August 2, 2012

 

US poultry industry seeks assistance over high corn prices

 

 

Poultry organisations throughout the US are urging the Environmental Protection Agency and Congress to approve a temporary exemption from a mandate that requires 40% percent of the year's corn harvest go to ethanol production, in order to ease rising corn prices.

 

Poultry companies are also seeking a longer-term solution from the Renewable Fuel Standards by advocating for Senate legislation to tie the amount of corn that goes to ethanol production to each year's crop yields.

 

"The future of farm families that grow the chicken and the livelihood of a lot of other people are at risk because of the higher corn prices and in part because of the federal mandate," said Bill Satterfield, executive director of Delmarva Poultry Industry. "If ethanol producers want to go to the free market and buy corn to produce ethanol, good for them. But when there is a federal government mandate that creates an uneven playing field then the federal government ends up picking winners and losers."

 

The requirement, where 40% of the country's corn harvest go toward ethanol production, has been in effect since 2005; however, drought-like conditions throughout much of the country in recent years have driven the amount of corn available down and the price up.

 

Monday (July 30), the National Chicken Council delivered a petition to EPA Administrator Lisa Jackson requesting a waiver from the Renewable Fuel Standards for the next year.

 

The request for a waiver comes less than two weeks after the NCC called for reform of the ethanol mandate, a request that appeared to be answered when US Sen. Ben Cardin, D-Md., introduced S. 3428 last week.

 

"I understand the important role domestic ethanol production will play in helping our nation achieve greater energy security. However, the nurturing and growth of our domestic biofuels industry must not come at the expense of our domestic food supply," Cardin said, after introducing "The RFS Flexibility Act: Assuring Fairer Access and Fairer Prices for US Food Producers and US Consumers." "We cannot sacrifice US food security for energy security."

 

Julie DeYoung, spokeswoman for Perdue Farms Inc., said the company supports the legislation and hopes to soon see a relief in corn prices.

 

"The price of corn has jumped 30% in less than a month, while our poultry selling prices have remained essentially the same," said DeYoung, noting 70% of a chicken's diet is corn. "It is very difficult to increase prices, because a lot of our business is done under contract; we can't just raise the prices."

 

The repercussions of rising feed prices have not yet struck the farmers who raise chickens, because the poultry companies, such as Perdue, buy the feed.

 

Satterfield, however, cautions that poultry farmers could be out of work if poultry companies continue to be squeezed by rising production prices.

 

"In 2011, we saw six chicken companies in the US either be sold to somebody else or go out of business through bankruptcy proceedings," Satterfield said. "The prices for corn now are higher than they were last year and the year before. We could see chicken companies go out of business or we could see chicken companies cutting back on the number of birds they grow."

 

DeYoung said Perdue has not yet cut back on the number of birds it is shipping to farmers, but is reviewing all its options and isn't ruling anything out.

 

"Certainly we are looking at all of our options, but chicken production has a certain element of time. It's not a system you can just bring to a screeching halt," DeYoung said. "We are being as aggressive as we can to increase prices, but it is difficult and will take time before we can even move our cost increases along."