Why Corn is Making Everything More Expensive

by Justin Weinger on April 6, 2007

In case you haven’t noticed, the price of groceries has started to slowly inch higher, thanks in large part to the huge increase in demand for corn.  So, does this mean that corn is driving up the price of corn?!?  Sounds like quite the paradox.

Anyway, the reason corn is in such high demand (thus driving up the price of groceries) is thanks to our obsession with Ethanol – an alternative fuel that is made from feed stock, usually corn.  Currently, Ethanol is an additive in most brands of gasoline (usually about 10% of what you put into your tank) however, many people – including President Bush – feel that Ethanol will be a great stand alone alternative fuel.

The reason many people believe Ethanol has such great promise as an alternative fuel is because it comes from a renewable source (plants) and can be produced domestically.

Unfortunately, this increase in prices will be felt almost everywhere throughout the grocery store. 

Expect the prices of beef and poultry to continue to increase, as the feed for these animals will continue to rise, meaning the additional costs are going to get passed on to us.  In turn, this means the price of dairy and eggs will also continue to rise.

And because land is at such a premium, the price of any crop, not just corn, is going to shoot up as well, which in turn is going to drive up the price of everything else in the grocery store.

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{ 3 comments }

Alan Leite April 11, 2007 at 12:52 pm

If does Buch buy brazilian ethanol, made by sugar cane, the american ethanol’ll not be expensive.
The brazilian ethanol it’s not expensive, it’s the lowest price of world, and the best technology too.
Why dont buy brazilian ethanol ???

Steven Stoft April 24, 2007 at 3:33 pm

Corn ethanol reduces CO2, but how much? Say we go to the USDA max corn level. Say we use the Academy of Sciences optimistic value for CO2 savings.
And the answer is, … 0.13%, about 1/10 of 1% of total US GHG emissions! There are good alternatives. Why should corn ethanol get the $7 billion/year (and growing) subsidy? Well, you know why. Full, clear documentation here: http:zFacts.com/p/60.html

Brian Carr April 25, 2007 at 9:05 am

Thanks for the comments. I think that we’re in a pretty dire situation regarding alternative fuels – not just in terms of the environment, but in terms of running out of oil. Whether we like it or not, at some point in the future we’re going to completely exhaust the world’s oil reserves and we need to be ready for it well in advance.

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