The National Cattlemen’s Beef Association (NCBA) expressed disappointment today after the announcement that the Environmental Protection Agency (EPA) denied a request to waive the Renewable Fuels Standard (RFS) mandate for the production of corn ethanol.
“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,” said NCBA President J.D. Alexander, a cattle feeder from Pilger, Neb. “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.”
BEEF Resource Page: Ethanol
In comments submitted by NCBA to EPA in October, NCBA 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. According to U.S. Department of Agriculture (USDA) reports, corn prices have increased about 60 percent since June 15, 2012, and the near futures price is hovering around $8 per bushel. In a report by USDA’s Economic Research Service (ERS), 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, the ending carry-over stocks for 2012-13 are now forecast at 647 million bushels, less than five percent of expected corn usage, and the lowest amount ever, according to USDA reports. This is a 35 percent 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.
A Closer Look: High Feed Costs To Force Structural Change
The effects of the refusal to waive the RFS will be felt throughout the economy with predictions of 500,000 head beef cow and 50,000 dairy cow liquidation in the U.S. alone in 2012. 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 said. “With EPA’s refusal to grant a waiver when faced with these conditions, it is clear the RFS is not working as Congress intended.”