Monday, April 16, 2007

Big day for food (and fuel)

Two news stories from The Wall Street Journal highlight the economic relationships between food and fuel. (btw -- WSJ has some public access articles, but many/most require registration and $$$)

Notably, Tyson (NYSE: TSN) and Conoco (NYSE: COP) have announced a partnership to make biodiesel from animal fat.

Tyson prouduces about 300 million gallons of beef, pork and chicken fat each year. About 58% of its fat production will go to the diesel deal once it is ramped up. ... Producing one 42-gallon barrel of renewable diesel requires about one barrel of animal fat. Each barrel requires, on average, two steers, or 16 hogs or 1,300 chickens, Tyson officials say. (2007.04.16 WSJ)

Continuing in this vein, WSJ also reports (in a subscriber-only article, The Outlook, Section A, p. 2, 2007.04.16 or ProQuest) that fuel prices (as well as corn prices and bad weather) have contributed to make food a “bigger potential contributor to inflation than it has been at least since 2004.” The USDA reports that food prices are likely to climb by 2.5 to 3.5% in the coming year. Wells Fargo & Co analysts suggest that the increase could reach 4.5%.

In this regard, Tyson, Kellog, Heinz and Kraft have all increased prices to retail and food-services customers.

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Anonymous said...

Yeah. This is tenuous. Check out the real story:

G. F. Barbato said...

great article!

of course, the previous comment (if you don't copy/click) refers to the use (or abuse) of a $1/gallon tax credit for the production of biodiesel from animal waste products (or carcasses).
there are many thoughts here, but, i'll note 2...

1. the original credit was introduced by Representative Roy Blunt (MO-R) to specifically target a company in his district. others now want the advantage... hmmm, was this intended to be pork? (pun intended)

2. can we have alternative fuels without government support? this is a blog unto itself e.g.,,
or, not,