December 2, 2015
New fuel mandate deals blow to US chicken producers
The US poultrysector fears production costs will further escalate as more corn will be diverted into fuel production with the mandated increase in the volume of ethanol in US fuel mix under the new Renewable Fuel Standard (RFS).
On Monday, Nov. 30, the US Environmental Protection Agency (EPA) announced the final RFS required volume obligations for 2014, 2015 and 2016 at higher levels than proposed by the agency in May 2015. Specifically, the EPA raised the implied corn mandate over the three years by more than 1.5 billion gallons and set the 2016 ethanol mandate at a level beyond the 10% blend-wall limits. This means ethanol will make up more than 10% of the total US fuel mix.
National Chicken Council President Mike Brown said EPA''s action "will cost consumers at the pump and on the plate by effectively raising fuel and food prices".
"By increasing the mandated volume of ethanol beyond the blend wall for next year, and retroactively increasing the mandates for 2014 and 2015, more corn from feed and food will be diverted into fuel production, resulting in increased costs for poultry and livestock producers. Since the RFS was enacted, chicken producers alone have incurred more than $50 billion in higher actual feed costs due to the ethanol mandates, and the tab keeps getting run up under this broken law", Brown said.
He added, "It''s ironic that while US ethanol is competitive in the global export market, the ethanol industry continues to rely on expanding the RFS mandates domestically. If anything, today''s (Monday''s) announcement by EPA should be yet another reminder that the RFS, and its implementation, are broken beyond repair".
Brown also noted that in setting the domestic mandates, EPA did not account for the amount of ethanol that is exported and the effect those exports have in diverting additional corn away from the domestic feed and food market.
Last year nearly 850 million gallons of ethanol were exported, and through August of this year, exports are running about five percent higher. Combined, 2014 and 2015 ethanol exports are likely to divert the equivalent of an additional 15.24 million metric tonnes of corn away from feed and food use--in addition to that which is mandated by the RFS.