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Pork Producers Council Favors Altering RFS

Pork Producers Council Favors Altering RFS

National Pork Producers Council says bipartisan legislation to temporarily reduce the federal Renewable Fuel Standard during periods of corn shortage is something the livestock industry needs.

The National Pork Producers Council is headquartered in Des Moines, Iowa. Iowa is the leading state in pork production, corn production and ethanol production. All three of those ag products are very important to the state's economy and Iowa has a big stake in the issue of whether or not ethanol mandates should be modified.

In its weekly newsletter on Oct. 7, the NPPC explained why it supports a bill that last week was introduced in Congress, known as the Renewable Fuels Standard Flexibility Act. The legislation, if it becomes law, would alter the Renewable Fuels Standard or RFS by linking the amount of ethanol required to be used in the U.S. to the U.S. corn supply. The bill is aimed at putting a brake on rising feed costs.

U.S. Representatives Bob Goodlatte, R-Va., and Jim Costa, D-Calif., on October 5 introduced the bi-partisan legislation that would reduce, in the event of a shortage of corn, the Renewable Fuels Standard, which mandates the amount of ethanol that annually must be produced in the United States.

NPPC says a safety-valve is needed for corn users such as livestock industry

The NPPC newsletter says the legislation would provide a "safety valve" for other corn users, such as the livestock industry, based on corn's stocks-to-use ratio, reducing the ethanol mandate by 25% when the ratio is projected to be less than 7% and decreasing it by 50% when the ratio would be 5% or less. USDA projects 2011-2012 corn stocks-to-use ratio at 5.3%, down from 6.9% for 2010-2011 and 13.1% for 2009-2010. The National Pork Producers Council strongly supports the measure known as the Renewable Fuel Standard Flexibility Act of 2011.

NPPC president-elect RC Hunt, a pork producer from Wilson, N.C., participated last week in a press conference on the bill, which has 25 bi-partisan cosponsors. In recent congressional testimony, NPPC said U.S. biofuels policy should take into account weather-induced grain production shortfalls and address how the problems associated with a short crop can be shared equitably among all grain users.

The pork producers organization also said the ethanol industry should bear some of the same risks that pork producers and other corn users bear from market supply and price shock. The ethanol industry is expected to use nearly 40% of the 2011-2012 corn crop, the first time it will exceed the amount used by the livestock and poultry industries. Click here to view the bill.

Report says ethanol has greater impact on economy than previously thought

The NPPC newsletter also notes that a report issued October 4 by the National Research Council (NRC) found that the federal Renewable Fuel Standard (RFS) has "contributed to upward price pressure on agricultural commodities, food and livestock feed since 2007." It also found that the "[livestock] market has experienced increased competition from the biofuels market."

Additionally, the NRC found that while dried distillers grains with solubles (DDGS) -- a byproduct of the ethanol production process that can be fed to livestock -- can alleviate some of the pressure, its use is limited because it impairs "efficient production and the quality of the [livestock] products."

Finally, the NRC found that it is highly unlikely that the ethanol industry can meet the RFS mandate to produce 16 billion gallons of cellulosic ethanol by 2022.

NPPC repeatedly has warned about the negative (if unintended) consequences of U.S. biofuels policy on the U.S. pork industry, particularly should there be a feed-grain shortage. In testimony last year before the NRC, NPPC vice president Randy Spronk, a pork producer from Edgerton, Minn., said that a "thorough evaluation of the nation's renewable energy policies can lead to solutions that support production of renewable energy without damaging pork producers and other feed-grain users or without unnecessarily raising food costs for consumers." Click here to view the report.

National Corn Growers Association says leave the Renewable Fuels Standard alone

The proposed bill would reduce the RFS when the projected U.S. corn stocks-to-use ratio falls below 10%, and reduce the RFS by as much as 50% if the ratio falls below five percent, notes a press release put out by the National Corn Growers Association.  "The U.S. ethanol industry is an integral part of job creation and economic opportunity throughout rural America," says NCGA president Garry Niemeyer. "This legislation would put progress made by the ethanol industry in jeopardy and we are asking members of Congress to oppose its passage."

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