Pork Producers Have ‘Jitters’ Over Corn-Based Ethanol

WASHINGTON, D.C. - Citing concerns about the availability of corn to feed pigs, the National Pork Producers Council today asked Congress to let an ethanol tax credit and a tariff on imported ethanol expire and to allow conservation lands to go back into crop production. The organization testified before the House Agriculture Subcommittee on Livestock and Horticulture on the impact of the rapid expansion of the ethanol sector on the livestock industry.
calendar icon 9 March 2007
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“U.S. pork producers support the development and use of alternative and renewable fuels as a way to reduce America’s dependence on foreign oil,” Joy Philippi, immediate past president of NPPC and a producer from Bruning, Neb., told the congressional panel, “but we continue to have the jitters over the rapid expansion of the corn-based ethanol industry and the unintended consequences it is having on the U.S. livestock industry. We have concerns about the availability of corn to feed our pigs.”

NPPC told the subcommittee that some projections show the ethanol industry using 10 billion bushels of corn by 2010. The U.S. produced 10.75 billion bushels last year, and the livestock industry alone used more than 6 billion of that. (Pork used 1.1 billion bushels.)

Corn availability concerns prompted pork producers at NPPC’s recently concluded annual business meeting to approve several resolutions related to ethanol, including supporting the incremental early release – without penalty – by USDA of Conservation Reserve Program acres back into crop land to boost corn production and allowing the 51-cent per gallon ethanol blender’s tax credit and the 54-cent tariff on imported ethanol to expire. The blender’s credit is set to expire Dec. 31, 2010; the import tariff Dec. 31, 2008.

Those subsidies have allowed the ethanol industry to bid up the price of corn, which now is going for more than $4 a bushel, up from about $2 last summer. With soybean prices chasing corn prices, pork producers’ production costs have risen dramatically in the past year – feed costs are now about $65 per pig compared with $35 last year; overall production costs have risen 30 percent.

The pork industry will adjust to changing costs and corn availability constraints, said NPPC in its testimony, citing a study by Iowa State University’s Center for Agricultural and Rural Development (CARD) that shows that pork production will need to decline by 10 to 15 percent to allow the industry to recoup higher production costs. CARD also estimates that a 30 percent production-cost increase will raise retail prices for pork, beef, dairy and chicken by 7.5 percent.

“We want a level playing field to compete for corn,” Philippi told the subcommittee. “And we will work with Congress to craft a free-market-based bio-fuels policy that will ensure the fuel, food and feed security of our country.”

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