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U.S. Pursuit of Ethanol Spikes the Cost of Dairy

July 25, 2007 05:03 PM
by findingDulcinea Staff
Demand for ethanol vexes farmers and dairy enthusiasts alike, prompting concern over whether efforts to diversify America’s supply of energy are cost- and energy-efficient.  

30 Second Summary

Arguments in favor of ethanol as an alternative to gasoline are increasingly overshadowed by the negative ramifications of its production.

Although the corn-based fuel burns cleaner than oil, extracting ethanol from corn is an elaborate process that some critics say requires more energy than it ultimately produces.

Consumers are paying the price. As the demand for corn rises, the industries that rely on corn derivatives suffer.

Among the hardest hit are dairy farmers who, obliged to pay more for cattle feed, are forced to raise prices. Ice cream has never been more expensive. The ingredients, such as milk, cream, butterfat, chocolate and vanilla, have all increased as U.S. corn demand soars.

The timing could not be worse. After an Australian drought affected dairy production in 2006, and an increased global demand for dairy, U.S. dairy farmers are already strained to meet demand.

In addition, petroleum companies are scaling back the building of oil refineries as potential investors support ethanol initiatives. As a result, gas prices have increased. Critics wonder whether the environmental benefits of ethanol production will be enough to justify the economic problems it creates.



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