Food for Thought
The anti-inflation ethanol argument McCain missed.
Moreover, the cost of producing meat is up. Consider that most of the red meat processed from now on, will come from animals who were fed corn this past spring and summer when corn prices hit record highs of between $6 and $7 per bushel. In the past 25 years, the annual average farm price of corn has averaged above $3.00 only once, in the crop year 1995-96. Moreover, corn has been priced above $2.50 only a total of 11 times in the past 30 years prior to federal ethanol mandates, even dropping to below $2.00 for the five year period 1997-98 through 2001-02, according to the University of Illinois.
So the bottom line is this: There is less meat in the wholesale and retail freezer, there are fewer animals to slaughter, and there is a higher cost to raise those animals. It all adds up to inflation--higher prices for Thanksgiving, Christmas, and New Year's turkeys, roasts, and hams, and for those Philly cheesesteaks and pork sausages in Pennsylvania, and around the country in 2009.
Politically, this food inflation trend will be in full force for the next president's inauguration, and will coincide with fragile consumer confidence and a sluggish economy. There are two diametrically opposed campaign promises on ethanol mandates--which of course is the policy at the root of more expensive beef, pork, chicken and turkey. Barack Obama's policy would feed the inflation. John McCain's would starve it.
Dave Juday is a commodity market analyst.