Energy costs are on the rise as winter weather freezes out production, but policy constructs are likely to lengthen the dynamic. The dominant political force intends to squeeze down fossil fuel support and this will push energy prices higher. Corn is relatively energy intense (20 percent of costs) to produce compared with soybeans (9 percent of costs), and it could be an additional factor besides the soybean-corn price ratio influencing planting this spring, but only on the margin. USDA’s Economic Research Service looked at the impact of higher energy prices on agriculture and found them to be “modest.” Indeed, the relative cost of energy has been low in recent years and yet the value of corn production minus production c...
From WPI Consulting
Communicating importance of value-added products
Facing increasing pressure to quantify the value of export promotion efforts to investors, a U.S. industry organization retained WPI to develop a quantitative model that better communicated the importance of exports. The resulting model concluded that value-added meat exports contributed $0.45 cents per bushel to the price of corn, increasing support for that sector’s financial support of WPI’s client. In addition to serving the red meat industry with this type of analysis, WPI has generated similar deliverables for the U.S. soybean and poultry/egg industries.