Poultry industry counters EPA, USDA's RFS position

By Timothy Charles Holmseth | June 02, 2008
Web exclusive posted June 15, 2008 at 10:16 p.m. CST

The United States' poultry industry is concerned by a recent letter that U.S. Secretary of Agriculture Ed Schafer and U.S. Secretary of Energy Sam Bodman sent to Sen. Jeff Bingaman, D-N.M., stating their respective department's continued support for biofuels. Bingaman is the chair of the U.S. Senate Committee on Energy and Natural Resources.

In letter dated June 11, the USDD and U.S. DOE said preliminary analysis suggests current biofuels-related feedstock demand plays only a small role in global food supply and pricing.

That expressed position by Schafer and Bodman sparked the ire of some in the poultry industry who do not agree with it. In a written statement dated June 2 Dr. Thomas Elam, president of FarmEcon LLC, said the prices of many other agricultural commodities have been profoundly affected. "For some important products corn prices are very important," Elam said. "The 2008 increase in corn prices caused by ethanol production has increased the feed costs of the U.S. broiler industry by over $4 billion. The implications for beef, pork, poultry and dairy producers are not small."

Lonnie Pilgrim, chairman of Pilgrim's Pride, also voiced his disagreement in a letter sent to partners and growers. Pilgrim said the federal renewable fuels standard (RFS) mandate has created an artificial demand for corn ethanol which has caused an increase in production costs for his company.

The letter written by Bodman and Schafer addresses the issue of the many different positions that are being taken on the food-versus-fuel debate. "The food and fuel pricing issues about which you have raised questions are complex," the letter said. Schafer and Bodman caution against "hasty judgments" driven by "highly questionable agenda-driven calculations."

According to Bodman and Schafer, the agenda-driven numbers are not supported by actual numbers. Information contained in the letter written by the USDA and DOE secretaries suggests that the Consumer Price Index tells a different story about the increase of food prices in 2007, and only 3 percent to 4 percent of the overall rise could be attributed to ethanol and biodiesel. "Other factors accounted for 95 to 96 percent of the increase," Bodman and Schafer said.

On June 12, George Watts, president of the National Chicken Council, wrote to the EPA, detailing the council's position. "We support the position by Gov. (Rick) Perry of Texas requesting EPA to grant a waiver of the 2008 renewable fuels standard by 50 percent," he said. "In our view, the renewable fuel standard has distorted the market and has imposed severe economic harm on companies in our industry through dramatically higher input costs and is imposing harm on the general public in the form of higher prices, present or impending, for food products."

Watts supports Perry's position, adding there is no alternative to the utilization of corn for chicken feed. "Ethanol interests suggest that leftovers from their processes - specifically dried distillers grains with soluble - could be used in place of corn, but this substance lacks the nutritional qualities needed to feed birds," he said.

Pilgrim's letter encourages recipients to support Gov. Perry's waiver request, in which he's requesting that the EPA grant a 50 percent waiver for the RFS.

In his statement, Elam said the USDA "has glossed over or ignored many facts" that do not support the minimum impact position of Bodman and Schafer.

The letter by Bodman and Schafer said efforts continue to keep the mandate in place as progress toward reducing dependence on foreign oil and greenhouse gas emissions continues. "Our agencies are committed to collecting and presenting accurate data, projecting potential impacts, and initiating the necessary and appropriate actions to assure the sustainable growth of biofuels," Bodman and Schafer said in the letter.