The budget shortfall responsible for spending cuts and layoffs at IPFW wasn’t the result of a single factor, but an enrollment decline last fall played a big part in creating it.Indiana is one of the hardest-hit states in the historic 2012 drought, but all Americans will feel the aftershocks of the drought’s effect on corn.
Already, shoppers have probably noticed that sweet corn is less plentiful and smaller. But corn’s importance in today’s economy goes far beyond corn meant for human consumption. Friday’s announcement that the corn crop is expected to be 13 percent lower this year will likely push prices even higher.
The biggest buyer of U.S. corn today is the ethanol industry, and ethanol prices are up 60 cents a gallon. Because all gasoline has about 10 percent ethanol, higher corn prices have added about 6 cents to the cost of a gallon of gasoline, Chris Hurt, professor of agricultural economics at Purdue University, said in an email.
After ethanol, the next-biggest corn product is for animal feed, and the higher cost of corn will add perhaps 1 percent to the price of beef, Hurt estimates. A 1 percent difference does not sound like much, but “we spend about $1.3 trillion on food each year, so 1 percent more is $13 billion annually,” he notes.
High fructose corn syrup is in countless food and drink products, but because it is such a small percentage of the product’s cost, any price increases would be minor.
