US Chicken Organisation Calls for Ethanol Limits to Protect Feed Prices

US - The US' chicken industry is supporting adjustment of target levels of biofuels to be included in transportation fuel, with the National Chicken Council (NCC) saying the standards distort feed prices.
calendar icon 29 July 2015
clock icon 3 minute read

The US' Renewable Fuel Standard (RFS) sets the minimum amount of renewable fuel, such as ethanol, that should be included in transportation fuel, with the target due to reach nearly 10 per cent in 2016.

Congress also set a 15 billion gallon cap on corn ethanol under the RFS, to prevent ethanol production from diverting too great a volume of corn from the feed, food, seed, and industrial market for energy.

With the increased required volume obligation for 2016 proposed at 14 billion gallons, and the projected trend in ethanol exports, the NCC said that conventional corn ethanol production will likely exceed 15 billion gallons in 2016.

Whilst supporting recent target adjustments, the NCC's President Mike Brown said: “NCC would, however, support further reductions in the target level for conventional biofuels for 2015 and 2016 to account for the distorting effects the RFS has on the market for corn, substitute feed products, chicken prices, and food prices in general.”

Mr Brown wrote to the US' Environmental Protection Agency (EPA) Administrator McCarthy that the use of corn for ethanol has created an uneven playing field for chicken producers.

Since the RFS was enacted in 2007, chicken producers have faced more than $50 billion higher in feed costs due to the RFS, he wrote.

“With both increased required volume obligations in 2015 and 2016, as well as increased ethanol exports, the US chicken industry is again only one supply shock, flood or drought, away from high volatile corn prices as in 2009 and 2012.

"Where chicken producers have to adjust production and limit flocks due to corn prices, the RFS protects ethanol producers from having to make the same type of adjustment,” Mr Brown said.

Additionally, Mr Brown said that ethanol exports are supported by the RFS and diverting more corn from the feed market, which was not foreseen when the law was made in 2007.

Through the first five months of 2015, ethanol exports are on pace to exceed 900 million gallons, which would represent more than 320 million bushels of corn diverted from the feed market in addition to that diverted by the domestic supply of ethanol.

“EPA’s implementation of the RFS to date has resulted in a programme that has departed from the underpinning statutory purposes,” Mr Brown continued. “It is now all the more critical that EPA adopt appropriate standards in the present proposed rulemaking.

“NCC recommends a significant reduction in the 2016 required volume obligations sufficient to bring the conventional corn ethanol volume below the 10 per cent blend wall.”

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