Rural America divided by biofuels policy
April 14, 2011
by Meat&Poultry Staff
WASHINGTON – High corn prices cost the turkey industry more than $1 billion in 2007 and 2008 and the current situation is almost as bad, Paul Hill, chairman of West Liberty Foods and past chairman of the National Turkey Federation (NTF), recently told the Agriculture Subcommittee on Livestock, Dairy and Poultry.
When the Renewable Fuels Standard was implemented, corn prices jumped from $2.50 per bushel to $8. Feed accounts for 70 percent of the cost of raising a turkey, and corn accounts for approximately 70 percent of the feed ration.
“Ethanol is dividing rural America — the corn farmer in me likes the prices, but the turkey farmer in me sees the real damage,” Hill said. “Congress doesn’t necessarily have to abolish all federal support for ethanol, but support for the blender’s tax credit should be eliminated.”
Hill told committee members that Congress should refrain from making a significant new investment in ethanol infrastructure. He also said Congress should implement a 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. Skyrocketing feed prices caused the turkey industry to cut production by 11 percent across the last two years, and Hill said production won’t increase significantly until Congress creates a safety net that makes feed costs less volatile.
In addition to ethanol policy, Hill pointed to the Grain Inspection, Packers and Stockyards Administration (GIPSA) proposed marketing rule as another area of concern for the US turkey industry. “The proposed GIPSA marketing rule creates long-term dangers for many family farmers,” he said. “Key issues for the turkey industry are the competitive injury proposal that makes it easier to sue or take regulatory action against processors, the provision that requires processors to virtually guarantee growers 80 percent recovery of capital investments and the series of provisions that would discourage competitive contracts.”
These key issues would create significant new legal and regulatory risk for the turkey processors who have production contracts with family farmers, Hill said. A study funded in part by NTF found an impact of $361.6 million on the turkey industry alone.
“The US Dept. of Agriculture has agreed to conduct an economic assessment, but appears unwilling to submit the study for public comment prior to publishing the final rule,” Hill said. “There must be transparency in the rulemaking process.”
The Environmental Protection Agency is seeking to impose new Total Maximum Daily Loads targets in the Chesapeake Bay watershed that are based on flawed modeling assumptions, Hill concluded.
Hill’s testimony can be viewed on the House Committee on Agriculture’s website