Ethanol industry says it's not to blame for feed shortages
Testimony during a Sept. 14 U.S. House Committee on Agriculture subcommittee hearing pointed to ethanol as a major contributor to the current situation for the livestock and poultry industries. Even before the hearing started, representatives of the ethanol industry noted that none of the witnesses represented biofuels. “Today’s hearing will do little more than provide a soapbox for those that falsely present domestic ethanol production as creating a choice between food or fuel,” said Renewable Fuels Association President and CEO Bob Dinneen. “Failing to include any representation from America’s ethanol, corn growing, or feed producing industries demonstrates the predetermined outcome of this hearing.”
American Coalition for Ethanol Executive Vice President Brian agreed. The witness list was a “who’s who of groups that think they are entitled to cheap corn forever,” he said. “But that doesn’t change the fact that corn ethanol is not the primary or even a significant source of increased feed and food prices. In fact, corn ethanol production results in feed and food production of distillers grain. Unless this hearing examines all the factors contributing to food and feed prices, it can’t be considered a serious investigation of the issue.”
Growth Energy sent a letter signed by Tom Buis, CEO, and Jim Nussle, president, to the House Agriculture Committee in advance of the hearing. The group pointed to research from Michigan State University, the World Bank and the Food and Agriculture Organization of the United Nations which demonstrate that ethanol and livestock can co-exist due to the amount of distillers grains generated during the ethanol production process. “More than one-third of all grain used in the production of ethanol is returned as a nutritious distillers grain, which is 25 percent cheaper than corn and can displace a greater amount of corn in feed rations, ultimately saving livestock producers’ input costs,” the letter said.
Feed prices have increased due to many factors, including global weather patterns, the weak dollar, unchecked speculation on Wall Street and increased exports of grain overseas. Each of these factors has a greater impact on the price and availability of feed than the ethanol industry, they asserted. Growth Energy also urged members of Congress to support policies that strengthen U.S. economic security and national security. “A vibrant American ethanol industry fosters our energy independence, helping reduce OPEC’s [Organization of the Petroleum Exporting Countries] hold on our economy and reducing risk to our security,” the group said in the letter . “And as a supplier of distillers’ grain, ethanol is a partner to many successful animal and livestock producers.”
ACE pointed out that the U.S. ethanol industry will produce 1.7 billion bushels of animal feed in 2011—which includes nearly 4.5 million tons of distillers grains. The ethanol co-product is currently priced at about 75 to 80 percent of the cost of corn. “Forward-thinking livestock producers have figured out that feed produced at ethanol plants can economically displace more than its weight in corn, actually reducing their feed costs,” Jennings said.
At today’s corn prices, a pound of pork chops that costs $3.52 at the store contains only 30 cents of corn, less than 8 percent of the total cost, the RFA said. In fact, despite the currently abnormally high price of corn, many of the nation’s largest integrated livestock and meat manufacturers are raking in strong quarterly profits. “Facts matter and we hope that the members of the committee will take a comprehensive look at the issue rather than taking the word of industries seeking to return to days of subsidized corn production,” Dinneen said.
He also pointed to a July 2011 report from Informa Economics that showed that ethanol was only one factor in rising corn prices. “Statistical evidence does not support a conclusion that the growth in the ethanol industry is the driving force behind higher consumer food prices,” the authors of the report said.