The Hill: No doubt about it: ethanol mandates hit food producers hard

July 25, 2013

In the past six years, skyrocketing costs have forced at least a dozen poultry companies to stop operations, file for bankruptcy or sell off assets, in some cases to foreign competitors. The business disruptions directly impact the more than 25,000 family farmers who grow the chickens, and the more than 300,000 employees directly working for the chicken companies. What’s behind this financial bleed? The Renewable Fuel Standard (RFS), the federal policy—being debated in Congress today — forcing more and more corn out of the feed market and into ethanol for gas tanks, despite the utter lack of consumer demand for higher ethanol blends. The policy’s ever-growing list of unforeseen ramifications is devastating American food producers and hitting consumers square in the pocketbook.

Though renewable fuels are important to our nation’s energy mix, the favoritism bestowed upon ethanol is not only curtailing other renewable alternatives competing for growth dollars, but also distorting markets for corn—the primary ingredient in poultry, dairy, cattle and hog feed. By guaranteeing corn demand, the RFS has pushed prices for the grain so high that even lower-energy, lower-nutrient feed from dried distiller grains (DDGs)—which return a portion of the corn used for ethanol production back to the animal-feed market—is needed to provide a bit of relief from the high feed prices. Since October 2006 and through July 2013, poultry producers alone have had to bear the burden of higher feed costs totaling over $50 billion.

But DDGs are, at best, a meager attempt to alleviate the damage done by the RFS.

Poultry producers, like others in animal agriculture, are mindful of their limited resources and consistently seek to employ the most sustainable and economical methods of raising animals. As such, when DDGs became more readily available in 2007, chicken producers added some DDGs to feed rations to determine the effect on efficiency and meat quality—but more so to find an alternative to high-priced corn.