Due to rising pressures on this year’s corn crop, squeezed even more from recent Midwest floods, and the chance that large numbers of pork producers could exit the business from the resulting rise in feed prices, the National Pork Producers Council (NPPC) today called for the federally-mandated target for corn-based ethanol production be cut in half.
In comments submitted to the U.S. Environmental Protection Agency (EPA), NPPC supported a request by Texas Governor Rick Perry urging that the agency grant a waiver of the Renewable Fuels Standard (RFS). That waiver would reduce the amount of biofuels produced in 2008 from 9 billion gallons to 4.5 billion gallons. Ethanol is the only viable biofuel.
EPA must rule on the waiver request by July 24.
Feedgrain prices already were on the rise in the summer of 2006, caused in part by the rapid rise in ethanol production. In the meantime, increased global appetite for crops, drought conditions in parts of the world and the RFS requirement have combined to push grain prices even higher. A bushel of corn for July delivery now is selling for over $7, compared with about $2.60 in July 2006.
From September 2007 to April 2008, corn prices rose 124% and soybean meal prices climbed 94%. 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,” declares NPPC President Bryan Black, a pork producer from Canal Winchester, OH. “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.”
Compounding matters are recent floods in the Corn Belt and delayed plantings due to the cool, wet spring that have combined to significantly drop USDA corn yield forecasts. The latest prediction is 149 bu./acre, down from 154 bu./acre.
NPPC says the expected shortfall, along with a mandated 38% increase in ethanol production over last year, has pork producers very concerned about gaining physical access to corn to feed their livestock.
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