn’t reduce pollution:
http://lfee.mit.edu/public/Groode_Current%20Corn%20Ethanol%20Results_June%202006.pdf
Wait a sec. US Dairy cows usually eat a diet of hay, silage (the corn stalks) feeder corn, soybeans, alfalfa and misc. supplements (they could also eat wheat, barley, rye etc). Most Dairy farmers select the most inexpensive feed and generally grow much of it themselves. If one goes high, they switch to other feeds.
It is the cost of fuel that is increasing expense of milk, not the cost of corn per se.
Corn is fetching higher prices for ethanol use, but the manufacturing costs of ethanol are becoming more efficient and large scale, meaning that ethanol isn’t increasing in cost proportionally. However, fluctuations in market demand may make temporary spikes in price.
Foreign Affairs May/Jun 2007 vol 86 Number 3
Has a great US ‘corn’ essay about ethanol/subsidies and food costs.
Don’t forget about the Government’s required mandates that shift more and more corn to ethanol production. That is mostly what’s causing the prices to spike.