{"id":1050,"date":"2012-01-11T15:42:51","date_gmt":"2012-01-11T22:42:51","guid":{"rendered":"http:\/\/plantingseedsblog.cdfa.ca.gov\/wordpress\/?p=1050"},"modified":"2012-01-11T15:44:32","modified_gmt":"2012-01-11T22:44:32","slug":"from-ag-alert-livestock-groups-welcome-end-of-ethanol-policies","status":"publish","type":"post","link":"https:\/\/plantingseedsblog.cdfa.ca.gov\/wordpress\/index.php\/2012\/01\/11\/from-ag-alert-livestock-groups-welcome-end-of-ethanol-policies\/","title":{"rendered":"From Ag Alert – Livestock groups welcome end of ethanol policies"},"content":{"rendered":"

http:\/\/agalert.com\/story\/?id=3719<\/a><\/p>\n

By Steve Adler<\/div>\n

When the clock struck midnight on Dec. 31 to usher in 2012, not everyone was
\nsinging “Auld Lang Syne.” Livestock and poultry producers\u2014particularly those in
\nCalifornia\u2014were singing goodbye to ethanol subsidies and tariffs.<\/p>\n

The start of the new year brought the end of a federal tax credit, created
\nmore than 30 years ago, which many political observers thought was untouchable
\nbecause of the strength of the Midwest voting bloc in Congress. The policies
\nincluded a 46 cent-per-gallon subsidy to oil companies for blending ethanol into
\ngasoline and a 54 cent-per-gallon tariff on ethanol imports that made it
\neconomically infeasible for other countries to produce ethanol for export to the
\nUnited States.<\/p>\n

Livestock and poultry organizations called elimination of these policies a “a
\ngood first step” in reducing high corn prices that have hurt dairy and poultry
\nfarms, which rely heavily on corn to feed their animals.<\/p>\n

Ethanol producers said the subsidy and tariff had served their purpose in
\nhelping to establish a viable ethanol industry in the United States and they did
\nnot protest their expiration. According to the Renewable Fuels Association in
\nWashington, D.C., the domestic ethanol sector has evolved, policy has progressed
\nand the market has changed\u2014making now the right time for the incentives to
\nexpire.<\/p>\n

“Ethanol producers never intended for the tax incentive to be permanent. Like
\nall incentives, it was put in place to help build an industry and when
\nsuccessful, it should sunset,” the association stated.<\/p>\n

Livestock and poultry groups say there will be no immediate, significant
\ndownward shift in corn prices, because the federal Renewable Fuel Standard
\nremains in effect. The standard mandates that 7.5 billion gallons of renewable
\nfuel be produced by 2012\u20146.25 billion gallons were produced in 2011. A 2007
\nrevision in the law gradually increases that to 36 billion gallons by 2022.<\/p>\n

“The elimination of the subsidies for corn in the U.S.\u2014both the direct
\nsubsidies that went to the oil companies in the form of the blender’s credit as
\nwell as the tariff on imported ethanol into the U.S.\u2014is good riddance,” said
\nMichael Marsh, CEO of Western United Dairymen. “But one of the things that will
\ncontinue to put upward pressure on corn prices will be the fact that the
\nRenewable Fuel Standard still stands. That is going to be a difficult standard
\nto fix.”<\/p>\n

Marsh added that livestock organizations believe the standard must be
\naddressed “and we are working on it.”<\/p>\n

Bill Mattos, president of the California Poultry Federation, agreed, noting
\nthat it is important for livestock and poultry organizations to remain vigilant
\nto resist any efforts to have the policies reenacted while at the same time
\nworking toward what he called a more reasonable approach to the implementation
\nof the Renewable Fuel Standard.<\/p>\n

Mattos said that 2011 was a very difficult time for poultry producers,
\nparticularly those with chickens being produced for meat.<\/p>\n

“I don’t know one company that has made a profit this past year with
\nchickens. There are some turkey companies that are doing OK because the turkey
\nprice has been very good, but most companies grow turkeys and chickens, and the
\nchickens have brought them down a little bit,” he said.<\/p>\n

Dairy producers in California also struggled financially in 2011, primarily
\nbecause of the high feed costs, Marsh said. He said the five-year average cost
\nfor corn totaled $219 a ton, while the average cost in 2011 was $298. Citing
\nCalifornia Department of Food and Agriculture statistics, Marsh said that in
\n2006, California dairy producers’ feed cost as a percentage of overall cost of
\nproducing milk was 55 percent. In the third quarter of 2011, that went up to 65
\npercent.<\/p>\n

“We are still losing dairies and I think that trend is going to continue,” he
\nsaid. “We will have continued consolidation in the industry. We have a number of
\ndairies that in going through the crisis of 2008-2010 had to borrow additional
\nmoney against existing assets, and getting refinancing today for some dairy
\noperators is very difficult. We continue to see sellouts of dairy operations,
\nincluding some that have been family operations for generations.”<\/p>\n

It is likely, Marsh said, that the ethanol policies also hindered development
\nof next-generation biofuels produced from something other than food crops. Now,
\nhe said, there is new hope that the elimination of the policies may bring about
\nrenewed interest in research and development for the creation of the next
\ngeneration of biofuels from products such as switchgrass, compost or other
\ncommodities that would not be in direct competition with corn.<\/p>\n

California is a net importer of corn for animal feed, primarily because of
\nthe high cost of agricultural land in the state compared to farmland in the
\nMidwest, Marsh said.<\/p>\n

The Renewable Fuels Association predicted that higher world prices for corn
\nwould lead farmers in other parts of the world to plant more corn instead of
\nother, less-profitable crops. The RFA said U.S. farmers “have a history of
\nresponding quickly to market signals by adjusting acreage and switching crops to
\nbest capitalize on current and expected prices.”<\/p>\n

(Steve Adler is associate editor of Ag Alert. He may be contacted at sadler@cfbf.com<\/a>.)<\/p>\n

Permission for use is granted, however, credit<\/em>
\n must be made to the California Farm Bureau Federation when reprinting this item.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

http:\/\/agalert.com\/story\/?id=3719 By Steve Adler When the clock struck midnight on Dec. 31 to usher in 2012, not everyone was singing “Auld Lang Syne.” Livestock and poultry producers\u2014particularly those in California\u2014were singing goodbye to ethanol subsidies and tariffs. The start of … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":12,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":["post-1050","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\r\nFrom Ag Alert - Livestock groups welcome end of ethanol policies - CDFA's Planting Seeds Blog<\/title>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/plantingseedsblog.cdfa.ca.gov\/wordpress\/index.php\/2012\/01\/11\/from-ag-alert-livestock-groups-welcome-end-of-ethanol-policies\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"From Ag Alert - Livestock groups welcome end of ethanol policies - CDFA's Planting Seeds Blog\" \/>\r\n<meta property=\"og:description\" content=\"http:\/\/agalert.com\/story\/?id=3719 By Steve Adler When the clock struck midnight on Dec. 31 to usher in 2012, not everyone was singing “Auld Lang Syne.” Livestock and poultry producers\u2014particularly those in California\u2014were singing goodbye to ethanol subsidies and tariffs. 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