The Iowa Renewable Fuels Association, or IRFA, last week criticized a group of national livestock and poultry producer associations for "politicizing the on-going drought in the livestock and poultry industry's multiyear effort to return corn prices to $2 per bushel," according to an IRFA press release. Several livestock groups are asking the federal Environmental Protection Agency to waive the Renewable Fuel Standard, or RFS,--citing current widespread drought conditions in the U.S.
In reality, the ethanol industry has driven changes in crop production that are easing the significant challenges posed by a historic drought, says the IRFA release.
National livestock request part of multiyear effort to return corn to $2 per bushel
"It's very disappointing to see some national livestock groups politicize this devastating drought in order to further their profit goals," states IRFA executive director Monte Shaw. "In reality, the growth of the ethanol industry has provided much greater flexibility for livestock producers to deal with a drought of these proportions. Instead, this RFS waiver request is all about their multiyear effort to lower corn prices back below the cost of production – to benefit large feeding operations and to the detriment of Iowa's farmer-feeders."
Without ethanol industry, U.S. farmers wouldn't be planting so much corn
Shaw points out that due to ethanol, seed companies spent more than they would have otherwise on research and development over the last decade, resulting in seed varieties that are withstanding the drought much better than in 1988. But the biggest factor is that American farmers responded to the demand for more corn by planting millions more acres. With no ethanol industry, farmers would have likely planted around 75 million acres of corn this year, instead of 95 million acres.
"Without ethanol, the corn crop would be much smaller and all of the rationing would be felt by livestock producers," adds Shaw. "Just think if we were taking the yield hit from this historic drought on 75 million acres instead of 95 million. There would be a much smaller corn harvest to allocate. And it's the ethanol industry that is pulling back on corn use first and fastest. If they were being honest, the livestock groups would be sending us a thank you note, not requesting a waiver from the RFS."
Livestock groups should be sending a thank you note, not requesting a waiver of RFS
Shaw adds: "For 22 out of the 25 years prior to enactment of the RFS, large livestock producers were able to purchase corn for a price below the cost of production. (See attached chart.) This was "sustainable" only because of multi-billion dollar crop support programs in the farm bill. This situation gave a competitive advantage to livestock producers (like those in Texas, North Carolina and Arkansas that control the national livestock groups) who purchase all their corn. Since 2006, the market economics have reversed, thereby benefiting the farmer-feeder over the large livestock producers. When you also factor in the cost advantages of ethanol's feed coproduct (distillers grains) it is clear that ethanol production is not "bad" for livestock producers, although ethanol production has played a role in returning corn prices to levels sustainable by market forces, not price support programs.
Iowa is the leader in renewable fuels production. Iowa has 13 biodiesel facilities with the capacity to produce 320 million gallons annually. In addition, Iowa has 41 ethanol refineries capable of producing nearly 3.7 billion gallons annually and one new facility under construction.
The Iowa Renewable Fuels Association was formed in 2002 to represent the state's liquid renewable fuels industry. The trade group fosters the development and growth of the renewable fuels industry in Iowa through education, promotion, legislation and infrastructure development.
For more information, visit the Iowa Renewable Fuels Association website at www.IowaRFA.org