WHY WE CARE

The U.S. is working toward greater energy security and diversification by encouraging the development and use of alternative and renewable energy and fuels. Ethanol from corn is the largest segment of the alternative fuels market.

A national mandate for the fuel industry to utilize 15 billion gallons of renewable fuels each year-- by the year 2015-- a $0.51 per gallon tax incentive for ethanol blenders, plus, a tariff on imported ethanol have stimulated government supported growth beyond market forces or consumers preferences -- this demand is expected to continue to grow dramatically in the coming years. This means corn demand is also up dramatically, taking corn to prices that are significantly higher than normal and limiting its regional availability.

Livestock and poultry producers rely on corn to feed their animals. When inputs like feed rise in cost, so too, do the cost of those livestock and poultry and the meat and poultry they produce. Producers ability to endure higher feed costs has resulted in some modest declines in production and production volumes. Production declines are often indications that farmers have left the business or scaled back their operations.

These economic shifts will impact consumer purchasing behavior, potentially reducing animal protein consumption. USDA estimates that U.S. animal protein consumption will decline by nearly TWO pounds per person in 2007 compared with 2006. The shift also may increase import of meat and poultry, which could become less expense relative to domestic products, and could make the U.S. less competitive in the meat and poultry export arena.

Our nation's current ethanol policy may be good news for big ethanol firms, but it's a raw deal for animal agriculture and consumers.

Moreover, mandates requiring the use of ethanol ignore the potential for drought or flooding. There is no evidence that a new mandate for increased ethanol use will stave off drought or influence Mother Nature. Major weather events occur and can adversely impact farming competitiveness in the best of conditions, much less with a government mandate.

A more rational policy, however, can help avert the coming economic crisis. For more information, go to Issue Overview.

To advocate more rational policies, go to Take Action Now!