US chicken industry urges Congress to cut ethanol mandate

20-04-2011 | |
US chicken industry urges Congress to cut ethanol mandate

The chicken industry in the US has called on Congress to slash the amount of ethanol required to be added to motor gasoline which has helped drive the cost of corn to unprecedented highs.

“The National Chicken Council (NCC) recommends a plan be implemented that would reduce the Renewable Fuels Standard when the stocks-to-use ratio for corn drops to low levels, as the situation is now,” industry executive Michael Welch said on NCC’s behalf at a hearing held by the Livestock, Dairy and Poultry Subcommittee of the House Agriculture Committee.

Chicken feed
Corn is the primary component of chicken feed, which accounts for 55% of the wholesale cost of whole, ready-to-cook chickens. Corn has rocketed from about $2 per bushel in 2006 to more than $7.50 per bushel today, which Welch said resulted largely from the fact that 40% of the corn crop is being diverted into federally mandated ethanol usage. Ethanol makers benefit from the mandate, a tax credit on usage of ethanol, and a protective tariff on imports.

“Mandating the use of ethanol, subsidising its cost, and protecting ethanol from competition is triple overkill,” said Welch, who is president and chief executive officer of Harrison Poultry in Bethlehem, Georgia, and a former chairman of NCC.

Less than 700 million bushels of corn are expected to be left at the end of this crop year, he said, meaning there is virtually no margin for error in the crop to be harvested in the fall.

No corn cushion
“There is no cushion, no extra bushels in inventory to carry the needs of the users of corn through the next crop year in the event of a shortfall in this fall’s corn harvest,” Welch said. “To assume an adequate number of acres will be planted to corn this year and the next few years and to further assume favorable weather conditions for crops this year and the next few years are not assumptions the US chicken industry is prepared to make, nor should prudent US government policymakers be willing to make.”

Welch urged Congress to adopt a contingency plan or “off-ramp” from the Renewable Fuels Standard, which is the law requiring that a fixed amount of ethanol be added to motor fuel every year.

“Unless there are perfect crop conditions this year to plant, grow, and harvest a record quantity of corn, animal agriculture will experience major disruptions while ethanol producers will continue to outbid non-subsidized buyers of corn,” he warned.

The mandate should be reduced to allow non-ethanol users greater access to corn, he said. Farmers should also be allowed to withdraw non-environmentally sensitive acres from the Conservation Reserve Program without penalty.
“More acres are needed, not just for corn, but also for soybeans, wheat, cotton, and other crops that compete with corn for acreage,” he said.

Source: National Chicken Council