Turkey industry hurt by U.S. biofuels policy

by Bryan Salvage
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WASHINGTON – The current U.S. biofuels policy has seriously damaged the American turkey industry and it needs reform, National Turkey Federation (N.T.F.) President Joel Brandenberger told a committee from The National Academies on May 3.

“The current ethanol policy presents too many potential economic concerns for all stakeholders,” he said. “Reform now, rather than in a time of crisis, is in the best interest of the ethanol industry, other corn consumers and corn farmers themselves.

“By causing a substantial shift in the way corn is distributed in the marketplace, the key input cost for turkey production has been distorted in a way that has caused fundamental, lasting changes in the turkey industry,” Mr. Brandenberger added during a stakeholder’s meeting before the Committee on Economic and Environmental Impacts of Increasing Biofuels Production. “While other forces have had an impact on the industry, it is clear that no factor has been as significant as the federal policy that supports renewable fuels.”

This marked the third meeting of the committee to address stakeholders’ specific concerns on the economic and environmental impacts of increasing biofuels production. The meetings are part of study on the impacts of biofuels required by the 2007 Energy Bill.

Feed accounts for 70% of the cost of raising a turkey, Mr. Brandenberger explained, and corn is the major ingredient in most turkey feed rations. For the average turkey, it takes about 2.5 lbs. of feed to produce 1 lb. of turkey. So when the price of corn increases, it has a significant impact on the price of raising a turkey.

“A change in the price of one commodity used in feed rations tends to affect the price of other commodities used in a ration,” Mr. Brandenburg added. “So, when corn prices rise, so does the price of soybean meal, the second-biggest ingredient in turkey rations.

“From 2005, the year before the most recent major shift in U.S. renewable fuels policy, through 2008, when many commodity prices reached record or near-record highs, the cost per lb. of ready-to-cook turkey increased an average of 20 cents per lb.,” Mr. Brandenberger continued. “Corn, by far, had the largest price increase of any of the feed ingredients during this time, rising 120% per bushel while no other ingredient experienced more than an 82% increase.”

The turkey industry believes policy reforms should end the ethanol industry’s reliance on government support and require the industry to begin competing in the open market, Mr. Brandenberger said. Key recommendations include adjusting the Renewable Fuel Standard during a crop shortage, eliminating the import tariff on ethanol and maintaining the 10%ethanol blend limit for mid-level blends of gasoline.

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