As the worst drought in more than a generation continues, the National Turkey Federation and other poultry and livestock producers have begun taking action to soften the blow on feed costs. In late July, National Turkey Federation and its coalition partners petitioned the federal government to grant a waiver to the Renewable Fuel Standard.
The extreme weather conditions have caused significant damage to the nation’s corn crop, driving up corn prices and causing analysts to predict a corn shortage later in the year. The coalition’s petition clarifies that relief from the Renewable Fuel Standard is urgent as ethanol now consumes more corn than animal agriculture, and the mandate gives ethanol producers a leg up in securing corn when supplies are tight.
This year’s Renewable Fuel Standard mandate is 15.2 billion gallons
Created in 2005, the Renewable Fuel Standard requires refiners to blend a certain amount of renewable fuel (almost exclusively corn-based ethanol) into gasoline each year. The 2012 mandate is 15.2 billion gallons total of renewable fuel, of which at least 13.2 billion gallons is slated to come from corn-based ethanol.
The Renewable Fuel Standard combined with another short corn crop would mean much less corn to be distributed to the livestock once the ethanol regulations have been met. This would be devastating to the animal agriculture industry, food manufacturers and foodservice providers, as well as consumers.
New study shows destabilization of corn prices
A new study, conducted by Thomas Elam, Ph.D., president of Farm Econ LLC, found that federal ethanol policy has increased and destabilized corn, soybean and wheat prices to the detriment of food and fuel producers and consumers.
“The increases we’ve seen in commodity prices are strongly associated with the Renewable Fuel Standard mandate,” said Elam. “At the same time, we haven’t seen the promised benefits on oil imports or gasoline prices. This means that while Americans are forced to pay more for food, they’re also not seeing lower prices at the pump; it’s a lose-lose situation.”
USDA report shows potential yield decline
The USDA, in its monthly Crop Production report, announced a large month-to-month potential yield decline for corn. Currently, about 24 percent of the corn crop is in “good” or “excellent” condition, representing record lows.
As a result of these deteriorating conditions, corn prices have risen dramatically over the past few weeks and are likely to remain at record highs. This means billions in increased costs for meat and poultry producers and food manufacturers, putting food processing jobs at risk and jeopardizing farmers’ livelihoods.
Adjustment in Renewable Fuel Standard needed
National Turkey Federation, and other livestock producers, have asked the government to use its available resources by adjusting the rigid Renewable Fuel Standard mandate.
The EPA is being urged to take the necessary steps to promptly analyze the current crisis in agriculture and consider a meaningful adjustment to the Renewable Fuel Standard.