Two articles Re Ethanol and rising costs: Industry Groups: Drop Ethanol Tax Credit, Protective Tariff
By Pork news source | Friday, April 30, 2010
The American Meat Institute, joined by national industry trade associations including the National Pork Producers Council, the National Turkey Federation, the National Chicken Council and the National Cattlemen’s Beef Association, urged the House Ways and Means Committee on Wednesday to allow a tax credit and a protective tariff for ethanol to expire at the end of this year.
“Although we support the need to advance renewable and alternative sources of energy, we strongly believe that it is time that the mature corn-based ethanol industry operates on a level playing field with other commodities that rely on corn as their major input,” the groups wrote in a letter to Congressmen Sander Levin of Michigan and Dave Camp of Michigan, chairman and ranking Republican members, respectively, of the tax-writing committee.
The letter notes serious concerns over the negative economic effects that government support for corn-ethanol has had on animal agriculture, specifically the Volumetric Ethanol Excise Tax Credit and the import tariff on foreign ethanol.
“The blender’s tax credit, coupled with the import tariff on foreign ethanol, has distorted the corn market, increased the cost of feeding animals, and squeezed production margins -- resulting in job losses and bankruptcies in rural communities across America,” the letter reads.
The letter notes that the Congressional Research Service stated that the dramatic increase in livestock production costs were attributed to higher costs for feed.
“There is no safety net to protect against the volatility in the commodity markets, forcing all industries to pay higher prices for input costs due to the fluctuations in the corn market,” the letter states.
The letter points to significant hardships suffered by the agriculture industry:
A decrease in turkeys raised of more than 6 percent since? 2007 levels and a near 9 percent reduction from 2008 levels – to adjust to these increased input costs. More importantly, the turkey industry eliminated nearly 3,000 jobs vital to rural America in 2008 and 2009 alone.
Total? losses for the pork industry amounted to more than $6.2 billion and average farrow-to-finish operations lost nearly $23 for each animal marketed from October 2007 through January 2010.
A record $7 billion lost by the? cattle feeding sector of the beef industry from December 2007 to February 2010.
A cumulative additional cost on the broiler industry of $15? billion since corn prices began their rise in the fall of 2006. This additional cost does not include the higher cost of other feed ingredients, such as soybean meal, whose prices tend to move in tandem with corn. Accordingly, broiler companies have suffered reduced profitability.
The letter ends by reminding the committee that animal agriculture is united in its support for energy independence and the development of the renewable fuels industry.
“However, 30 years of support has created a mature corn ethanol industry that now needs to compete fairly in the marketplace and allow for the next generation of renewable fuels to grow,” the letter concludes.
Read a copy of the letter.
Source: AMI
porkmag.com
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Meat Prices Likely to Rise
This summer, pork and beef will cost more due to herd reductions linked to surging feed costs caused by more demand for ethanol.
Posted: Apr 28, 2010
CHICAGO – The demand for more ethanol has caused feed costs to soar, resulting in farmers downsizing hog and cattle herds. Because of that, U.S. meat prices will probably reach record highs this summer, Bloomberg News reports.
This month, wholesale pork prices leaped 25 percent to 90.68 cents last week, according to U.S. Department of Agriculture (USDA) data. Beef jumped 22 percent this year to reach $1.69 per pound last week, the highest price since July 2008. In March, chicken gained the most in 20 months.
With the improving economy, grilling season resuming, and Russia and China letting in more U.S. imports, demand for chicken breasts, pork chops and steaks is growing. However, domestic meat supplies could fall to a 13-year low because of high corn prices, which caused ranchers to trim herds.
“Ethanol-induced prices in meat are just now getting to the marketplace,” said Steve Meyer, the president of Paragon Economics. “Consumers are going to see the highest prices they’ve ever paid in meat and poultry because of the decisions made to make corn into ethanol.”
Ethanol producers point to “wild speculation in the markets and the surge of index funds” and not an increase in corn use for fuel as the reason for higher meat prices, said Chris Thorne, a spokesman for Growth Energy.
Experts predict retail prices could reach record levels during the next three months with the summer grilling season. Meat prices rose 5 percent this year, while food costs dropped 5.8 percent.
However, grocery stores have not been passing along those costs to consumers, said Meyer. Last month, retail beef on average experienced little change from the pervious year.
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