The Civil War pitted brother against brother and fathers against sons and tensions are getting similarly heated as agriculture works through the wrenching drought. With feed prices high and supplies scarce, livestock organizations have taken an official position to unwind part of the Renewable Fuels Standard the corn industry used to build the ethanol market. Putting the livestock industry at opposite ends with corn growers is akin to a civil war in agriculture. Unfortunately, the philosophical differences are not just separating farm organizations, but challenging individuals to fight within their own emotions.
The action came within the US Environmental Protection Agency, which administers the Renewable Fuels Standard that determines how much ethanol is needed for the nation’s motor fuel supply. Since its establishment 5 years ago, the volume has been ratcheted upward. For 2012, 13.2 billion gallons are mandated, with 13.8 billion in 2013. To refine that much ethanol, it will take 4.7 billion bushels of corn this year and 4.8 billion next year.
Contending that will take too much corn away from the market in a year of short supplies, 17 livestock groups petitioned the EPA to either waive or partially waive the requirement until there is a better supply of corn. The petition states, “The drought-induced reductions in the corn supply means that the mandated utilization of corn for renewable fuels will so reduce the supply of corn and increase its price that livestock and poultry producers will be forced to reduce the size of their herds and flocks, causing some to go out of business and jobs to be lost. In addition to this direct harm, these herd and flock reductions will ripple through the meat, milk and poultry sectors, causing severe harm in the form of more job and economic losses. This drought-induced harm exists now, will continue to exist into the latter part of 2012 and 2013, and could continue to be felt in 2014 depending on the policy choices made now.”
The livestock, meat, and dairy groups are not only concerned about the availability of supplies, but also the price of corn, which they say will rise more than normally because of the RFS mandate, “At a yield of 156 bushels per acre, the mandate increases the price of corn by approximately 80 cents, while at 135 bushels per acre, the effect of the mandate alone is over $2.50 per bushel.” The petition adds, “For those who produce pork, beef, milk, and poultry, this represents a dire outcome. Prices for feed have risen substantially and will likely rise further. In some regions, feed availability will be substantially disrupted, forcing long distance shipping and challenges in financing its acquisition.”