HUNTIN' DAYLIGHT -- COMMON SENSE DISCONNECT

by: Wes Ishmael


A hefty percentage of consumers don't believe U.S. farmers should be responsible for addressing global hunger. That's according to the latest analysis of consumer trust in the food system conducted by the Center for Food Integrity (CFI). The study found that 40 percent of those surveyed strongly disagreed that, “the United States has a responsibility to provide food for the rest of the world.”

According to CFI, the study also shows that more than half the survey participants strongly agreed with the statement, “It is more important for the U.S. to teach developing nations how to feed themselves than to export food to them.”

“These results clearly indicate that consumers do not believe U.S. farmers should be responsible for feeding the world. Agriculture needs to find messages that deliver a direct benefit to consumers or society to build support for today's farming practices,” says Charlie Arnot, CEO of CFI. “If consumers don't believe U.S agriculture has a responsibility to feed the world then we can't build consumer support for today's farming simply by claiming we need to feed more people, unless we can build public support that feeding the world should be a priority.”

Stephen Sapp, a professor of sociology at Iowa State University, says that to his knowledge, this is the first large-scale, nationwide survey asking Americans their opinions about U.S. agricultural policies to help feed the world.

That may help explain why subsidized ethanol production has been such an easy sell to voters, even though it increases the cost of basic food staples here and around the word.

The Insidious Nature of Ethanol Subsidies

“While U.S. corn usage for food and industrial purposes other than ethanol have remained relatively constant since 2008, the amount of corn used for ethanol has increased eight-fold, with three-quarters of that increase occurring since 2005,” says Steve Meyer, president of Paragon Economics, a livestock and grain marketing and economic advisory company at Adel, Iowa. “I realize we cannot ‘un-ring the bell' on ethanol subsidies and tariffs but subsidized ethanol has meant record-high corn prices and record-high costs of production for meat and poultry resulting in lower per capita meat and poultry output. If you hear from anyone that the government should not be deciding on winners and losers, please realize that you have already done so.”

Meyer was speaking on behalf of the National Cattlemen's Beef Association (NCBA) at a September hearing of the House Committee on Agriculture's Subcommittee on Livestock, Dairy and Poultry.

The hearing came on the heels of USDA's World Agriculture Supply and Demand Estimates report that projected this year's corn crop would be 417 million bu. lower than initial estimates.

In addition to Meyer's statement, representatives from NCBA, National Pork Producers Council (NPPC), National Turkey Federation (NTF), National Chicken Council (NCC) and the American Feed Industry Association (AFIA) made statements following the hearing.

“It is a real possibility that next year corn will need to be rationed, and NPPC believes that rationing ought to be applied to all corn users, including the ethanol industry,” said NPPC Vice President Randy Spronk, a pork producer from Edgerton, Minn. “The ethanol industry is using more and more of the nation's corn supply. This year it is expected to overtake livestock and poultry producers as the largest user of corn. But its growth has been driven almost entirely by the Renewable Fuels Standard mandate, which makes no provision for short corn supplies.”

“Included in this effort must be a ‘safety valve' to adjust the Renewable Fuels Standard when there is a shortfall in corn supplies,” explained Michael Welch, Harrison Poultry chief executive, speaking for the NCC. “In addition, a plan should be implemented to allow a reasonable number of good, productive cropland acres to opt out of the Conservation Reserve Program (CRP) on a penalty-free basis.”

Moreover, Ted Seger, president and part owner of Farbest Foods Inc., and past NTF chairman explained, “There is an immediate and legitimate concern about the availability and cost of feed ingredients due to the mandated use of corn-based ethanol. It has become clear, from the minute the government chose to subsidize corn as an energy source, that livestock and poultry interests have taken a back seat to the ethanol industry.

“While no one item is a silver bullet to fixing the low corn stock problem, we must do something to protect livestock and poultry producers from excessive high corn prices due to the fact that the government has mandated the use of half of the corn supply into the nation's fuel supply. The Volumetric Ethanol Excise Tax Credit, or blender's credit, is not required to support ethanol production and should be allowed to expire at the end of the year. Also, the Renewable Fuel Standard should be reevaluated by creating a policy that provides a practical, automatic and meaningful safety net to protect against a poor corn crop.”

Following the September hearing, Joel G. Newman, AFIA president and CEO, explained, “America's farmers and ranchers and the industries which serve them can't compete against federal bio-fuel subsidies, outdated land-use programs or unfettered institutional speculation in the futures markets. The U.S. feed industry is the single largest buyer and user of feed grains, oilseeds, processed meals and byproducts, and its production represents 70 percent of producing safe, affordable meat, poultry, dairy and eggs. The Administration and Congress must make policy changes now; otherwise, they will have a much bigger problem---an inability to put affordable food on the tables of the American people.”

One Potential Solution

In October lawmakers introduced the Renewable Fuels Standard (RFS) Flexibility Act of 2011, which would tie the amount of corn ethanol production required under the RFS to U.S. corn supplies.

“The federal government's creation of an artificial market for the ethanol industry has quite frankly created a domino effect that is hurting consumers. It is expected that this year about 40 percent of the U.S. corn crop will be used for ethanol production,” penned Representatives Bob Goodlatte (R-VA) and Jim Costa (D-CA) in a letter to their colleagues in the U.S. House of Representatives. “Our legislation will alter the RFS to give relief to our livestock and food producers and consumers of these products. This is a common sense solution to make sure that we have enough corn supplies to meet all of our demands.” Goodlatte and Costas are leading the bi-partisan charge for the legislation.

During the aforementioned House Subcommittee on Livestock, Dairy and Poultry, Meyer, said on behalf of NCBA that since 2004, the last year before the RFS was implemented, corn used for ethanol production increased from nearly 1.4 billion bu. to an estimated 5 billion bu. in 2010-2011, a 382 percent increase. However, he noted corn production has increased by only 5.4 percent during the same time period. Meyer said his opinion is that these differing growth rates and subsequent unprecedented low carryover stocks were primarily caused by ethanol subsidies and guaranteed market.

Specifically, the RFS Flexibility Act of 2011 would establish a process requiring the administrator of the Environmental Protection Agency to review twice yearly the U.S. Department of Agriculture's (USDA) report on the current crop year's ratio of U.S. corn stocks-to-use in making a determination on the RFS. In years with tight stocks-to-use ratios, a reduction to the RFS could be made.

Kevin Kester, a California cattleman and president of the California Cattlemen's Association said this legislation would provide relief from tight corn supplies. He said it is important to note that if the RFS had been in place since 1969, according to an analysis by Paragon Economics, a reduction in the RFS would have only been triggered five times.

“Cattlemen are not opposed to ethanol and we're not looking for cheap corn. We simply want the federal government to get out of the marketplace and allow the market to work,” Kester said during a news conference. “USDA has projected this year's corn crop will be more than 400 million bu. smaller than last year. Supplies are already tight due to drought, floods and rising demand, driven partially by the mandate. A smaller corn crop will put even further strain on corn stocks. It's time to add a layer of common sense to our nation's renewable fuels policy…”







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