Meat Groups Want End to Ethanol Subsidy

WASHINGTONThe American Meat Institute, National Turkey Federation, National Chicken Council and National Cattlemens Beef Association on April 28 urged the House Ways and Means Committee to allow a 30-year-old tax credit and a protective tariff for ethanol to expire at the end of this year.

Although we support the need to advance renewable and alternative sources of energy, we strongly believe that it is time that the mature corn-based ethanol industry operates on a level playing field with other commodities that rely on corn as their major input, the groups wrote in a letter to Michigan Reps. Sander M. Levin and Dave Camp of Michigan, chairman and ranking Republican members, respectively, of the tax-writing committee.

The letter noted serious concerns over the negative economic effects that government support for corn-ethanol has had on animal agriculture, specifically the Volumetric Ethanol Excise Tax Credit (VEETC) and the import tariff on foreign ethanol.

The blenders tax credit, coupled with the import tariff on foreign ethanol, has distorted the corn market, increased the cost of feeding animals, and squeezed production marginsresulting in job losses and bankruptcies in rural communities across America, the letter stated.

The letter also noted that a September 2008 report by the Congressional Research Service (CRS) stated that the dramatic increase in livestock production costs were attributed to higher costs for feed.

There is no safety net to protect against the volatility in the commodity markets, forcing all industries to pay higher prices for input costs due to the fluctuations in the corn market, the letter stated.

The letter points to significant hardships suffered by the agriculture industry including:

A decrease in turkeys raised of more than 6 percent since 2007 levels and a near 9 percent reduction from 2008 levels to adjust to these increased input costs.  More importantly, the turkey industry eliminated nearly 3,000 jobs vital to rural America in 2008 and 2009 alone.

Total losses for the pork industry amounted to more than $6.2 billion and average farrow-to-finish operations lost nearly $23 for each animal marketed from October 2007 through January 2010.

A record $7 billion lost by the cattle feeding sector of the beef industry from December 2007 to February 2010.

A cumulative additional cost on the broiler industry of $15 billion since corn prices began their rise in the fall of 2006.  This additional cost does not include the higher cost of other feed ingredients, such as soybean meal, whose prices tend to move in tandem with corn. Accordingly, broiler companies have suffered reduced profitability. 

Click here to read the entire letter.