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PepsiCo representatives declined to comment for this article, but their corn-related troubles and those of other beverage companies can be traced not back to the field, but back to the oil barrel.
Congress mandated gasoline companies to blend 9 billion gallons of ethanol with regular gasoline in 2008 – up sharply from the previous 5.5 billion gallons. The corn-based substitute for oil-based fuel appeals to politicians because it is renewable – taking 97 percent of its matter from the air – and reduces reliance on oil from the conflict-ridden Middle East.
According to Nathan Fields, director of research and business development for the National Corn Growers Association, that high-level mandate has attracted investors who fled the troubled waters on Wall Street. Now dabbling in commodities futures, Fields said those investors are exacerbating the natural swings in corn prices.
Fields said market forces alone would have pushed the price of a bushel of corn beyond the typical $2-4 range, but those newly-arrived investors forced the cost of corn north of $6.00 per bushel on the Chicago Board of Trade.
Ironically, that extra push has led to the slowdown of the industry that attracted investors to corn in the first place. Jon Birger wrote for CNN Money in February that the high price of corn had cut the profit margins on ethanol, so much so that companies have shelved plans for as many as 50 planned ethanol plants.