Source:  Rita Jane Gabbett, MEATINGPLACE.COM., 4/15/11

When it comes to corn use of ethanol and government policies that support it, something’s got to give. That’s the message representatives of the National Chicken Council and the National Turkey Federation told the House Agriculture subcommittee on livestock, dairy and poultry this week.

“The National Chicken Council recommends a plan be implemented that would reduce the Renewable Fuels Standard when the stocks-to-use ratio for corn drops to low levels, as the situation is now,” said Michael Welch, president and chief executive officer of Harrison Poultry and a former chairman of NCC, at a subcommittee hearing.

Corn is the primary component of chicken feed, which accounts for 55 percent of the wholesale cost of whole, ready-to-cook chickens. Welch blamed $7.50 per bushel corn largely on the fact that 40 percent of the corn crop is being diverted into federally mandated ethanol usage. Ethanol makers benefit from the mandate, a tax credit on usage of ethanol, and a protective tariff on imports.

“Mandating the use of ethanol, subsidizing its cost, and protecting ethanol from competition is triple overkill,” he said, noting less than 700 million bushels of corn are expected to be left at the end of this crop year — meaning there is virtually no margin for error in the crop to be harvested in the fall.

Welch urged Congress to adopt a contingency plan or “off-ramp” from the Renewable Fuels Standard, which is the law requiring that a fixed amount of ethanol be added to motor fuel every year.

The mandate should be reduced to allow non-ethanol users greater access to corn, he said. Farmers should also be allowed to withdraw non-environmentally sensitive acres from the Conservation Reserve Program without penalty.

Paul Hill, chairman of West Liberty Foods and past chairman of the National Turkey Federation (NTF), told the same subcommittee that Congress should refrain from making a significant new investment in ethanol infrastructure and should implement a safety net to protect against the vitality in the commodity markets, forcing all industries to pay higher prices for input costs due to the fluctuations in the corn market.

Soaring 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.

“Congress doesn’t necessarily have to abolish all federal support for ethanol, but support for the blender’s tax credit should be eliminated,” said Hill.

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