Somebody Put Him in a Cage

As the implications of biofuels, particularly ethanol, have become clear, the opposition to federal mandates and subsidies has ramped up. The latest is a hope expressed by Pilgrim's Pride CEO Clint Rivers, who is looking for a "groundswell of opposition" against expensive food he claims is the result of ethanol subsidies. Pilgrim's Pride is the largest chicken producer in the country, and has been hit hard by the increased cost of corn:

Rivers lambasted what he called the government's "ill-advised policy of providing generous federal subsidies" to ethanol makers. He said that the consequences will be higher prices on an array of foods that consumers will feel both in supermarkets and when they go out to eat.

"Many costs have not been passed through" to retail yet, he said. When they are, "hopefully that will create a groundswell of opposition to what's happening - using tax dollars to increase the price of our food," Rivers said.

Of course no mention of the generous federal subsidies that allowed Pilgrim's pride to buy cheap corn for years. I don't think Rivers has any clue where that "groundswell of opposition" would come from. I suppose he means the "grassroots", but my guess is he'll be a lot more comfortable funding some astroturf lobby group in DC.

But wait! Later in the article, true to Wall Street Journal form, Pilgrim's Pride stock price is quoted:

Shares of Pilgrim's Pride were trading recently at $23.60, up 78 cents, or 3.5%, on the New York Stock Exchange on roughly double the average daily volume.

Pilgrim's Pride stock appears to be down about 20% for the year so far, and about 44% off the 52 week high of $41 per share. But the stock has also vastly outperformed the food industry average over the past five years. Also, Pilgrims Pride had $8.3 billion in revenue last year. In 2003, Pilgrim's Pride had only $2.6 billion in revenue. So they jacked up their revenue and stock price over the last five years through acquisitions (it's not like we increased our chicken consumption by 320% or so).

Forgive me if I don't have a lot of sympathy for them, because they were paying less for corn than it cost to grow it during that time as well. It looks to me like the price of corn went up above the cost of producing corn and their business model went straight down the drain. To be honest, that doesn't bother me all that much. Their vertically-integrated economically exploitative and environmentally destructive business model sucked in the first place.

Biofuels have a lot of implications- good and bad- and we'll continue to write about those. But whining CEOs of multi-billion dollar agribusiness giants aren't going to affect my opinion at all.

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