Biofuel & Pet Food Costs

With the recall of so many pet foods this year, the international demand for U.S. commodities, the continued domestic demand and the additional demand by the new ethanol plants has caused continued upward movement in the commodity market. Recent articles in The Wall Street Journal talk about how "farmers are poised to reap the richest corn harvest in memory, and last month's record-breaking wheat crop has already infused local economies with cash. Meantime, the nation's growing appetite for ethanol, the alternative fuel derived from corn is bolstering the price of that crop, prompting farmers to plant more of it. And the move away from wheat and other grains is boosting their prices by limiting supply". Instead of flooding the market with corn, the opposite is taking effect. Farmers are very sophisticated commodities traders and are storing corn while they await the best price. (This has caused an interesting side effect; a shortage of storage space which results in another increased cost to pass along). To make matters even more expensive, farmers who traditionally raised other grains are plowing them under to grow corn.

You might wonder what this has to do with a product that does not use corn or wheat. Unfortunately, those grains are used in the feed consumed by the protein source, chicken, lamb, beef, venison, etc., used in pet foods. Because we pride ourselves on the fact that our food is made in small batches only when we order it, and not stored in warehouses or silos, the turnover in raw material is much quicker and more susceptible to rapid fluctuations in costs. We recently received our second price increase in three months and the third this year. It is only a matter of time until all of the pet food manufacturers start to pass along these costs.

We would be very interested in hearing from you.