Davene asked me a great question about this morning’s B3,RD post:
How about the way the HFCS industry affects farmers? I don’t know much about it – something about HFCS affecting the price of corn, and that affecting the price of feed for dairy and beef farms. Just thought I’d pick your brain. :)
I’d like to clarify that I am not an expert in farming or agricultural economics, but I do have some interest in the subject. So, please read judiciously (as you always should, but especially when the speaker/writer is not an expert in the field.)
The United States’ federal government subsidizes corn, making HFCS a less expensive option than sugar for many food processors, which is why many food processors switched from using sugar to using HFCS in the ’70s and ’80s.
Since a majority of American domestic corn use is for animal feeds, anything that increases the demand for corn (without also increasing supply for corn) would increase the price of corn–and thereby, the cost of meat. However, despite the ubiquitous-ness of HFCS in the American diet, HFCS remains a small player in overall demand for corn.
According to an article published in the February 2008 edition of “Amber Waves” (a USDA publication), total demand for HFCS reached a peak in 1999 and has since begun to decline.
The below graph, using data from the USDA on US domestic corn use, further supports my assertion that HFCS is unlikely to be a key player in raising the prices of feed, and therefore meat.
This graph indicates that total domestic corn use in the United States has doubled in the past 25 years. Twenty-five years ago (in 1983), almost 81% of all corn used in the United States was used for animal feeds. In 2008, animal feed made up only 51% of all corn used in the United States.
What made the difference? Probably not HFCS. In fact, in the 25 years since 1983, total corn used for food, as seed, or for other industrial purposes (apart from fuel) decreased from 16% to 13% of total corn usage.
In the last 25 years, corn use for feed has multiplied 1.3 times. Corn use for food, seed, and industrial purposes has multiplied 1.7 times. Corn use for fuel (as ethanol), on the other hand, has multiplied 23 times.
Demand for ethanol has increased significantly in the last 5-10 years. According to a USDA briefing on corn, “strong demand for ethanol production has resulted in higher corn prices.” This has then led to the higher meat and dairy prices you may have noted in the last few years.
So, in answer to Davene’s question (and perhaps yours), HFCS is unlikely to be a cause of concern to our farmers–or a cause for higher meat or dairy prices.
(Ethanol, on the other hand–well, that’s opening a whole new can of worms. I personally have my doubts about how environmentally friendly ethanol is–but beyond that, I think it’s foolish to use FOOD to fuel our cars. Wouldn’t it be a lot smarter to use something humans can’t use otherwise?)