Soaring meat and poultry prices in the US are being fuelled by the country’s ethanol policy, says economist Dr. Tom Elam, president of Farm Econ. “You cannot use the combined grain crops of Australia and Indonesia for US fuel and not have an impact on corn, soybean and food prices”, he explains. Elam expects food price inflation to rise five or six percent in 2009 and estimates the cumulative costs to the food industry of the renewable fuel program will be about $100 billion from 2005-2010. The program mandates minimum ethanol production and provides tax incentives for ethanol use.

As part of his analysis, Elam compared what would have happened without the federal bio-fuels program with what has happened. According to his findings, farm level corn prices in 2008 would have averaged about $2.77 per bushel without the program. Ethanol tax credits have added $1.33 per bushel, and may drive corn to more than $5 a bushel in 2009, he says.

Elam has calculated production costs per animal have increased by 53 cents per chicken; $3.40 per turkey; $38 per hog and $117.50 per fed beef animal.