Drought sparks request to halt ethanol mandate
WASHINGTON, D.C. -- Livestock and poultry groups from across the country have banded together to request the U.S. Environmental Protection Agency implement an immediate waiver of the nation's Renewable Fuels Standard for corn-based ethanol in light of continued drought conditions.
In a press conference Monday morning, representatives from the National Pork Producers Council, the National Cattlemen's Beef Association, National Turkey Federation and National Chicken Council announced a petition had been delivered to EPA Administrator Lisa Jackson asking to waive "in whole or in substantial part" the mandate for the remainder of this year and into 2013.
The RFS requires 13.2 billion gallons of corn-based ethanol to be produced in 2012 and 13.8 billion gallons in 2013 -- amounts that will use about 4.7 billion and 4.9 billion bushels, respectively, of the nation's corn. The mandate requires ethanol to be blended with gasoline in an effort to keep fuel costs dow.
Some agricultural forecasters now estimate just 11.8 billion bushels of corn will be harvested this year, down from nearly 13 billion bushels harvested in 2011. Demand for corn in both the food and fuel industries is driving corn prices to record highs, creating concern for livestock producers from coast to coast.
The RFS has "directly affected the supply and cost of feed in major agricultural sectors of this country, causing the type of economic harm that justifies issuance of an RFS waiver," said the coalition of agricultural groups in its petition.
This is the second time since the RFS Standard was expanded in 2007 that a request has been made to slow or halt the production of corn-based ethanol. In 2008, Texas Gov. Rick Perry was unsuccessful in his request to the EPA.
John Burkel, National Turkey Federation vice chair and turkey grower from Badger in northwest Minnesota, said major cutbacks in turkey production occurred in 2008 when the waiver was not granted, and that will only continue if changes aren't made.
"I don't have a mandate that says when you leave the grocery store, you throw a whole bird in your cart," Burkel said. "I have to compete for corn on a whole different level than they do."
That competition has forced many turkey growers out of production, and will ultimately lead to higher prices for consumers at the grocery store.
Burkel said turkey will still be found in grocery stores this fall, but if the high cost of corn remains, there will be a drop in production across not only the turkey industry, but all industries.
"(That will) put consumers in a position where they can't afford to buy meat anymore, or very little of it," he added. Since 2007, the wholesale cost of turkey has risen by more than 50 percent.
Producers cutting back
Burkel, a fourth-generation turkey producer, has to buy approximately 100,000 bushels of corn per year to feed his turkey flocks. With corn nearing $8 per bushel, he said price plays a "critical role" in his ability to feed his family.
"The availability of corn this year is uncertain," he said. "I've already cancelled my last flock of turkeys for this year."
In northeast Nebraska, National Cattlemen's Association President and cattle finisher JD Alexander has also made cuts in his rural Pilger feedlots.
"We are about 60 percent of capacity -- we just can't make the numbers work," Alexander said. "I'm having trouble finding corn. My neighbors have either sold out or they're not sure they will be able to fill contracts with the corn they're producing this year. As a direct result we've cut back and are being very conservative."
In addition, Alexander said for the first time in his life, he's cutting corn for silage to feed his beef animals.
"The corn is not making an ear and we're not getting kernels. We're taking an early crop and putting it into roughage," he said. "The (corn) prices are at record highs that I've never had to pay before and it's really hard to get it. In the long run it's really putting a burden on our operation and many other producers across the nation."
While Alexander said he supports America's ethanol industry and what it has done for rural communities, he does not stand for a federal mandate that "picks winners and losers."
"We do not stand for manipulation of corn prices. We do not stand for a federal government sitting by patiently, forking over taxpayer dollars to artificially inflate the price of corn for livestock producers and other end users," Alexander said. "This isn't rocket science. Let the market work and embrace free market principles."
Randy Spronk, a rural Edgerton pork producer and president-elect of the National Pork Producers Council, said a large portion of the country -- the proverbial bread basket -- is in the midst of the worst drought in 50 years.
"Livestock and poultry producers are struggling because of it," Spronk said. "We're worried about having enough corn, soybeans and other crops -- at any price -- to feed our animals. These aren't unfounded fears."
Spronk said the latest U.S. Department of Agriculture crop report showed just 31 percent of the nation's corn crop is rated good or excellent, with 38 percent rated poor or very poor.
"USDA also forecasts because of the drought, food prices will rise 4 percent next year," he added.
Waiver needed now
Alexander said livestock and poultry producers are willing to compete for corn, but he said they need to have a level playing field.
"The ethanol industry is a mature market now," Alexander said. "They've been held up with a three-legged stool for many years. At some point ... you need to wean it and it's time to wean the ethanol industry and let it stand on its own.
Michael Formica, chief environmental counsel for the National Pork Producers Council, said there's no other option at this point for livestock and poultry producers to get "immediate relief" other than through a waiver of the ethanol mandate.
"As we look forward, we've got a dire situation on availability of corn," Spronk said. "That's why we're trying to act early here.
"In writing the energy bill that set up the RFS, Congress included the waiver exactly for the situation farmers and ranchers now face," he added. "We need a waiver now."
"If we're not going to put this (waiver) in now, with an historic drought, when will we do this," asked Burkel.
"Relief from the Renewable Fuels Standard is extremely urgent," added Michael Welch, president and CEO of Bethlehem, Ga.-based Harrison Poultry and past chairman of the National Chicken Council. "A very short corn crop will undoubtedly prove to be devastating to the animal agriculture industry, food manufacturers, food service providers and consumers not just in the United States, but in the entire world."
Daily Globe Reporter Julie Buntjer may be reached at 376-7330.