Facing the prospect of significant numbers of pork producers going out of business from skyrocketing feed costs, the National Pork Producers Council on Monday called for the federal mandate for ethanol production be cut in half.
“The U.S. government’s intervention in grain markets, through the Renewable Fuel Stansard, has created one of the most severe economic crises to ever hit pork producers,” said NPPC President Bryan Black, a producer from Canal Winchester, Ohio. “The impact for the pork industry and its customers will be devastating as herds are culled, producers go out of business and pork prices skyrocket.”
In comments submitted to the U.S. Environmental Protection Agency, NPPC urged that the state of Texas be granted a waiver of the RFS and that the amount of ethanol that must be produced in 2008 be cut in half from 9 billion gallons to 4.5 billion gallons.
Pork producers have been under severe economic pressure due to higher prices for feed, which accounts for 70 percent of the cost of raising a hog. Feed grain prices already were increasing starting in the summer of 2006 because of the rapid rise in ethanol production. Since then, increased global demand for crops, drought conditions in parts of the world and the RFS requirement have fueled even higher grain prices. From September 2007 to April 2008, corn prices rose 124 percent and soybean meal prices went up 94 percent. During that time, pork producers lost an average of $30 on each hog marketed.
Compounding the problem is the recent flooding in much of the Midwest which has pushed corn yield forecasts significantly below earlier projections. USDA recently reduced its estimated average yield per acre from 154 bushels to 149 bushels. The expected shortfall along with an increase in ethanol production over last year has producers very concerned about having physical access to corn to feed their livestock.