Corn prices are the key here. Corn prices affect the price of meat and milk. And we’re in a drought so the price of corn is already climbing through the roof.
Consumers can expect to pay more for beef, poultry and milk, as the worst drought in 50 years spreads across the Midwest, destroying crops and sending corn and soybean prices spiking.
Meanwhile, corn prices for December delivery, the most active contract, rose as high as $7.96 a bushel Wednesday. That’s still just about a nickel shy of the record high set in June 2010. The front month September contract continued to trade above $8 a bushel.
Still, prices are up nearly 50% over the past three months. And soybean prices have also been on the rise, gaining 25% since early June.
What does this have to do with the EPA? One word. Ethanol.
Opponents of the RFS say drought-driven spikes in corn prices and reduced harvests should prompt the agency to relax the requirements, which require refiners to blend billions of gallons of ethanol into gasoline.Livestock, poultry and food industry groups dismayed at the amount of corn used for ethanol have joined states in calling for EPA to back off the ethanol mandate. EPA also faced congressional pressure to ease the requirements.
But EPA tossed aside their arguments.
“We recognize that this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers,” said Gina McCarthy, EPA’s top air regulator, in a statement. “But our extensive analysis makes clear that Congressional requirements for a waiver have not been met and that waiving the RFS will have little, if any, impact,” she said.
The ethanol industry applauded EPA’s decision.
What all that translates into is that in a bad economy, working families will have even more trouble buying meat or milk to feed their kids.
Next time you see a price hike on milk or meat… you know who to thank for it.