Sunday, September 23, 2007

High Cost of Chicken is Caused by Corn Costs?

Hardly. Corn costs represent only a small portion of the final food cost to consumers. Yes, corn costs have increased, from about $2.50 a bushel a year ago to about $3.50 a bushel this spring. But that $3.50 buys 56 POUNDS of corn from a grower. And the cost of corn had remained at all time lows for many years.

So what about all of that clucking about corn costs and higher cost of chicken?

According to the National Chicken Council, it takes 2 pounds of corn to produce one pound of chicken, live weight. This equates to less than 13 cents worth of corn when corn is $3.50 per bushel.

So if corn was $2.50 a year ago, that $1.00 bushel price different at most represents 4 cents per pound increase that may or may not be passed along to the final consumer.

And according to the USDA, chicken breasts, bone in, average retail price is $2.33 a pound in August, 2007. So that makes any increased corn costs less than 2 percent of the final food price. And the total corn costs less than 6% of the final cost.

What has been shown to cause major cost in increases in all sectors of the economy is increased energy costs and labor costs. Sky high oil costs, driven by international demand and foreign oil cartels, are impacting America's security and economic vitality.

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