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AMI Tells Congress That Reliance on Corn-Based Ethanol Links Food Prices to Fuel Prices

Tuesday, May 6, 2008

The mandate by Congress to utilize a key food ingredient as the dominant input for biofuels has inextricably coupled food to fuel prices, driving up costs for consumers and affecting the economy, said AMI President and CEO J. Patrick Boyle in testimony submitted to the House Energy and Commerce Committee Subcommittee on Energy and Air Quality.  “Valuing food for its energy content instead of nutrition is adding unnecessary inflationary pressure on the US economy,” he said.

Boyle said that the goal of energy security is commendable and should be considered in relative context to risk posed to domestic and international food security.  “Congressional and Administration leaders should develop and implement a plan to decouple the increasing price correlation of food from fuel,” said Boyle.  Boyle noted that, in 2007, livestock and poultry producers saw their feed prices rise by more than 65 percent and are anticipating an equally difficult environment for 2008.  “Food to fuel mandates and subsidies have had a profound impact on the meat and poultry industry and its ability to source affordable feed,” he added.

Boyle pointed out that the The Energy Independence and Security Act of 2007 (EISA), its predecessor —  the Energy Policy Act of 2005 (EPAC), and existing biofuel subsidies and trade protections have concentrated the adverse impacts on animal agriculture producers and consumers’ food budgets.  “When the EPAC was signed, food inflation was coincidently at its ten-year average of 2.3 percent.  In January 2008, the CPI food index was 4.9 percent, which is more than twice the ten-year average.  Food inflation creates a drag on the economy and reduces the purchasing power of consumers,” Boyle noted.   He pointed out that the consequences of this added inflation contribute to an increased food bill of nearly $200 for a household of four.

Boyle added that corn is one of the largest components in the diets of livestock and poultry.  Swine rations often contain about 60-85 percent corn, poultry rations contain about 65-75 percent and beef animals often have diets averaging 35 to 65 percent shell corn – although some producers will feed 100 percent corn to beef animals as either shell corn, flaked, or silage.  “As a result of a significant increase in ethanol production, animal nutritionists are being confronted with a new challenge in attempting to incorporate a significant amount of ethanol’s byproduct or distillers grains into existing feed rations and maintaining  meat and poultry quality and the economic well-being of the livestock and poultry producer,” he said.     

“The American Meat Institute is committed to working Congressional and Administration leaders to develop policy that balances our energy security and food security objectives,” he said.


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