As the federal government is set to lower the Renewable Fuels Standard for this year, the nation’s largest chicken industry organization says the policy has resulted in more than $44 billion in higher feed costs to producers since 2007.
The National Chicken Council asserts that chicken producers have been unable to step up production this year to their annual average because of rippling effects from the federal ethanol policy and that consumers are paying the price.
Bill Roenigk, the NCC’s senior vice president and economist, told a congressional subcommittee recently that the federal policy of diverting part of the corn supply to ethanol is “broken beyond repair.”
“I don’t think any of us had the foresight to know what would be happening in 2014” when the program began seven years ago, Roenigk said in an interview. He said higher feed costs have since caused 14 chicken companies to go bankrupt, go out of business or be sold to foreign owners.
“We’re not opposed to ethanol,” he said. “We’re opposed to government mandating a certain number every year … even when there’s not enough corn to go around.”
His remarks come as the U.S. Environmental Protection Agency has proposed to reduce the 2014 quotas for producing biofuels to be blended into gasoline and diesel fuel. The agency is considering setting the quota for both ethanol and non-ethanol fuels at 15.21 billion gallons for the year rather than the more than 18 billion gallons called for in the law.
In its proposal, the EPA explains that it has been difficult to incorporate increasing amounts of ethanol into the fuel supply even though the agency boosted the amount of ethanol allowed in gasoline from 10 percent to 15 percent in newer cars in 2011. Moreover, gasoline consumption in the U.S. is lower than was anticipated when the law was enacted, the agency notes.
EPA administrator Gina McCarthy is expected to make a final determination next month.
The proposal isn’t sitting well with ethanol advocates, including nearly three dozen advanced biofuels companies that sent a letter last week urging President Barack Obama to rethink the way the government determines blend quotas.
The companies, aided by the Advanced Ethanol Council and Biotechnology Industry Organization, wrote that they “invested billions of dollars in the development and commercial deployment of ultra-low carbon biofuels” based on the expectation that the RFS would “create a market for our fuels.”
Animal agriculture groups have long targeted ethanol subsidies and mandates, which they blame for artificially driving up the price of corn, which is a main ingredient of the alternative fuel. Industry insiders have complained that as much as 40 percent of the nation’s corn supply in a given year is diverted to ethanol production. However, U.S. corn futures have been on a downward trend in the past month as periods of warm, dry weather are facilitating planting, Reuters has reported.
The American Farm Bureau Federation has joined Midwestern corn growers in defending federal ethanol policies, touting ethanol’s value as a clean fuel produced domestically. However, a study published recently in the journal Nature Climate Change concludes that biofuels made with corn residue release 7 percent more greenhouse gases in the early years compared with conventional gasoline.
Last fall, 169 U.S. House of Representatives members urged the EPA in a letter to lower the ethanol mandate for 2014. Rep. Bob Goodlatte, R-Va., and others have introduced legislation this year to eliminate corn-based ethanol requirements, cap the ethanol blend in gasoline at 10 percent and require the EPA to set cellulosic biofuels levels at production levels.
The legislation has 59 cosponsors and is supported by some 50 outside groups, although it isn’t expected to get far in an election year.
As for the RFS for 2014, Roenigk expects McCarthy to arrive at some sort of compromise. But he said even a compromise would be a step in the right direction.
“I think you’d see a couple of editorials that said while Washington may not be able to function (on most issues), at least on this issue it appears that Washington was able to function,” he said.
National Chicken Council: http://www.nationalchickencouncil.org
EPA 2014 Renewable Fuel Standards proposal: http://www.epa.gov/otaq/fuels/renewablefuels/documents/420f13048.pdf
Advanced biofuels industry letter to President Obama: http://advancedethanol.net