Federal funds that are currently being spent on the ethanol blenders' tax credit should be used to support infrastructure improvements for ethanol distribution. That was one of the resolutions adopted by the Iowa Pork Producers Association at the IPPA policy session Jan. 25 at IPPA's annual meeting in Des Moines.
What does ethanol have to do with pork production? Plenty, the delegates said. A number of them pointed out that the increased amount of corn being used for ethanol is part of the reason corn prices are skyrocketing this winter and feed costs for hog producers are so high. The IPPA delegates made it clear that they support ethanol as a renewable fuel and understand how ethanol production is important for Iowa's economy. But they agreed that both the blenders' tax credit and the tariff on imported ethanol into the U.S. should be allowed to expire at the end of this year.
Livestock producers would welcome some easing of corn price
"We are willing to use some tax dollars to help with the distribution of ethanol so that a more efficient distribution such as a pipeline system and blender pumps would maybe make ethanol more competitive with petroleum fuel on the East and West Coasts of the United States," says Dave Struthers, a Story County farmer and an IPPA delegate. Several IPPA delegates in the policy session discussion pointed out that livestock producers hope ending the tax credit will ease corn prices that have climbed well above $6 per bushel since the 2010 harvest.
Delegates also asked IPPA leaders and the National Pork Producers Council to look into the possible development of a contingency plan to ensure adequate feed supplies based on a stocks-to-use ratio for corn. The current stocks-to-use ratio is very tight and corn prices are very high this winter. What would happen to feed prices if a widespread drought or other crop problems occur during the 2011 corn growing season? Several IPPA delegates voiced concern that the government should have some sort of contingency plan in place to prioritize corn use among the various sectors (ethanol, livestock feeding and exports) to help livestock production survive if such an extreme situation should occur.
IPPA delegates say U.S. needs a contingency plan for corn use
The IPPA delegates said they would prefer that the plan be a voluntary effort involving the major end users; the biofuel, livestock and export sectors. The proposal will be sent to the National Pork Producers Council for consideration at the NPPC's annual Pork Forum in early March.
"All of the most successful businesses come up with a plan so that if something extraordinary happens, you know what you are going to do," says Sam Carney, a pork producer from Adair who is currently president of the NPPC.
Producers discuss need for open markets, price transparency
Another resolution discussed at the IPPA annual meeting encouraged all hog producers to negotiate a portion of their monthly sales on the open market in an effort to maintain price transparency. Many pork producers use marketing agreements in an effort to reduce their financial risk, an approach that has led to fewer negotiated sales of hogs on the open market.
In addition, IPPA delegates adopted a resolution asking the NPPC to petition the Chicago Mercantile Exchange to revert the lean hog contract back to a live hog contract with a delivery period to packing plants from the 6th to the 20th of the month. The delegates also supported a resolution for mandatory price reporting to include a projected net price in addition to a base price for lean hogs.
The delegates also asked IPPA leaders to work toward policies to encourage more younger people to get into the swine business, not just as contract growers but as sow, pig and hog owners.