March 12, 2007

US pork producers jittery on corn-based ethanol
 

The National Pork Producers Council has asked US Congress to let an ethanol tax credit and a tariff on imported ethanol expire and to allow conservation lands to go back into crop production, citing concerns about the availability of corn for the country's swine industry.

The organization testified before the House Agriculture Subcommittee on Livestock and Horticulture on the impact of the rapid expansion of the ethanol sector on the livestock industry.

NPPC past president and Nebraska pork producer Joy Philippi said US pork producers support the development and use of alternative and renewable fuels as a way to reduce America's dependence on foreign oil but the industry is concerned on the unintended consequences of corn availability in the midst of ethanol craze.

NPPC told the subcommittee that some projections show the ethanol industry will use 10 billion bushels of corn by 2010. The US produced 10.75 billion bushels last year, and the livestock industry alone has consumed more than 6 billion. (Pork used 1.1 billion bushels.)

Corn availability concerns prompted pork producers at NPPC's recently concluded annual business meeting to approve several resolutions related to ethanol, including supporting the incremental early release - without penalty - by USDA of Conservation Reserve Program acres back into crop land to boost corn production. The council also recommends allowing the 51-cent per gallon ethanol blender's tax credit and the 54-cent tariff on imported ethanol to expire. The blender's credit is set to expire December 31, 2010; the import tariff December 31, 2008.

Those subsidies have allowed the ethanol industry to bid up the price of corn, which now is going for more than US$4 a bushel, up from about US$2 last summer. With soybean prices chasing corn prices, pork producers' production costs have also increased dramatically in the past year - feed costs are now about US$65 per pig compared with US$35 last year as overall production costs have risen 30 percent.

The pork industry will adjust to changing costs and corn availability constraints, said the NPPC.  

In a study by Iowa State University's Centre for Agricultural and Rural Development (CARD), pork production will need to decline by 10 to 15 percent to allow the industry to recoup higher production costs. CARD also estimates that a 30 percent production-cost increase will raise retail prices for pork, beef, dairy and chicken by 7.5 percent.

Philippi said swine raisers will work with Congress to have an equal playing field for corn and to ensure the fuel, food and feed security of the country.