Source:  Tom Johnston, MEATINGPLACE.COM, 4/30/10

The American Meat Institute, National Turkey Federation, National Chicken Council and National Cattlemen's Beef Association have asked the Ways and Means Committee to let a 30-year-old tax credit and a protective tariff for ethanol to expire at the end of this year due to adverse impacts on their constituents.

"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 Congressmen Sander M. Levin and Dave Camp, chairman and ranking Republican members, respectively, of the tax-writing committee. "Favoring one segment of agriculture at the expense of another does not benefit agriculture as a whole or the consumers that ultimately purchase our products."

The groups expressed particular concern over the Volumetric Ethanol Excise Tax Credit (VEETC) and the import tariff on foreign ethanol. "The blender's tax credit, coupled with the import tariff on foreign ethanol, has distorted the corn market, increased the cost of feeding animals, and squeezed production margins – resulting in job losses and bankruptcies in rural communities across America," they wrote.

The letter cites a September 2008 report by the Congressional Research Service that attributed a dramatic increase in livestock production costs to higher costs for feed, which "may account for 60 percent to 70 percent of total livestock production costs in any given year." Between 2005 and 2008, corn prices quadrupled, reaching a record high of more than $8 per bushel.

"While there has been some recent relief in corn prices, current market prices are still 50 percent higher relative to pre-RFS (Renewable Fuel Standards) conditions," the groups wrote.

For example, U.S. pork producers in 2008-2009 lost more than $6.2 billion, cattle feeders lost a record $7 billion in equity from December 2007 to February 2010, and broiler companies have lost nearly $15 billion since the fall of 2006 when corn prices began to rise, the groups noted.

To view the entire letter, click here. 
On the other hand

The Renewable Fuels Association, however, took exception to the letter, issuing its own news release accusing the meat industry groups of, "trotting out tired and oft-refuted rhetoric yet again."

"Once again, corporate livestock interests are seeking to return to the days they bought corn under the price of production for the American farmer. Such practices resulted in farmers getting more income from the government than they could from the marketplace, while corporate livestock industries prospered," the RFA said.

It went on to say, "Ethanol is not the major driving force behind corn prices, whether they are rising or falling. Oil prices, speculation, weather, and a host of other factors have far more to do with the price of corn than ethanol production."

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