USA: uncertainty over corn supplies remains
The National Pork Producers Council (NPPC) in the USA has expressed
disappointment with the recent decision by the US Environmental Protection
Agency (EPA) to reject a waiver of the federal ethanol production mandate for
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
deeply disappointed with EPA's decision,â€ said NPPC President Bryan Black. â€œPork
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.â€
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
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.
â€œThe RFS has helped create one of the most volatile economic
situations ever to hit pork producers,â€ said Black. â€œWe 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
National Pork Producers Council (NPPC)
Department of Agriculture (USDA)
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