US: uncertainty over corn supplies remains

The waiver would have eased uncertainty over feed supplies and prices and
helped bring long-term stability to US pork producers and consumers, according
to NPPC.

Deeply disappointed
“We are deeply disappointed with
EPA’s decision,” said NPPC President Bryan Black. “Pork producers need more time
to adjust to the volatility of the grain markets and to the government’s ethanol
mandate, which this year is requiring the ethanol industry to use about
one-third of the total US corn crop. That has contributed to the uncertainty
with regard to feed grain supplies and prices.”

The federal Renewable
Fuels Standard mandates the production in 2008 of 9 billion gallons (34 billion
litres) of corn-based ethanol. That will require more than 3 billion of an
expected harvest of less than 13 billion bushels (3.3 million tonne) of corn
this year.

A waiver of the 2008 RFS would have reduced the production
mandate to 4.5 billion gallons (17 billion litres).

Costs
raising
Pork producers have been reeling from higher prices for feed,
which accounts for 70% of the cost of raising a hog. Feed grain prices already
were increasing starting in the summer of 2006 in part because of the rapid rise
in ethanol production. Since then, increased global demand for crops, weather
conditions and the ethanol mandate have fueled even higher grain
prices.

A bushel of corn (0.254 metric tonne) for September delivery now
is selling above $5 – it was around $7 in mid-summer – compared with about $2.60
in July 2006.) From September 2007 to April 2008, corn prices rose 124% and
soybean meal prices went up 94%. During that time, pork producers lost an
average of $30 per hog marketed.

NPPC in June urged EPA to grant Texas a
waiver of the RFS. Without the waiver, NPPC pointed out in comments to the
agency, the Texas pork industry, which generates more than 3,100 jobs and nearly
$200 million in gross state income, could be adversely
affected.

Volatile
“The RFS has helped create one of the most
volatile economic situations ever to hit pork producers,” said Black. “We need
relief, and the RFS waiver was one way the government could have provided it.
Now, we expect to see increasing pressure on the domestic pork industry, with
the hog herd continuing to be reduced, producers going out of business, jobs
being lost and retail pork prices rising.”

Related
websites:
• National Pork Producers
Council (NPPC)
• United
States Department of Agriculture (USDA) 

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