Tuesday, June 12, 2007

Why Are Beef Prices Rising?

Lately, I've been pondering over the "real" cost of beef. Turns out, this is a complex issue. To appreciate its complexity, first consider three major players:

  • Corn

  • Oil

  • Cows
Here's the bottom line: Beef prices are rising. Because oil prices have increased, there is a greater demand for ethanol. (Ethanol is an alternative fuel that's primarily made from corn.) This increased demand for ethanol has resulted in higher corn prices.

But what's the connection between corn and beef?

In today's agricultural climate, most cows eat corn, not grass. Because it costs more money to feed cows due to increased corn prices, these costs are passed onto consumers who eat steak.

Isn't it amazing to see how these factors are all connected? (Of course, there's another key player to consider: The US government.)


Freeloader said...

Beef is not the only thing to endure the rising price of corn. A majority of the population of South America is having to deal with rising tortilla prices as well. Corn has almost doubled in price recently; a larger increase than has happened in recent years. http://e85.whipnet.net/e85.price/corn.rush.html

Combine this with higher fuel prices and everything gets more expensive.

Michelle Verges, Project Director said...

Freeloader: I appreciate your comment. You also got me thinking: How will corn prices affect the cost of other products?

I really would like to generate a list on this topic.

Will increased corn prices affect the cost of using corn syrup? Corn syrup is ubiquitous; it's included as an ingredient in many foods, such as bread, ketchup, and soda.

I'm really curious to know how these corn prices will affect other food costs. And you're right: We can't forget about those increased fuel prices.


Experimentaholic said...

There was a story on he News Hour on PBS about this today. Very topical! I think we as consumers forget the enormous interdependency between the various industries that produce what we consume. What amazes me is the globalization of these industies. A hundred years ago, the products that we consumed were produced within a train's ride away from where we consume the product. I look in my cabinet and I have soy sauce produced in Japan, Jufran sauce produced in indonesia, Shirachi produced in Vietnam, curry paste produced in Singapore, spices grown in France...the list goes on. It amazes me how much our consumption of food has changed over the past century simply in terms of the globalization of my cabinet...it is a multicultural and diverse category. In Philadelphia there is an Asian market you would be interested in visiting...I wonder about the paths that these items they sell have taken to get here. One positive thing though concerns corn syrup - perhaps we could use a little less of it in our daily diet, given the rates of obesity and diabetes in our culture. I like the way you think about these things, Michelle.

Michelle Verges, Project Director said...

Great comment, Experimentaholic! You raise another important point: globalization.

Because our food economy depends on oil, we have the pleasure of eating various international foods without having to travel to those countries.

Doesn't it seem like a luxury we've somehow taken for granted?

I generally don't think twice about the journey my food has taken before it reaches my plate. Perhaps it's time I think about this issue more deeply.

And I completely agree with you: It would be a huge step in the right direction if we reduced the amount of corn syrup in our diet. I've become more mindful about this ingredient and consequently, I'm reducing my consumption of foods containing corn syrup.