Several organizations have told the Environmental Protection Agency (EPA) they oppose any increase to the ethanol blend percentage in gasoline.
Both the National Cattlemen’s Beef Association and the American Meat Institute have urged the EPA to deny a petition that would allow the use of so-called “mid-level ethanol blends” (blends above 10 percent ethanol, such as E15 or E20) in commerce.
NCBA submitted comments to the EPA this week, and Kristina Butts, NCBA manager for legislative affairs said, “Changes made to the ethanol blend percentage will impact all industries that rely on corn, not just the ethanol industry. Before considering raising the blend percentage, the government should first take a serious look at how it would affect corn and cattle markets, and whether corn production would be able to keep pace with a higher mandate.“
Livestock producers are especially concerned about any impact the increase in ethanol production could have on corn prices. Dramatic increases in corn and feed grain prices last year, along with significant increases in fuel prices, helped create unprecedented financial losses for livestock owners.
NCBA says higher feed costs and economic factors which have negatively impacted beef demand resulted in a record $5.2 billion loss in equity for cattle feeders since January 2008. Cash corn prices during the second week of July last year were $6.30 per bushel, more than double the July 2007 average of $3.12 per bushel. Omaha cash corn prices were reported last week at $2.96 per bushel.
According to the United States Department of Agriculture (USDA) Economic Research Service (ERS), in 2008, feed costs for livestock, poultry and dairy reached a record high of $45.2 billion – an increase of more than $7 billion over 2007 costs. Yet farm gate cattle and calf receipts have essentially remained flat, at between $49 and $50.2 billion during the past five years.
“Cattle producers support an open and free market as the best driver of competition and innovation in all industries, including the renewable energy sector,” said Butts. “Artificially diverting more of the corn crop to ethanol production, without considering the possible negative impacts on other industries is bad public policy.”
Projections show that increasing the blend percentage from 10 to 15% would require an immediate 4.5 billion gallons of ethanol, and would require approximately 1.6 billion bushels of corn—which is nearly equivalent to the amount of corn used by the cattle industry in an entire year.
“Cattle producers support energy independence and the development of the renewable fuels industry,” Butts continued. “What we don’t support are government mandates that disrupt the market and favor one industry at the expense of others. All we’re asking for is a level playing field.”