By Martin Barbre, NCGA President
(Posted Wed. Mar 19th, 2014)
Recently, ethanol opponents in the livestock and poultry sector signed a letter supporting the EPA’s proposed cuts in the Renewable Fuel Standard. In the letter, they complain about how high corn prices have affected the viability of the industry.
It is one thing to complain about the price of corn when it is $8 per bushel, as it came close to doing in the late summer of 2012, when the drought reduced the corn supply by four billion bushels. Now, with corn nearly half that price, livestock and poultry producers are still complaining and singling out ethanol. The fact is, there are a lot of people who want corn to be priced around its historic, if unsustainable, two bucks a bushel. We’re sure they’d even prefer it to be free, and so we call them the Free Corn Coalition.
In order to bolster their point, these critics also greatly exaggerate how much corn is converted to ethanol. In their letter, they claim that “Today, roughly 42 percent of the corn crop goes into ethanol production to meet the RFS mandate.” Forty-two is a fairly exact number, and they don’t say how they get it. The quick and accurate math tells another story. USDA estimates about five billion bushels will be used this year for ethanol and other products. Subtracting the amount of corn these other products represent makes the amount of corn going directly into ethanol equal about 3.9 billion bushels – from a total corn supply of 14.8 billion. That’s only 26 percent. The other 1.1 billion bushel of ethanol co-products becomes more feed for livestock and poultry.
Here’s more math for you. These interests are doing pretty well themselves. According to ag writer Chris Leonard, four companies make 85 percent of America’s beef and 65 percent of its pork. Just three companies produce almost half of all the chicken in the United States. That’s quite some consolidation. And these are the interests that control the livestock and poultry groups now attacking ethanol.
It’s difficult to believe that these groups are suffering from corn prices. Take Tyson Foods, for example, which reported in January that for its fiscal first quarter it had a profit of $254 million, up from $173 million the previous first quarter.
In addition to the letter to Congress on the RFS, many of these organizations also are part of a group called “Smarter Fuel Future,” one of several coalitions that have come and gone over the years to fight ethanol.
A recent blog posted from this group bragged about how diverse the coalition is. And then they said this:
“We hate to oversimplify, but it seems clear that these groups are fighting for a mandate that is only really helping one industry, in one part of the country, while leaving the rest of us out to dry.”
What’s that one industry? American agriculture. Tens of thousands of farmers sent in comments to the EPA or called the White House. These farmers are from all over the country, including states where the National Corn Growers Association doesn’t even have an affiliate, like California.
And it wasn’t just NCGA on the farm side of the coalition – it was farmers groups representing other commodities and broad-based ag groups like the American Farm Bureau Federation and the National Farmers Union, two organizations that don’t always agree but certainly do when it comes to the importance of ethanol.
Does strengthening American agriculture only help “one part of the country”? Doesn’t everyone eat? Farming is not a special interest – it’s a general interest critical to our country. And a strong, stable ethanol industry helps everyone by providing for stronger, more stable farm economy.
Were it not for the ethanol marketplace, corn farmers would not have been as well-placed to survive the 2012 drought. And that’s as it should be. The demand for corn for feed is flat, and we’re growing more corn per acre. Our success in good years helps us survive challenges like 2012, and now, with the record crop harvested in 2013, we’re rebuilding corn stocks with a projected carry-out, or surplus, of nearly 1.5 billion bushels.
Corn farmers are meeting all needs, and doing it smartly and sustainably at a time when costs are rising dramatically on the farm. Two-dollar corn, on the other hand, would be unsustainable and devastating to all agriculture.