By Julian Hattem - 11/28/13 07:30 AM EST
Turkey farmers’ feathers are being ruffled by a federal biofuel mandate they say is increasing the cost of the corn they feed their birds and making it harder for them to turn a profit.
Corn that should be going to feed their turkeys is being diverted to produce ethanol, according to the National Turkey Federation, which is increasing corn prices across the board.
“There’s got to be more of a cost that is passed along somehow,” Keith Williams, a spokesman with the trade group, told The Hill. “That’s going to go to the consumer. It’s increasing the food cost.”
The Renewable Fuel Standard (RFS) calls for petroleum refiners to mix a certain amount of biofuel like ethanol, which is made from corn, in with conventional gasoline. Congress created the program in 2005 to reduce the country's dependence on foreign oil, combat climate change and expand the nation's renewable fuels sector.
Proponents of ethanol, which has been one of the largest beneficiaries of the program, say that the $5.4 billion turkey industry is exaggerating the effect the fuel standard has on corn prices.
“The turkey guys are selling a bunch of bologna, no kidding,” said Geoff Cooper, the vice president of research and analysis with the Renewable Fuels Association.
He noted that corn prices are lower than they were last year, when a massive drought hurt crops and drove up food prices. Now corn prices have fallen to a three-year low, thanks in part to a record harvest.
“We kind of expected that all this grousing from the poultry industry would stop when we’ve got this record crop harvested and saw corn prices come down, and yet they keep on beating the drum,” he said.
But turkey companies are “still feeding off of last year’s corn,” Williams said, which he claims was artificially made more expensive by the fuel standard.
The price of turkey feed accounts for about 70 percent of each bird’s cost.
According to estimates from the agricultural economist Thomas Elam, who has spoken on behalf of the poultry industry, feed costs for turkey producers have risen by $1.9 billion since the fuel standard was enacted.
High corn prices might not necessarily mean a higher sticker price at the supermarket, though, because turkey prices are often set as a way to draw in shoppers, Williams said.
“Looking at the prices is not really reflective of it because it’s used as something to bring people into the store,” he said.
A study conducted by PriceWaterhouseCoopers for the National Council of Chain Restaurants, however, found that the program’s impact on corn prices could cost restaurant owners as much as $3.2 billion per year by 2015.
Anti-hunger organizations like Oxfam America have also accused the program of contributing to spiking food prices.
Ethanol backers disagree with those charges.
The Renewable Fuels Association has released its own study that found “no direct correlation” between the fuel rules and increases in food prices.
Biofuel refiners only use part of the corn kernel, according to Michael Frohlich, a spokesman with the ethanol trade group Growth Energy, and the most nutritious part is returned to the food chain.
“When you produce ethanol you’re producing food and fuel,” he said. “We have a direct co-product that’s produced that is a high-protein, high-value animal feed.”
The Environmental Protection Agency issues fuel standards annually.
Earlier in November, the agency proposed a dramatic cut to the standard, rolling back the requirement for ethanol for the first time in the program's history.
Turkey producers say that’s a start, but permanent action has to come from Congress, which created the fuel standard in the first place.
“We hope that they will certainly look beyond just this year and look at the ways in which this needs to be changed, and that’s going to be something Congress is going to have to do,” Williams said. “There are enough people in Congress who have raised questions about reform, if not repeal, of the RFS.”