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Worst Policy Ever Has Bacon on the Path to Extinction
September 25, 2012
Well, if you’re a fan of bacon in any format, you need to brace yourself. Unless the Environmental Protection Agency (EPA) acts quickly to waive the corn ethanol mandate, it could be the end of a very tasty era for America’s many bacon lovers. The BBC was the first out of the gate with the dire prediction that “there could soon be a global pork shortage, and a sharp rise in prices” – but the news has been pointing this direction in a long time.
Thanks to a double whammy of severe drought and bad energy policies, the price of corn has reached a record high of over $8/bushel. This means livestock producers are finding it costs far more to feed and raise hogs than they can sell them for. This summer’s poor corn yields have exacerbated an already shaky corn supply due to a Renewable Fuels Standard that diverts almost forty percent of our corn to fuel production. The editors at Bloomberg.com explain:
Since 2005, the U.S. government has mandated that gasoline contain ethanol, almost all of it derived from corn. The policy, ostensibly aimed at reducing the country’s dependence on foreign oil and at improving the environment, has been a bonanza for farmers. Land planted with corn soared by a fourth after Congress passed the Energy Independence and Security Act of 2007, which required that gasoline producers blend 15 billion gallons of ethanol into the nation’s gasoline supply by 2015.
… With this year’s crop expected to be the smallest in six years, corn prices have jumped 60 percent since June. The ethanol requirements are aggravating the rise in food costs and spreading it to the price of gasoline, which is up almost 40 cents a gallon since the start of July.
The damage is far-reaching. Beef and pork producers are slaughtering their stocks at a record pace to cut use of corn feed that costs two-thirds more than three months ago.
In the U.S., pork giant Smithfield Foods Inc. saw first-quarter earnings drop 25%, forcing its president to beg the EPA for help:
But like other livestock producers, high feed costs have challenged its bottom line. In July, Mr. Pope called for the U.S. government to waive its mandate requiring the blending of ethanol into the nation's gasoline supply as a severe drought batters the nation's corn crop and drives up prices. Smithfield buys roughly 128 million bushels of corn and corn equivalents each year to feed its hogs, making it one of the largest consumers of the grain in the U.S., Mr. Pope had said.
The Wall Street Journal reports a similarly disturbing picture for our neighbor to the north:
Big Sky Farms Inc., one of Canada's biggest hog farmers, was forced into receivership by lenders earlier this week, the latest victim of a withering North American drought that has sent feed prices soaring for livestock producers across the continent.
Big Sky, based in Humboldt, Saskatchewan, produces about one million hogs a year, generating about 40% of the Canadian province's annual production. It ranks as Canada's No. 2 producer, with operations on both sides of the U.S.-Canada border.
And the Guardian reports a worldwide slaughter of pigs that will lead to sharply increased prices:
Rabobank said the slaughter of millions of pigs has already led to a 31% increase in the price of pork and the costs of other meats are also expected to soar as "US livestock herds are likely to be liquidated at an accelerating pace in the first half of 2013".
Nicholas Higgins, a Rabobank commodities analyst and author of the report, said: "There will be an initial glut in meat availability as people slaughter their animals to reduce their feed bills. But by next year herds will be so reduced that there won't be enough animals to meet expected demand and prices will soar."
While all meat lovers will be affected by the record-breaking price rises, Higgins said bacon butty fans may suffer the biggest increases because it is easier for farmers to slash and rebuild pig herds than cattle.
"Farmers cut back pigs because they can rebuild them the quickest. Replacement cattle take a lot longer to breed – a year and a half compared to six months for pigs," he said.
While the government can’t make it rain, the EPA can waive costly ethanol mandates that require fuel producers to blend corn ethanol into the gasoline supply, thus diverting much-needed food to our fuel tanks. NTU is working with a broad coalition of groups ranging from livestock producers, anti-hunger organizations, and environmental advocates to urge the EPA to waive the ethanol mandate, relieving the pressure on corn markets. Unfortunately, right now it looks like more not less corn will be going into our cars in the near future
E15, gasoline with 15% ethanol (up from the current 10%) could be coming to a gas station near you. Even as corn prices climb, the Administration has been clearing the way for E15 fuel, despite the major risks to engines, the lower gas mileage, and increased greenhouse gas production – just to name a few of the serious downsides to E15.
Rather than letting the market determine our fuel needs –it’s clear that the EPA is willing to continue to plow forward with their ethanol schemes regardless of the outcome.
Sadly, for baconistas everywhere, the EPA’s dogged adherence to failed corn ethanol policies could spell the end of what will one day be remembered as a Golden Age of Bacon. The coming critical bacon shortages will hamper the amazing creativity of baconphiles the world over, rendering (pun intended) bacon less a medium for awesome and delicious inventions, and more a pricey delicacy enjoyed only by society’s elite. At ever higher prices, it will soon become unaffordable to push the limits of pork products and the world may never see the triumph of a Burger King Whopper with not just 1,050 strips of bacon, but 2,100!
Here, at the end of 2012, we may indeed be seeing the very pinnacle of bacon culture and technology, consigning so many bacon bandaids and woven bacon explosions to the grease trap of history. Sadly, this is just one more way big government is making it harder and harder for everyone to bring home the bacon.
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