Michael Giberson
An article in the Houston Chronicle reports that the high price of corn is putting the squeeze on the cattle feedlot business:
[John] Van Pelt, the manager of a cattle feedlot in this town 50 miles south of Amarillo, is now paying $215 a ton for cattle feed — double what he spent just three years ago. With 20,000 cattle in his yard, that works out to about $25,000 per day, just in feed, and what could become several million dollars in added costs this year.
Van Pelt blames a surge in U.S. ethanol production for a near tripling in the price of corn, the main ingredient in cattle feed, and for cutting into profits across Texas’ massive cattle feeding industry.
… Cattle feeders won a victory last fall when the state Legislature killed a key incentive that had helped attract ethanol and biodiesel plants to Texas, a provision the feeders said gave preferential treatment to biofuels.
But U.S. ethanol production continues to rise amid growing demand for the fuel and as new plants come online, including several in Texas. The situation is likely to keep pressure on corn prices for both ethanol producers and cattle feeders.
The article includes a quote from an ethanol industry representative who makes the reasonable claim that not all of the blame for higher food prices can be placed at the ethanol industry’s feet. Rising demand for food from growing economies around the world have also put upward pressure on food prices.
…The matter has drawn attention from the top of state government.
“Finding that balance is what this is all about,” Gov. Rick Perry said last summer in Houston. “We don’t want to be put in the place of having to decide whether we are going to feed cattle or fuel vehicles.”
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