Representatives from the livestock and poultry industries commended U.S. Representatives Bob Goodlatte (R-Va.) and Jim Costa (D-Calif.) for introducing the Renewable Fuels Standard (RFS) Flexibility Act.

The legislation calls for a twice annual review of the corn stocks-to-use ratio. If the ratio falls below a threshold of 10 percent, the RFS could be reduced. The groups said the legislation will provide relief in times of tight corn supplies while also ensuring there is enough corn to meet the demand from all end-users.

The National Pork Producers Council (NPPC), National Cattlemen’s Beef Association (NCBA), the National Chicken Council (NCC), and the National Turkey Federation (NTF) participated in a press conference hosted by the bill’s sponsors to introduce the legislation. The groups raised concerns about the impact tight feed supplies and high feed prices have had on livestock and poultry producers.

“This is a much-needed step,” according to Steve Meyer, president, Paragon Economics. “When we see another drought in major corn-growing regions, all corn users will have to reduce their usage to make sure the crop is properly rationed.” The last significant drought in the Corn Belt was in 1988. Iowa State University agricultural meteorologist Elwynn Taylor suggests the area is due for another major drought.

Cutbacks in corn use would fall mostly on the buyers of animal feed, the other major user of the nation’s corn crop in addition to the ethanol industry. “The current RFS gives ethanol blenders, and thus ethanol producers, no leeway to reduce the amount of corn they use,” adds Meyer. “All rationing would fall on feed users and exports, and feed customers simply cannot reduce feed use quickly because animals have to be fed.”

The bill would allow much needed flexibility in the RFS. “What (the proposed legislation) will do is provide an out for ethanol blenders and ethanol producers in the case that corn is expensive relative to oil and gasoline,” said Meyer. “The rigid RFS allows no reduction in output for ethanol manufacturers. It simply says ‘thou shalt produce and use X billion gallons per year’ -- regardless of market conditions.” 

“America’s pork producers, who need corn to feed their animals, are grateful to Congressmen Goodlatte and Costa for sponsoring legislation to protect the nation’s livestock and poultry producers should there be a shortage of corn,” said NPPC President Doug Wolf, a pork producer from Lancaster, Wis. “Production of biofuels is important to the U.S. economy but so is production of food.”

While livestock and poultry producers are not against ethanol as part of the solution to reduce the nation’s dependency on oil imports, they want a level playing field to compete for their corn purchases. Mandated production levels of ethanol currently at work in the country deny that.

“Cattlemen are not opposed to ethanol. We simply want the federal government to get out of the marketplace and allow the market to work,” said Kevin Kester, California cattleman and president of the California Cattlemen’s Association, an affiliate of NCBA. “USDA has projected this year’s corn crop will be more than 400 million bushels smaller than last year. It’s time to add a layer of common sense to our nation’s renewable fuels policy.”

“The nation’s inventory of corn has fallen to critically low levels and will most likely fall further to only about two and a half weeks’ worth of corn on hand,” said Bill Roenigk, NCC senior vice president and chief economist. “This is due primarily to the enormous draw on the corn crop by ethanol producers – about 40 percent of the total. Chicken producers are facing corn shortages while ethanol producers are actually exporting corn-based ethanol to other countries.”

The turkey industry also encourages a policy that provides practical, automatic and meaningful protection against a poor corn harvest.  “While no one item is a silver bullet to fixing the low corn stock problem, the National Turkey Federation applauds Reps. Goodlatte and Costa for introducing legislation that will protect livestock and poultry producers from excessively high prices caused by the government mandates,” said NTF President Joel Brandenberger. “The (proposed legislation) would put a safety net in place that ensures the availability of corn and reduces price volatility in the future. 

Source: NPPC, Paragon Economics