Corn producers and ethanol backers applauded the EPA's recent decision to deny a waiver of the federal Renewable Fuel Standards for the production of ethanol. That wasn't the case for the country's livestock producers and their organizations.
J.D. Alexander, cattle feeder from Wisner and president of the National Cattlemen's Beef Association, said the RFS is flawed policy and should have been waived. NCBA expressed disappointment after the recent announcement.0
"In light of the most widespread drought to face the country in more than 50 years, the refusal to grant this waiver is a blatant example of the flawed policy of the RFS," Alexander said. "The artificial support for corn ethanol provided for by the RFS is only making the situation worse for cattlemen and women by driving up feed costs."
In comments submitted by NCBA to EPA in October, the organization stated that the cattle industry, along with other livestock groups has suffered a significant economic impact due to the RFS mandate and the drought. From December 2007 to August 2012, the cattle feeding sector of the beef industry lost a record $4 billion in equity due to high feed costs and economic factors that have negatively affected beef demand, NCBA said.
According to USDA reports, corn prices have increased about 60% since June 15, 2012, and the near futures price is hovering around $8 per bushel. In a report by USDA's Economic Research Service, 2011 feed costs for livestock, poultry and dairy reached a record high of $54.6 billion--an increase of more than $9 billion over 2010 costs. These costs are borne by cattlemen and women nationwide, according to Alexander. Further, he points to USDA reports showing ending carryover stocks for 2012-13 are now forecast at 647 million bushels, less than 5% of expected corn usage, and the lowest amount ever.
"This is a 35% decrease from last year's carry-over amount. If realized this would means there would be very limited corn reserves for next year should the country experience another poor crop, Alexander says.
The effects of the refusal to waive the RFS will be felt throughout the economy with predictions of a 500,000-head beef cow and 50,000-dairy cow liquidation in the U.S. alone in 2012, according to NCBA. These losses are driven by drought and high input costs.
"Our message to EPA and Administrator Jackson is how bad does it have to get for livestock producers before relief is brought to rural America? Cattlemen and women are only asking for a level playing field," Alexander says. "With EPA's refusal to grant a waiver when faced with these conditions, it is clear the RFS is not working as Congress intended."