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AMI Op-Ed: Consumers Are Paying for Federal Ethanol Mandate in Food Costs

Friday, July 16, 2010

(American Meat Institute)

“A 2007 Congressional mandate to divert a substantial portion of the U.S. corn crop — the chief source of food for the animals that we eat — into corn-based ethanol to be burned as fuel instead of being used as animal feed has pushed many in animal agriculture past the tipping point,” says AMI President and CEO J. Patrick Boyle in a guest opinion piece in today’s Farm World, the largest farm newspaper of the Midwest.

Boyle says the law effectively created a new domestic market for corn, ensuring that a substantial portion of the crop – more than one-third – be converted into corn-based ethanol and pumped in our gas tanks.

This mandate put immediate pressure on corn prices, which in 2008, quadrupled from their historic levels, reaching a record high of more than $8 a bushel.

“Government intervention into the corn markets created increased uncertainty and risk for producers who suddenly found themselves priced out of the feed markets and forced to contract their livestock and poultry production,” Boyle said. “From 2008 to 2009, the U.S. cattle herd decreased by nearly 2 million head while hog population shrank by 1.5 million. Turkey production dropped by 26 million and the chicken population fell by an astonishing 385 million birds. When the supply shortens on the farm, prices in the supermarket start to increase.”

Boyle noted that the Congressional Budget Office (CBO) reported in 2009 that Americans spend about $1.1 trillion per year on food; so in 2007, the ethanol subsidy cost families between $5.5 billion and $8.8 billion in higher grocery bills. Yet, the government mandate to divert corn from animals into fuel continues. In 2008, the government mandated that 9 billion gallons of corn-based ethanol, consuming one-third of the corn crop be produced. By 2015, that number rises to around 15 billion gallons which is nearly 45 percent of the corn crop.

“This mandate has marked the beginning of economic hardship for those who produce the meat we eat,” Boyle said.

Boyle says its also contributing to the deficit. Right now, the ethanol industry is lobbying for the extension of more tax credits and trade barriers that will cost taxpayers $6.75 billion a year by 2015 .

“Rainy days and Mondays might get you down, but they’re completely out of one’s control,” Boyle concludes. “Government mandates, on the other hand, are something we all have a voice in. Congress needs to rethink its price supports and mandates on food-based energies, like corn, and let the market play its proper role in our energy future.”

To view the op-ed in its entirety, go to http://www.meatinstitute.org/ht/a/GetDocumentAction/i/61077.

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