Ethanol battle not over yet
Poultry execs look to the U.S. government for action.
Executives at leading broiler and turkey firms are still calling for action from the U.S. government to reduce corn-based ethanol mandates and subsidies, and to remove or reduce tariffs on imported ethanol. Any or all of these measures would be steps towards leveling the playing field for all users of grains. Speaking at the NCC annual convention, Clint Rivers, president and CEO, Pilgrim's Pride Corp., said that rising food costs for consumers and a shortage of food for the world's poorest consumers will be the drivers for a revision of this country's ethanol policies.
Keith Shoemaker, president and CEO, Butterball LLC, in an interview with WATT PoultryUSA, said that only 20 percent of the cost increase in turkey has been reflected in the market price so far. "When the real cost of food is reflected in the price that consumers pay, it will result in a reduction in the standard of living for the average American consumer. They will have to cutback somewhere else so that they can pay for their food," Shoemaker said.
When gasoline prices went over $4 per gallon earlier this year, many people felt that this served as a tipping point which shifted the majority opinion in the U.S. in favor of offshore oil exploration and drilling. Is there a tipping point for food prices?
Meat and poultry prices have not risen enough yet to really hurt the consumer's pocket, but analysts see prices rising significantly in 2009. Is there a breast meat, ground beef or pork chop price that will be the economic equivalent of $4 per gallon gasoline? Is there a tipping point for political support for corn-based ethanol?
The ethanol lobby will not rollover and play dead as consumers, animal agriculture and food companies mount renewed efforts to lobby Congress to remove or reduce subsidies and tariffs. According to published reports, ethanol producers are, on average, operating with slim to no margins. There have been several biofuel plants filing for bankruptcy and a number of unfinished plants have had construction halted. Now, ethanol producers can point to their own weak financial performance as reason number one for why all of the ethanol mandates, subsidies and tariffs need to remain in place. In fact, I wouldn't be surprised if they asked for more. This way Congress can reach a "compromise" and just leave everything as it is.
If the poultry industry is going to win the next round of the fight over the government's ethanol policies, it is going to have to fight and fight hard. "We have to be absolutely, positively relentless; we have to be like a terrier that is latched onto someone's ankle," Shoemaker said. "I don't know if it will take two years or three years, but we have to keep after it." According to Shoemaker, the focus of the ethanol debate has to be on the cost to the average consumer of our country's ethanol policies. In addition, we have to stress the impact on world hunger of using 40 percent or more of our corn to make motor fuel and not for food. "We have to keep it human and speak with our legislators and let them know the human cost," he said.
Richard Bond, president and CEO, Tyson Foods Inc., said "When Congress comes back after the election; I think it is imperative for each one of us to work extremely hard and somehow halt these mandates." The task isn't going to be easy, but the poultry industry needs to be determined and resolute. It will take grass-roots lobbying from everyone to get results, but this effort is necessary. According to poultry industry executives, this is a fight that the poultry industry can't afford to lose. "Ethanol mandates are killing us," Bond said.