“I think food inflation has got to go up,” said C. Larry Pope, president and chief executive of Smithfield Foods Inc., the world’s largest pork producer, in a recent speech. “Everything that uses wheat, everything that uses corn, everything that uses corn syrup has got to go up.”

The exception may be beef, as already high beef prices may not see the increases that chicken and pork could, said Jim Hilker, an agricultural economist at Michigan State University. “I’m not sure beef prices will go up a lot, but they won’t come back down.”

Pork farm losses, though, may total US$3.8 billion (euro2.46 billion) for 2008, one-quarter of total production, according to Chris Hurt, an agricultural economist at Purdue University. He calls the industry “a financial disaster in progress.”

The biggest driver to prices is grain costs, which have been affected by the rise in ethanol production and strong export demand due to the weak dollar. Corn costs have more than doubled over the last two years from US$2.50 (euro1.62) a bushel to US$6 (euro3.88). That has added US$6 billion (euro3.88 billion) to chicken farmers’ annual feed bills, according to the National Chicken Council, a trade group.

As a result, companies are slaughtering animals to tighten supply. The move will temporarily increase supply, lowering prices, but as farms herds and flocks get smaller, it will raise prices.

Meat and poultry executives have also come out against federal ethanol mandates, which they say are driving the cost of corn higher. Senate Republicans have asked environmental regulators to halt the ethanol expansion plans amid the rising food prices.

The U.S. Department of Agriculture predicts overall food prices could increase another 4 percent to 5 percent in 2008. But consultant Jim Hertel, of Willard Bishop food retail consultants in Barrington, Illinois, thinks that high commodity and fuel prices, plus demand from India and China, could push food inflation anywhere from to 7 percent to 10 percent.

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