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Chicken Prices Headed Up, Tyson Warns

Diversion of corn to biofuel blamed for record feed prices

May 16, 2008

Ethanol • Soaring Egg Prices Blamed on Costs of Fuel, Feed, Chicks • Chicken Prices Headed Up, Tyson Warns • Ethanol Gives Consumers Half a Loaf, Bakers Say • Ethanol-Blended Fuel Blamed for Boaters' Problems • Sales of Ethanol-Burning Cars Up 10% • How Green Can Your Drive Get? • Ethanol Producers Say Rising Food Prices Not Their Fault • Ethanol Driving Up Meat Prices, Congress Told • MIT Gas Saver: Ethanol Turbocharger • Ford Flex-Fuel Claims Challenged • Tests Find Ethanol Cleaner But Not Cheaper • Ethanol Lobbying Disclosures Questioned • Ethanol Benefits Questioned • Chrysler to Step Up Flex Fuel Production • Automakers Want More Ethanol Pumps • Ethanol Increases Consumers' Fuel Bills • Ethanol A Waste, Study Concludes • Ethanol Bandwagon Rolls on in the U.S. Senate

Increased use of ethanol has been blamed for driving up corn prices. And now, moving one step up the food chain, Tyson Foods warns that the price of chicken is going the way of gasoline.

Tyson CEO Richard Bond told an analysts' conference that the chicken industry is cutting production in reaction to higher feed prices. The diversion of corn and other grains to make ethanol has angered meat producers and now, Bond says, consumers will start to feel the pinch.

Tyson is the largest U.S. meat company. Besides chicken, it produces beef and pork products.

It's actually the second feather dropped onto the meat industry by higher gas prices. Not only has grain become much more expensive, but the diesel fuel that powers the trucks that deliver the feed, livestock and processed foods is selling at record levels, currently $4.445 nationally.

Corn prices recently shot past $6 per bushel, the highest price ever. That translates into a $600 million increase in the cost of raising a year's worth of chickens, Bond said.

Bond also criticized the proposed five-year Farm Bill, which passed the U.S. House of Representatives Wednesday and is now before the Senate, because it would extend by two years a tariff on imported ethanol.

U.S. ethanol producers are aided by a tariff on imported ethanol and by a tax credit for blending ethanol with gasoline.

In 2005 Congress passed legislation requiring the use of nearly eight billion gallons of ethanol in the U.S. by 2012. Critics say its effects on fuel supplies will be minimal, pointing out the U.S. currently uses 140 billion gallons of gasoline a year.

Farmers, however, seem to like the new policy, as it has coincided with record prices for their crops. The ethanol industry, along with farm state lawmakers, disputes the contention that ethanol production is driving up food prices, blaming instead the skyrocketing cost of gasoline.

Bakers irate

Bakers warned earlier this month that higher grain prices were driving up the cost of bread and other staples.

"Why are we putting food in our gas tanks instead of our stomachs," asked Rich Reinwald, owner of Reinwald's Bakery and First Vice President of the Retail Bakers of America, in testimony before the Congressional Joint Economic Committee.

The bakers' group says food inflation in the first quarter of this year almost matched the rate for all of 2007, straining consumers' budgets to the breaking point.

"There are steps Congress and the Administration can take that would ease this burden on American families," said ABA President & CEO Robb MacKie.

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