Forecasts for the lowest corn production since 2006 indicate a looming crisis ahead for US livestock producers if the federal ethanol mandate is not waived, warned the American Meat Institute.
US 2012 corn production was forecast at 10,778,589,000 bushels, down 13 percent from 12,358,412,000 bushels in 2011, the US Department of Agriculture (USDA) said in its Aug. 10 Crop Production report.
If realized, corn production would be the lowest since 10,531,123,000 bushels in 2006, the USDA said.
It was the first USDA survey-based forecast of the season for corn, soybeans and other row crops.
“These numbers highlight the crisis faced by livestock and poultry producers in simply trying to feed their animals," said J. Patrick Boyle, AMI president.
"The report makes a waiver of the Renewable Fuel Standard [RFS] ethanol mandate, which is exacerbating corn demand and prices, even more urgent.”
“Last week, we joined a coalition in calling upon the US Environmental Protection Agency [EPA] administrator to waive the Renewable Fuel Standard ethanol mandate,” Boyle said.
“While we can’t force the skies to respond with rain, the government has the power to act immediately to ease pressure on corn by waiving the RFS.”
The governors of Maryland and Delaware are the latest political figures to enter the debate.
Gov. Martin O’Malley (D-Md.) and Gov. Jack Markell (D-Del.) petitioned EPA Administrator Lisa Jackson to exercise her statutory authority to waive the RFS for 2013.
“While there may be some who question the true price impact of waiving the RFS standards for a limited period, those debates are quantitative, not qualitative, as it is not in dispute that a waiver would put downward pressure on corn pricing,” the letter stated.
“Given the likely impacts to the poultry industry, not to mention the increased cost of food for consumers, of this dramatic increase in price due to the undersupply of corn, it is hard to imagine any scenario when exercising your authority would be more appropriate.”
The National Turkey Federation and the National Chicken Council offered strong support for an immediate waiver.
"This historic drought increases the likelihood that poultry companies will end up paying more than $9.50 per bushel throughout the 2012-13 crop year to meet their feed needs, translating into billions of dollars in added costs for poultry producers," the groups said.
"These additional costs will either be passed on to consumers through increased food prices, or poultry farmers will be forced out of business."
Members of Congress joined the effort to get EPA to issue a waiver to the RFS when a bipartisan group of 156 US Representatives and 25 US Senators wrote letters to EPA Administrator Lisa Jackson urging the agency to adjust the ethanol mandate.
However, advocates from the ethanol industry and some agricultural organizations are organizing opposition to any changes to the RFS.
The Global Renewable Fuels Alliance (GRFA), responding to comments by the United Nations’ Jose Graziano da Silva in which he called for an easing of US ethanol mandates, said such a move would be premature.
“While the current drought in the US Midwest has placed tremendous pressure on farmers, any action to reduce or eliminate the RFS would be premature and have immediate consequences in lost jobs and an increased reliance on crude oil imports," GRFA said.
"The flexibility of the RFS and the market are the most effective way of reducing demand for corn during these difficult times.
Already we have seen US ethanol production curtailed by 14 percent this year while refiners are sitting on 2.6 billion RFS credits that can be used to meet their compliance obligations.
This market flexibility combined with large ethanol stocks makes the waiver of the US RFS unnecessary."
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