Agricultural News
Livestock Groups Call on US House to Not Renew Ethanol Supports- Let Them Expire.
Thu, 29 Apr 2010 18:50:02 CDT
Major livestock and poultry trade associations asked the House Ways and Means Committee on Wednesday to allow a 30-year-old tax credit and a protective tariff for ethanol to expire at the end of this year. The request was made in a letter signed by the National Cattlemen's Beef Association (NCBA) and other industry trade associations, including the American Meat Institute, the National Turkey Federation, and the National Chicken Council. The NCBA is new to this formal call for an end to ethanol subsidies, as the American Meat Institute has been making this call for several years.
"Although we support the need to advance renewable and alternative sources of energy, we strongly believe that it is time that the mature corn-based ethanol industry operates on a level playing field with other commodities that rely on corn as their major input," the groups wrote in a letter to Congressmen Sander M. Levin of Michigan and Dave Camp of Michigan, chairman and ranking Republican members, respectively, of the tax-writing committee. "Favoring one segment of agriculture at the expense of another does not benefit agriculture as a whole or the consumers that ultimately purchase our products."
To read the letter that NCBA has signed on to- click here.
On Monday, May 3, NCBA Chief Economist Gregg Doud will also be a presenter at the National Academies' third meeting of the Committee on Economic and Environmental Impacts of Increasing Biofuels Production.Doud's presentation will focus on the impact of corn ethanol production on the cattle industry.NCBA strongly opposes mandated ethanol production and supports immediate efforts to significantly reduce the Renewable Fuel Standard (RFS) mandate.
From December 2007 to February 2010 the cattle feeding sector of the beef industry lost a record $7 billion in equity due to high feed costs and economic factors that have negatively affected beef demand. Between 2005 and 2008, corn prices quadrupled, reaching a record high of more than $8 a bushel; a pattern that is unsustainable for all industries that utilize corn. This volatility in the market place was a direct result of competing demands for corn and higher energy prices. According to USDA's Economic Research Service, in 2008, feed costs for livestock, poultry and dairy reached a record high of $45.2 billion - an increase of more than $7 billion over 2007 costs. A report released in September 2008 by the Congressional Research Service (CRS) stated that the dramatic increase in livestock production costs were attributed to feed. The CRS report said that "the main driver was feed, which may account for 60%-70% of total livestock production costs in any given year."
During the 2005-2006 marketing year, USDA estimates that corn use for ethanol production increased from 1.603 billion bushels to 3.677 billion bushels during the 2008-2009 marketing year. For the 2009 - 2010 marketing year ethanol production is expected to absorb 4.3 billion bushels of corn. Ethanol use accounted for approximately 14 percent of total corn use in 2005-2006, and that percentage is projected to grow to more than 33 percent in 2009-2010. Over the same period, use of corn for feed has fallen from about 55 percent to about 42 percent, with exports falling from almost 19 percent to about 15 percent.
NCBA says that cattle producers they represent continue to support an open and free market as the best driver of competition and innovation in all industries.
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