NPPC Urges RFS Waiver

WASHINGTON, D.C. - With rising pressures on this year’s corn crop, which now have been ratcheted up because of flooding in the Midwest, and the prospect of significant numbers of pork producers going out of business from the resulting higher feed costs, the National Pork Producers Council today called for the federally-mandated target for corn-based ethanol production to be cut in half.
calendar icon 24 June 2008
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In comments submitted to the U.S. Environmental Protection Agency, NPPC urged that the state of Texas be granted a waiver of the Renewable Fuels Standard (RFS) and that the amount of biofuels – ethanol is the only viable biofuel – that must be produced in 2008 be reduced to 4.5 billion gallons from 9 billion gallons. EPA must make a decision on the waiver requested by Gov. Rick Perry by July 24.

"The U.S. government’s intervention in grain markets, through the RFS, has created one of the most severe economic crises to ever hit pork producers."
NPPC President Bryan Black

Pork producers have been feeling the pinch of higher prices for feed, which accounts for 70 percent of the cost of raising a hog. Feed grain prices already were increasing starting in the summer of 2006 because of the rapid rise in ethanol production. Since then, increased global demand for crops, drought conditions in parts of the world and the RFS requirement have fueled even higher grain prices. (A bushel of corn for July delivery now is selling for more than $7 compared with about $2.60 in July 2006.) From September 2007 to April 2008, corn prices rose 124 percent and soybean meal prices went up 94 percent. During that time, pork producers lost an average of $30 on each hog marketed.

“The U.S. government’s intervention in grain markets, through the RFS, has created one of the most severe economic crises to ever hit pork producers,“ said NPPC President Bryan Black, a producer from Canal Winchester, Ohio. “The impact for the pork industry and its customers will be devastating as herds are culled, producers go out of business and pork prices skyrocket.“

Making matters worse are the recent flooding in much of the Heartland and delayed plantings because of a cool, wet spring, which have pushed corn yield forecasts significantly below earlier projections. USDA recently reduced to 149 bushels from 154 bushels its estimated average yield per acre. That expected shortfall along with a mandated 38 percent increase in ethanol production over last year has producers very concerned about having physical access to corn to feed their livestock, pointed out NPPC in its comments to EPA.

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