New Energy Law to Raise Meat Prices

Everywhere you look for the last few days there are articles about the new energy bill. Thankfully, some of the worst pieces of the legislation as originally proposed didn't make it to the President's desk. One piece of this bill that really bothers me is the focus on biofuels. Even a switch to cellulosic ethanol production is potentially devastating to the cattle feeding industry. Cattle are wonderful digesters of cellulose. That's what the rumen does. It is why a cow can live on grass. The corn kernel based ethanol production fortunately leaves co-products that are usable as cattle feed. They are usable because cattle can take the cellulose that is left in these co-products and convert it to beef.

If you have an ethanol plant utilizing corn kernels for ethanol production and suddenly in your hands is a way to convert the remaining co-product to ethanol, what are you going to do? Convert the co-products to ethanol. What will remain? Not much -- certainly nothing with any feed value. Cattle feeding will have little or no source of a good starch-based commodity for feed. The ethanol plants will consume virtually the entire corn crop.

Oh, by the way -- the U.S. consumer doesn't like to see yellow fat on their beef. Grass-fed beef takes longer to produce, has yellow fat, and a very different taste than what the average family desires. Look for meat prices to go through the roof.

U.S. energy law drives alternative to corn ethanol

By Timothy Gardner - Analysis

NEW YORK (Reuters) - The U.S. energy bill signed into law by President George W. Bush on Wednesday should drive a billion-dollar domestic business for a low-emissions domestic ethanol made from sources other than corn -- though it could take nearly a decade to go from the lab into car tanks.

The bill calls for...(complete article here).