Poultry and Meat Trade Groups Tell EPA Agricultural Commodity Prices are Substantially Underestimated in Proposed Renewable Fuel Standard Program

October 24, 2012
Washington, D.C.
FOR IMMEDIATE RELEASE CONTACT: Sherrie Rosenblatt, National Turkey Federation 202-898-0100 ext. 7227 srosenblatt@turkeyfed.org Dave Ray, American Meat Institute 202-587-4243 DRay@meatami.com In comments submitted today to the Environmental Protection Agency (EPA), poultry and meat trade groups sharply criticized EPA’s proposed changes to the Renewable Fuel Standard (RFS), citing inadequate analysis of the proposed rule’s impact on agricultural commodity prices. National Turkey Federation, National Chicken Council, American Meat Institute and FarmEcon LLC noted in the comments that EPA’s proposed regulations have not considered the risks associated with variability of grain crop or other biomass production. This would have serious consequences on food and fuel production costs in years of reduced crop production. Increased reliance on biofuels would likely increase the instability of U.S. fuel supplies even if the reliance on imported oil is decreased. “Increasing the level of biofuel production in the current RFS has already resulted in a strong link between energy prices and agriculture prices,” the comments noted. “Energy prices are highly volatile, and the link between that volatility and increased volatility of agriculture commodity prices has become a major issue facing commodity producers and users.” That volatility has very real consequences for food producers that go beyond the increased cost levels already seen. The comments explain that until EPA performs a risk assessment that takes into account not only average prices, but also variations around average prices, the real costs of the RFS are unknown. “Not only is the turkey industry asking that EPA make an attempt to minimize the impact on our growers and producers, but we also are asking the government to realistically consider the impact on the American consumer,” said Joel Brandenberger, NTF’s president. “The proposed RFS program poses severe consequences for the U.S. food supply.” AMI’s President and CEO J. Patrick Boyle noted that increasing the RFS would divert even more animal feed into this nation’s fuel tanks and put continued upward pressure on corn prices. “Further increasing the RFS will have a direct impact on the ability of livestock and poultry producers to effectively predict future annual budgets and costs due to volatility in the markets because feed is the largest single input cost associated with raising food producing animals,” said Boyle. “The net result is further disruption in the meat and poultry business and higher food prices for consumers,” he added. According to Farm Econ LLC, if the RFS is increased to 20 billion gallons of grain-based ethanol per year, consumers could see almost a 5 percent increase in average food costs. This estimate is based on $3,778 in food spending per capita. The impact on retail food costs as a result of higher farm commodity prices was clearly evident in 2008. Last year, one of substantial increases in grain and soybean prices, the Consumer Price Index for food increased by 5.9 percent. The comments also recommended that EPA and USDA adopt a policy that outlines a set of rules for adjusting the RFS downward in the event of a crop shortfall. The set of transparent rules would serve as a safety net and would offer all concerned parties a degree of certainty for planning production adjustments in time of lower crop supplies. Finally, the federation’s comments address EPA’s assumption that grain-based ethanol production be limited to 15 billion gallons from cornstarch. “At a minimum, it is likely that the 5 billion gallon Advanced BioFuels RFS could be made, at least in part, using grain feedstocks other than cornstarch,” the comments stated. As a result, the impact on grain prices, along with food and fuel production costs would be higher than initially proposed. The comments recommend a final set of regulations that tightly constrain the use of grains for ethanol production in excess of 15 billion gallons per year. The RFS is a program created by Congress in 2005 that mandates the minimum amount of renewable fuel – almost exclusively corn-based ethanol at this point – that must be blended into motor fuels each year. Congress in 2007 increased the RFS significantly, and EPA’s proposed rule is intended to govern implementation of the congressional mandate. ### About the National Turkey Federation The National Turkey Federation (NTF) is the national advocate for all segments of the $14 billion turkey industry, providing services and conducting activities that increase demand for its members' products by protecting and enhancing their ability to profitably provide wholesome, high-quality, nutritious products. Its award-winning web site, EatTurkey.com, offers consumers, food professionals and the media an extensive library of information including healthy eating and restaurant trends, turkey cuts and purchasing tips, turkey nutrition and cooking techniques, and turkey facts and trivia. Additionally, the site presents a searchable database of more than 1,800 recipes, offers a recipe E-mail program and provides special seasonal and holiday ideas. NTF is headquartered in Washington, D.C. About the National Chicken Council The National Chicken Council represents integrated chicken producer-processors, the companies that produce and process chickens. Member companies of NCC account for approximately 95 percent of the chicken sold in the United States. About the American Meat Institute The American Meat Institute (AMI) represents the interests of packers and processors of beef, pork, lamb, veal and turkey products and their suppliers throughout North America. Together, AMI's members produce 95 percent of the beef, pork, lamb and veal products and 70 percent of the turkey products in the United States. The Institute provides legislative, regulatory, public relations, technical, scientific and educational services to the meat and poultry packing and processing industry.