All of the soybeans and corn hadn’t been harvested yet when the November crop report was released by the U.S. Department of Agriculture, but it was still evident that it wasn’t a great crop year. With a low carryover from last year and disappointing harvests this year, experts say grain prices might not set new historical highs as they did in 2011, but they likely won’t fall much. If Congress takes no action, the mandate for corn-based ethanol will be 13.2 billion gallons in 2012. Bill Roenigk, senior vice president, National Chicken Council, told the audience at USPOULTRY’s Grain Forecast and Economic Outlook Conference that U.S. ethanol policy suffers from the “roach motel syndrome” — politicians have checked in, but they won’t check out.
The USDA estimates that for the 2011-12 crop year, ethanol production will consume 37% of the U.S. corn crop, animal feed and residual will use 35%, 12% of the crop will be exported, food and industrial uses will total 11%, and there will be a residual of 5%. After making ethanol with corn, the residual solids can be dried into DDGS, which are available as a feedstuff for livestock and poultry feeding. The total volume of DDGS produced in the 2011-12 crop year is expected to be equivalent in weight to 12% of the corn crop.
Under current legislation, the corn-based ethanol mandate is scheduled to increase incrementally to 15 billion gallons in 2015 where it stays until 2022. In addition to this, the corn-based ethanol industry wants to be approved for some or all of the Undifferentiated Advanced Biofuels Mandate, which will be a half billion gallons in 2012, and will rise in steps to 5 billion gallons by 2022. The U.S. will export 1 billion gallons of corn-based ethanol in 2011.
Over $4 billion
Since October of 2006, it is estimated that the cumulative additional cost of corn to the egg industry due to ethanol subsidies, mandates and tariffs is $4.6 billion, according to Roenigk. The monthly additional cost to the egg industry exceeded $140 million this past summer.
A coalition of groups is calling for Congress to take a number of actions regarding ethanol this year:
- Let the Volumetric Ethanol Excise Tax Credit (VEETEC) for blending ethanol with gasoline and the import duty on ethanol sunset at the end of 2011.
- Prohibit the definition of advanced biofuels to be changed to allow corn-based ethanol to qualify.
- Allow for removal without penalty of non-environmentally sensitive land from the CRP program.
- Minimize or prohibit further government subsidies and federal grants for funding the building and expansion of infrastructure that encourages the manufacturing, distribution and selling of corn-based ethanol.
- Seek a partial or full waiver of the Renewable Fuels Standard (RFS) through legislation for a mandatory stocks-to-use ratio trigger mechanism, legislative action permitting individual states to opt-out of the federal RFS mandate and/or file a legal challenge with the EPA. (See table 1.)
Industry call for action
The corn lobby and the ethanol industry have been remarkably successful over the years keeping Congress tied up in the “roach motel.” They suffered some setbacks this summer when efforts to extend VEETEC and the imports tariffs beyond 2011 failed, but the battle isn’t won yet. Roenigk called on poultry producers to contact their representatives and senators to ask them support the five initiatives listed above.
I agree with Roenigk and I want to remind producers that just because the corn-based ethanol lobby lost a battle this summer it doesn’t mean other battles will be easy to win. Your support is needed.