Biofuels ronnie

Published on August 31st, 2013 | by Jo Borrás

24

McDonald's, not Ethanol, is What's Raising Chicken and Food Prices

McDonald's Raising Price of Food

It’s not ethanol production that’s raising the price of food like chicken and beef. According to Bloomberg and Businessweek, the culprit is McDonald’s!

That’s right, gang! The 26% year-to-date price increase came along with a 1% drop in supply, which farmers say had nothing to do with ethanol. Now, as you are probably not suffering from severe brain injury, you might have noticed that 1% drop in supply should not a 26% spike in demand make. Where was all that demand coming from? That’s where McDonald’s – which announced plans to reintroduce bone-in “Mighty Wings” chicken at its 14,100 US locations this week – comes into play: to prepare for the tsunami of chicken wings, McDonald’s has been stockpiling chicken.

14,100 restaurants, by the way, will sell a LOT of chicken wings!

Not only that, McDonald’s has been stockpiling chicken for 18 months – right about the time people started noticing the price of chicken going up – according to industry analyst Nick Setyan, who explained the facts to Vanessa Wong at Bloomberg Businessweek and left behind this handy-dandy graph.

chickenwings_315

Graphs are fun.

Anyway, when the price of chicken futures started going up mysteriously a little over a year ago, there was a rush from big oil lobbyists to place the blame on the Renewable Fuels Act (RFA) and ethanol. Despite the fact that farmers blamed fluctuating oil prices and climate change for increased production costs and that the AAA came out against oil-lobby ads meant to turn the public against ethanol, a huge percentage of the public believed big oil’s ridiculous fear mongering. As has happened time and time again for the anti-ethanol hysterics, new information coming is making them look pretty silly.

So, here’s to reality continuing to make the ethanol haters look ridiculous!

 

Sources: Businessweek, Fuels America, the Week.

Tags: , , , , , , , , , , , , , , , , , , , , , , , , ,


About the Author

I've been involved in motorsports and tuning since 1997, and write for a number of blogs in the Important Media network. You can find me on Twitter, Skype (jo.borras) or Google+.



  • UncleB

    Now if they could only do the same for pork! Fact is: Grain to edible protein conversions are best, most efficient with fish!

    • http://www.insteading.com/ Jo Borras

      Or mealworms!

      • EdselFord

        Would you like to Super Size that.

  • EdselFord

    McDonald’s is your kind of plaaaace.

    • http://www.insteading.com/ Jo Borras

      It sure is!

      • EdselFord

        Child Hood Obesity rules.

  • http://www.biodiversivist.com Russ Finley

    The truth:

    McDonalds is so large it can create temporary supply/demand imbalances in two or three specific items, like wings, and cucumbers when it changes a menu item which investors try to capitalize on by buying up a commodity, hoping to make a profit as the price swings through a high.

    It can also cause food prices to fall by simply dropping a menu item. And keep in mind, that there isn’t less food, just a temporary increase in demand of a given item, which takes time for suppliers to meet. So, McDonalds causes food prices to rise and fall, but unlike corn ethanol, Mcdonalds does not permanently triple the price of feedstock for foods, diverting food from the food chain to the fuel supply.

    • http://www.insteading.com/ Jo Borras

      I think you meant “LIKE ethanol, McDonald’s doesn’t permanently triple the price of feedstock …”

      • http://www.biodiversivist.com Russ Finley

        The price of corn has tripled since enactment of the biofuels blending mandate legislation in 2005. Look at how stable the price of corn was before that legislation. A corn buyer who paid $2 million dollars for a million bushels of corn in 2005 would pay $6 million for those million bushels in 2012.

        The E.U. is about to cut their biofuel goal from 10% to 5.5%. You can read the article at Green Car Reports.

        • Jerry

          Great to point this out. I like reneable energy and being sustainable, but covering the effect of corn ethanol to food price is not the way to go. This Bloomberg piece lacks critical analysis of the entire grain price. Merely the price of two type of chicken meat doesn’t provide a big picture, nor a related one.

          • http://www.insteading.com/ Jo Borras

            Again: study after study has shown ethanol does not impact food prices. Only one study, sponsored by the AAPS, ever showed otherwise.

          • http://www.biodiversivist.com Russ Finley

            That’s not true. The E.U. has just dropped its biofuel goal from 10% to 6%.

        • shecky vegas

          Russ – You might’ve also noticed that the only organizations fully behind corn-based ethanol production has been Monsanto and Archer Daniels Midland. For obvious reasons, they’re behind any regulation that forces more use of corn and grain product. They’re also tend to be the ones who voice “concern” over non-corn based ethanol as being “hard on the environment” and “too expensive for consumers”.

          • http://www.insteading.com/ Jo Borras

            Also a good catch! Shecky, I heart you.

        • http://www.insteading.com/ Jo Borras

          OOh … I love it! Thanks for showing some follow-through.

          That said, oil was at $42/bbl. in 2004/05, when your graph starts … with national gas average at $1.80-1.90. It’s not exactly the same growth, but it’s not far off.

          • http://www.biodiversivist.com Russ Finley

            OOh …I love it! By your reasoning, everything should cost 300 percent more today thanks to higher oil prices …yet only corn does. Or are you saying that corn ethanol will never be cheaper than oil because it’s cost is directly tied to the price of oil, or are you saying that the energy inputs to corn are so great that tripling the price of oil triples the price of corn?

          • http://www.insteading.com/ Jo Borras

            OMG … Apple stock is up, too! CONSPIRACY!!!

    • http://www.insteading.com/ Jo Borras

      HOLY HELL, man! I just checked out your site – you’re a crazy pants. UncleB seemed like a crazy pants tin-hat case when he first came along, though, so maybe (like him) you’ve actually got a clue. Followed.

      • http://www.biodiversivist.com Russ Finley

        Never drink while blogging …

        • http://www.insteading.com/ Jo Borras

          How else would I blog?

  • Scott

    McDonald’s. Is there any reason they don’t suck?

    • http://www.insteading.com/ Jo Borras

      I feel like the chicken nuggets are pretty good.

  • Pingback: Eat Drink Better | Healthy recipes, good food: sustainable eats for a healthy lifestyle!()

  • Pingback: Eat Drink Better | Healthy recipes, good food: sustainable eats for a healthy lifestyle!()

Back to Top ↑