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By now, you’ll have discovered that the turkey at the center of your Thanksgiving celebration has never been more expensive. The Topeka Capitol-Journal’s Phil Anderson reports:
You won’t be able to get turkeys for chicken feed this year.
The cost of the big birds keeps going up, with prices at 89 cents a pound among the least expensive this past week at Topeka supermarkets.
Higher-grade birds can command as much as 40 and 50 cents more per pound.
A year ago, turkeys could be had for as low as 79 cents a pound. And just a few years ago, the birds were on sale for about 39 cents a pound.
The National Turkey Federation provides the data that allows us to determine just how expensive your Thanksgiving turkey has become in recent years. Here, we’re taking the annual farm income for U.S. turkey producers and dividing it by the number of turkeys produced to calculate the average income turkey producers receive for each bird they produce for the market. The results are presented in the chart below for the years from 1990 through 2011:
Because the profit margins for U.S. turkey producers are very low, what we’re really seeing in this chart are the escalating costs of producing turkeys in the United States, in which the cost of producing each bird has more than doubled since 2003, and which are being passed along to U.S. consumers.
So what’s driving those costs up? Anderson continues:
Experts attribute the escalating prices to several factors, not the least of which are higher feed costs and corn being used for ethanol.
“There is no doubt that higher turkey prices are related to feed prices,” said Scott Beyer, an internationally known poultry expert and professor in the Department of Animal Sciences and Industry at Kansas State University. “About 65 percent of the cost of growing turkeys is related to feeding.”
Beyer also noted the role of Summer 2012’s drought in affecting turkey feed prices, however that drought isn’t a factor in the skyrocketing increase in the average cost of a live turkey since 2003 shown in the chart above. Something else is making your Thanksgiving turkey much more expensive than it used to be.
That “something else” turns out to be the U.S. federal government’s ethanol mandate, which requires ethanol produced from corn to be combined with gasoline for use in the nation’s motor vehicles. Beyer notes the effect of the government’s ethanol mandate on the economy:
Adding to the higher prices, he said, is a “mandate” to use ethanol in gasoline.
As a result, he said, “competition over a decreasing corn crop for nonfood uses escalated prices.”
Beyer said many turkey producers have asked the ethanol mandate be lifted to help ease food prices.
“Anytime one part of any market is manipulated there could be winners and losers,” he said. “In this case, the drought and ethanol situation both contributed to steeply higher feed prices, and consumers were the losers. High feed prices have bankrupted turkey growers, chicken producers and dairies.”
You can get a sense of how the U.S. government’s corn ethanol mandate has affected corn prices in the chart below, which reveals the percentage of the U.S. corn crop claimed by ethanol production along with the average price per bushel for corn:
In the drive to make the U.S. more self sufficient in energy production, the U.S. federal government’s ethanol mandate is doing both U.S. consumers and farmers a considerable amount of harm. Worse, the ethanol mandate is especially wasteful since technological advances have given the United States the largest recoverable oil reserves in the world.
The International Energy Agency currently forecasts that U.S. oil production will surpass current world leader Saudi Arabia’s production in less than eight years.
The bottom line is that there is very little benefit to anyone other than politically-connected U.S. corn farmers and ethanol producers for the federal government’s ethanol mandate. And on this Thanksgiving holiday, there is no question that you’re directly paying the rising price for that continuing foolishness.
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