National Turkey Federation President Tells Congress Economy Can Avoid Economic Danger from Renewable Fuels Driving Record High Corn Costs

June 5, 2013

National Turkey Federation President Joel Brandenberger today told the House Oversight Subcommittee on Energy Policy that EPA’s failed management of the Renewable Fuel Standard (RFS) waiver process has distorted feed costs for turkey, livestock and all poultry producers. Ultimately, Brandenberger told the subcommittee, that distortion has unnecessarily increased the prices consumers pay for food at restaurants and grocery stores.

“While the government cannot control the weather or almost any other factor that can come to bear on the U.S. corn supply, it fortunately has one tool still available that has the potential to directly impact corn demand,” said Brandenberger. “By adjusting the normally rigid RFS mandate down to align with current market conditions, the federal government can help avoid dangerous economic situations caused by the prolonged record high cost of corn.”

When Congress enacted the expanded RFS in the Energy Independence and Security Act of 2007, it granted EPA the authority to waive all or part of the RFS, if economic circumstances permit. States have petitioned the EPA for such a waiver in 2008 and again last year. Both times, EPA has denied the request. 

“The RFS has destabilized corn and ethanol prices by offering an almost risk-free demand volume guarantee to the corn-based ethanol industry,” said Brandenberger. “Domestic and export corn users other than ethanol producers have been forced to bear a disproportionate share of market and price risk. Ethanol prices should reflect the fuel’s energy value relative to gasoline, not a corn price that is both inflated and destabilized by the inflexible RFS.”

“As corn is syphoned off to ethanol, animal agriculture is losing jobs in rural America,” said Brandenberger.  Job creation in the livestock and poultry industry has been substantially reduced by the diversion of corn to ethanol production. Almost 1 million potential food sector jobs that could have been created from 2007 to 2011 were not.

·         When the first RFS was created in the 2005 Energy Bill, livestock and poultry were consuming more than 6.1 billion bushels of corn, or about 55.2 percent of the crop.  Back then, ethanol used 1.6 billion bushels and that amounted to 14.4 percent of the corn crop.

 

·         Today, livestock and poultry consume about 4.4 million bushels, or 40.8 percent of the crop.  Ethanol today consumes 4.6 billion bushels of corn: 42.7 percent of all the corn produced in the country.  On top of that, corn stocks are at near-record lows and corn prices at near-record highs.

 

·         Turkey production, which was on the rise in 2006, began plummeting by 2008 and still remains almost 10 percent below its 10-year high. 

The RFS was created by Congress in 2005 to mandate the required minimum amount of renewable fuel blended into motor fuels ann­ually.  In 2007, Congress increased the RFS significantly and added biodiesel, while permitting the EPA to govern implementation of the congressional mandate. Current U.S. biofuels policy contains escalating corn-based ethanol blending requirements that do not automatically adjust to energy and corn market realities.  

Brandenberger concluded his statement to the subcommittee by noting, “We are paying the price now; ultimately everyone will end up paying more for this ill-conceived government policy.”

The National Turkey Federation has posted a copy of Joel Brandenberger’s written testimony.

About NTF:  NTF is the national advocate for all segments of the $29.5 billion turkey industry—providing services and conducting activities to increase demand and raise awareness for its members' products, while strengthening their ability to profitably and safely deliver wholesome, high-quality, and nutritious food to consumers worldwide.  Visit our website on www.eatturkey.com, ‘follow us’ on Twitter and ‘like us’ on Facebook