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Saturday, January 30, 2010

'Great Recession' Plus High Corn Prices Are Changing The American Diet

From Treehugger:

feedlot beef cattle photo
Beef cattle feedlot. Image credit:WhyFiles, via USDA

I was surprised to read in Business Week, via Bloomberg, that "the U.S. cattle herd may have shrunk to the smallest size since 1958,..." Farmers are culling herds because demand for red meat is down in this Great Recession (thanks Wall Street), while corn prices are way up (thanks Congress for the luxuriant corn-based ethanol incentives).

From the farmer's viewpoint: "Corn, the main ingredient in livestock feed, jumped to a record $7.9925 a bushel in 2008 on the Chicago Board of Trade, and prices averaged about $3.79 last year, the third-highest annual average since at least 1959." With the cited level of herd reduction, corn prices will fall eventually, helping ranchers - unless Congress goes for another round of ethanol incentives first! (Makings of a classic challenge and response scenario that will play out for years more.)

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