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AMI Submits Comments Supporting Requests for an RFS Waiver

Thursday, October 11, 2012

Washington, D.C.—In comments filed today with the U.S. Environmental Protection Agency (EPA), the American Meat Institute (AMI) supported petitions seeking a waiver of the Renewable Fuels Standard (RFS) that were filed by the governors of Arkansas and North Carolina.

 “AMI urges the Agency to grant this waiver because the mandate for corn ethanol through the RFS, in combination with the nationwide drought this summer, has inflicted and will continue to inflict severe economic harm throughout the supply chain from producers to consumers,” said AMI President and CEO J. Patrick Boyle.

With the U.S. experiencing the worst drought since the 1950s, projected corn harvest yields have dropped to 122 bushels per acre, the lowest estimate since the 1995/1996 crop year. USDA currently forecasts corn prices to range from $7.20 – $8.60 per bushel in 2013 with 4.15 billion bushels of corn being used for animal feed.  In contrast, just four months earlier in June, USDA estimated that 5.45 billion bushels would be used for animal feed, with corn prices estimated at $4.20 - $5.00 per bushel.  Using the lowest possible price points, those differences provide for a $6.99 billion increase in feed costs in only three months.  In addition to this cost increase, corn used for feed has declined over the same period by more than one billion bushels (25 percent) as producers have sought alternative feed sources, or worse, liquidated their herds. 

While a variety of factors contribute to feed and food price inflation, , ethanol production driven by the RFS consumes more than 40 percent of the U.S. corn crop annually and is the only factor under direct EPA control. The comments explain that if the situation is not addressed quickly, the entire supply chain will feel the effects, including smaller herds, higher operating costs for processors and higher meat and poultry prices for consumers.

USDA’s Economic Research Service projects an annual increase of 3.5 to 4.5 percent in the beef and veal index for 2012 and another jump of 4 to 5 percent in 2013.

“Granting a waiver will allow the market to adjust to current corn supply conditions without the interference of a federal mandate dictating how corn is used,” said Boyle. “The waiver authority under the RFS program was meant for just the type of acute conditions experienced in the market today.”

AMI’s full comments are available online at http://bit.ly/Rj9lzU



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