This article from the WSJ is a few days old but it’s still noteworthy for anyone who buys food, which is just about all of us. Heck, even if you’re on food stamps, thanks to the government those EBT cards don’t pay for as much as they used to. That’s because the government has mandated that we put food in our gas tanks. They might blame the recent drought, but that’s a temporary problem, the bipartisan mandate to increase our food and fuel prices is permanent.
Under the federal mandate, Americans must use 15 billion gallons of ethanol in gasoline annually by 2015. To meet this goal, 5.3 billion bushels of corn per year—equal to more than 40% of the 2011 corn crop—must be processed and burned as ethanol, not used for food or livestock feed.
The result: higher prices across the entire food chain, from products directly containing corn to protein raised on corn feed and crops that compete with corn for farmland. That includes the bread on the table, the eggs at breakfast, the chicken or steak at dinner, and almost all dairy products.
Since the enactment of the ethanol mandate in 2005, the use of corn in ethanol has skyrocketed to more than five billion bushels per year from 1.3 billion. Corn prices immediately began to rise, too, and in each year since they have exceeded the highest price seen between 1976 and 2006. Price increases also spread to other parts of the agricultural sector, as farmers switched to corn from other crops and livestock.
New research by PricewaterhouseCoopers (on behalf of the National Council of Chain Restaurants) finds that by the time the mandate’s 2015 goals are met, it will have caused a 27% increase in corn prices. Increased corn prices have already led to higher prices for other commodities, such as soybeans (by up to 16%), pork (by up to 15%) and poultry (by up to 8%).
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