In early March, several livestock groups appeared before the House Agriculture Subcommittee on Livestock, Dairy, and Poultry to voice their concerns about the impact the rising feedstock prices are having on their livelihood. According to the National Cattlemen’s Beef Association (NCBA), corn is the primary feedstock for cattle feeders, accounting for about 85 of every 100 pounds of cattle feed.
“The livestock industry remains the largest consumer of corn by utilizing almost 58 percent of the total corn used over the past decade,” Ernie Morales, a cattle feeder and rancher from southwest Texas, told the committee. “In the past year alone, cattle feeders have seen a 92 percent increase in cash corn prices.” Morales testified on behalf of the NCBA and Texas Cattle Feeders Association.
Morales presented figures from the Renewable Fuels Association (RFA) that put current U.S. ethanol production at 5.6 billion gallons with another 6.2 billion gallons currently under construction. There are more than 110 biorefineries in operation and dozens more under construction.
According to the National Corn Growers Association, farmers produced 11 billion bushels of corn for the first time ever in 2004, followed by an 11.1 billion bushel crop in 2005. After all demands were met, the corn industry finished 2005 with nearly two billion bushels in surplus – one of the highest levels since the 1980s. In 2006, farmers harvested 10.54 billion bushels of corn, of which 1.8 billion went to the production of ethanol, representing 17 percent of total U.S. corn production, according to the RFA.
In his testimony, Morales added that in time, U.S. corn producers can and will meet this rapidly expanding additional demand.
“However, until the appropriate acreage and yield adjustments can be made during this transition, USDA’s [U.S. Department of Agriculture’s] current projection of a 50 percent year-to-year increase in ethanol-based corn demand from 2.15 to 3.2 billion bushels will be felt squarely in the wallets of every feeder and cow-calf producer in this country.”
Pork producers are also worried about the impact of the rapidly expanding ethanol sector on the livestock industry.
“U.S. pork producers support the development and use of alternative and renewable fuels as a way to reduce America’s dependence on foreign oil,” Joy Philippi, immediate past president of the National Pork Producers Council (NPPC) and a producer from Bruning, NE, told the congressional panel. “But we continue to have the jitters over the rapid expansion of the corn-based ethanol industry and the unintended consequences it is having on the U.S. livestock industry. We have concerns over the availability of corn to feed our pigs.” The pork industry used 1.1 billion bushels of corn in 2006 and has seen feed costs rise to about $65 per pig compared to $35 per pig last year.
Others testifying about the impact of the high corn costs included Matthew Herman, manager of a Tyson Foods chicken production and processing complex in Monroe, NC, on behalf of the National Chicken Council and North Carolina Poultry Federation. He said animal agriculture has survived high feed prices in the past, but those were temporary conditions caused by weather or other problems. The high prices facing the livestock industry now are caused by ethanol subsidies and mandates set by law, Herman stated.
American Meat Institute President J. Patrick Boyle also testified before the House agriculture committee, urging Congress to take four key actions to mitigate the impact of dramatically increased corn demand:
• Expand research in ethanol by-product safety, quality, and usability and renewable energy technologies;
• Establish equity of incentives for all renewable energy including renewable diesel and methane conversion;
• Support a working lands conservation program to encourage environmentally friendly feedstuffs production; and
• Expose consumers to more renewable fuels by allowing the 54-cent per gallon tariff on imported ethanol to expire in 2008.
All three livestock groups are also calling on Congress not to renew a 51-cent per gallon ethanol blender’s tax credit that expires December 31, 2010.
“We believe that these credits have served a valuable purpose,” said NCBA’s Morales. “But at a projected annual production level of somewhere between 12 and 15 billion gallons, it is clear that this [ethanol] is no longer a fledgling industry.” The groups also support the incremental early release – without penalty – by USDA of Conservation Reserve Program acres back into cropland to boost corn production.
“We also believe that other renewable fuel sources, such as cellulosic feedstocks for ethanol, hold great promise,” Morales testified. “And we continue to support the use of animal fats and oils in the production of biodiesel as we also see this as a way to decrease our energy dependence by utilizing what has traditionally been a waste product.”
According to NCBA, cattle producers are looking to alternative feed sources such as distillers grains, a co-product of ethanol-based corn production. While cattle can utilize some distillers grains in feed, Morales said some cattle don’t perform as well on distillers grains as they do when fed a higher concentration of corn. In addition, distillers grains aren’t easily transportable to all cattle operations.
The NPPC is urging the federal government to appropriate funds for research on the use of biofuels co-products for swine feed rations and for research on swine utilization of distillers dried grains with solubles and their impact on meat quality and animal health.
Newsline - April 2007 Render