No doubt about it: ethanol mandates hit food producers hard

What’s behind this financial bleed? The Renewable Fuel Standard (RFS), the federal policy—being debated in Congress today — forcing more and more corn out of the feed market and into ethanol for gas tanks, despite the utter lack of consumer demand for higher ethanol blends. The policy’s ever-growing list of unforeseen ramifications is devastating American food producers and hitting consumers square in the pocketbook.

Though renewable fuels are important to our nation’s energy mix, the favoritism bestowed upon ethanol is not only curtailing other renewable alternatives competing for growth dollars, but also distorting markets for corn—the primary ingredient in poultry, dairy, cattle and hog feed. By guaranteeing corn demand, the RFS has pushed prices for the grain so high that even lower-energy, lower-nutrient feed from dried distiller grains (DDGs)—which return a portion of the corn used for ethanol production back to the animal-feed market—is needed to provide a bit of relief from the high feed prices. Since October 2006 and through July 2013, poultry producers alone have had to bear the burden of higher feed costs totaling over $50 billion.

But DDGs are, at best, a meager attempt to alleviate the damage done by the RFS.

Poultry producers, like others in animal agriculture, are mindful of their limited resources and consistently seek to employ the most sustainable and economical methods of raising animals. As such, when DDGs became more readily available in 2007, chicken producers added some DDGs to feed rations to determine the effect on efficiency and meat quality—but more so to find an alternative to high-priced corn.

However, chicken feed rations require high energy and high protein. The majority of the feed energy in DDGs is removed by the ethanol manufacturing process, and corn’s protein component is damaged by the heat in the drying process. These deficiencies, along with poor amino acid balance, variability of quality and composition, and digestibility issues, keep chicken farmers from using DDGs to make up more than 5 percent of the chicken feed ration.  Simply put, DDGs have the oil squeezed out, so they contribute extremely little energy to the feed ration, which is vital for birds’ diets.

And this lesser feed is not coming at the discount that corn farmers and the ethanol industry would have you believe. Though DDGs provide a 25 percent “savings” compared to corn feed, that discount is nullified when considering the 275 percent spike in overall corn prices brought on by the RFS. Think of it as a grocery store raising prices by a couple of dollars then trying to win you over with a 50-cent coupon.

While chicken producers can do their best to absorb high corn prices, the price volatility is dealing a fatal blow to poultry businesses. Dairies have been hard-hit as well; last year, California, one of the nation’s top dairy-producing states, lost 100 farms due to high feed prices and unmanageable production costs.

The danger of the RFS and the price volatility it facilitates were made overwhelmingly apparent last year as a drought swept across the nation. The RFS monopolized 40 percent of the corn crop for use in ethanol—never mind how many corn fields dried up and how much food and feed prices increased. The drought taught the rest of America what we know all too well: our nation’s crops are always susceptible to unpredictable weather. So why has our government voluntarily placed yet another strain on our limited resources?

DDGs, while indeed returning some corn to the feed supply, are neither a justification nor the remedy for the damage the RFS inflicts on the poultry industry. We’re already up against the weather; now the RFS has us contending with fuel suppliers for increasingly expensive corn.

Our leaders must scrap the RFS and let the free market decide whether corn should go to food or to fuel. Until they do, all America’s poultry and livestock producers can do is pray that optimum weather conditions for producing corn and competing crops will be the norm every year. Recent history has certainly proven otherwise.

Brown is president of the National Chicken Council.

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