Feed Chickens and People, Not Vehicles

by Paul Chesser, Heartland Institute Correspondent on May 6, 2008

in Blog

Paul Chesser, Climate Strategies Watch

As I mentioned in an earlier post, North Carolina's Climate Action Plan Advisory Group enlisted the Energy Center at Appalachian State University to apply its mumbo-jumbo economic analysis model (click on "Ponder presentation") to the recommendations that CAPAG produced. Undoubtedly the global warming believers wanted some public entity to tell them how all their energy tax hike and regulation ideas would improve the economy and create jobs, and the Energy Center delivered. They reported that by 2020, North Carolina would see $2.2 billion in new investment and 32,000 new jobs if all CAPAG's recommendations were implemented.

Focusing on details, the Energy Center was particularly optimistic about CAPAG's biofuel subsidy proposals. A proposal to replace 12.5 percent of the state's petroleum diesel fuel consumption with biodiesel by the year 2020 would yield 661 new jobs and $68 million in annual gross state product. Even more exciting, an ethanol subsidy of 23 cents per gallon, to replace gasoline consumption in the state with ethanol by 25 percent by the year 2025, would create more than 12,000 new jobs and increase gross state product by $4.1 billion.

Someone should have sent that memo to employees at Pilgrim's Pride, who closed a chicken processing plant in North Carolina in March, as well as six distribution sites. The reason?

Chief Executive Clint Rivers placed blame for the industry's trouble on the federal government's "deeply flawed" policy of paying subsidies for using corn to produce ethanol for fuel, which he said would cause food prices to rise further.

"American consumers are only just beginning to feel the impact of sharply higher food prices," as food producers pass along more of their higher costs, Rivers said.

Rivers said the company hasn't been able to raise prices fast enough to cover higher feed costs. He called the current situation facing poultry producers "among the most difficult I have seen during my 27 years in the business."

Apparently the science was settled, but the economics was not.


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