The rising cost of corn and its declining availability has resulted in increased retail pork prices and pork production costs over the past year. And further increases are expected, according to a new study conducted by the Center for Agricultural and Rural Development (CARD) at Iowa State University.
The study assesses the potential size of the U.S. biofuels sector and estimates the subsequent impact on crop markets, the livestock and poultry sectors, exports, as well as wholesale and retail food prices.
The researchers estimate that, since last August, ethanol production has boosted pork production costs by 30 per cent – about $20 million a week – with similar increases in the dairy, beef, egg and poultry sectors. Those increases translate into higher U.S. retail food prices to the tune of $14 billion annually.
The CARD study suggests that this amount could reach $20 billion in a scenario where crude oil prices range from $65 to $70 per barrel and U.S. corn prices jump to $4.42 per bushel. The study also projects that, if U.S. ethanol production reaches the estimated 30 billion gallons by 2012, it would consume more than half of U.S. corn, wheat and other coarse grain production.
As the demand for grains for the bio-fuel industry increases, the cost of feed energy will continue to increase globally. It had been previously estimated that the cost of feed energy will increase by 10 per cent, while the cost of feed protein will likely decline by more than 20 per cent between 2006 and 2012. The assumption is that feed protein will become cheaper because of increased supplies of protein-rich co-products from the bio-fuel industry, such as distillers’ grains and distillers’ solubles. So, as heavy users of feed energy, pork producers will be looking for more cost-effective alternatives.
Researchers Hans Stein of the University of Illinois and Kees de Lange of the University of Guelph recently collaborated on a presentation at the London Swine Conference, which looked into some of these alternative ingredients and their nutritional value.