Pork industry fights ethanol blend increase

By Craig A. Johnson | October 06, 2009
Report posted Oct. 28, 2009, at 4:18 p.m. CST

The U.S. pork industry is calling for Congress to study the effects of the increase in the ethanol blend limit to E15, according to the National Pork Producers Council. The group feels that the combination of subsidies for the ethanol industry and tariffs on imported ethanol are forcing pork producers to compete unfairly for grain.

That the pork industry is no fan of ethanol is nothing new. For several years, pork producers have been dealing with declining profitability due to stable demand, increases in production and increases in the cost of corn and soy meal in the form of dried distillers grains.

According to NPPC spokesman Dave Warner, "For pork producers, you can see the relationship directly. Sixty to 70 percent of the cost of raising a pig is feed grain. That cost has gone up. You can't pass that cost onto a consumer if there is not a demand."

By fighting the ethanol blend increase, pork producers hope to stabilize feed costs. Members of the U.S. Senate and House have urged the USDA to lend assistance to U.S. pork producers to help them out of a two-year-old economic crisis. According to the NPPC, pork producers have been dealing with an average loss of $22.50 per hog since 2007. Total losses across the pork industry are estimated at $5.3 billion, by the NPPC.

Recently the pork industry has been hit hard by the larger global economic recession. According to Warner, "People are not buying as much meat protein. They'll go to something a little less expensive. China, with its emerging middle class, would be an example [of the opposite]. They are a country switching from a grain-based diet to a meat-based diet." However, China currently bans the importation of U.S. pork products due to concerns over the H1N1 virus. According to the NPPC, this charge is baseless and China's ban is much more likely politically motivated, meant as an opportunity to protect its domestic pork industry.