Ethanol Waiver Sought Amid Drought

Groups representing the livestock and poultry industry are petitioning the Obama administration to waive requirements for gasoline refineries to blend ethanol into their fuel production for one year.

The groups have asked the Environmental Protection Agency to suspend the practice in order to curb the rising cost of grain as extreme drought conditions spike feed costs for Midwestern farmers. In a conference call with reporters, industry representatives said the price of meat will continue to rise for consumers unless the waiver is granted.

"We're worried about having enough corn, soybeans, and other crops at any price to feed our animals," said Tom Super of the National Chicken Producers Council. "These aren't unfounded fears."

Citing USDA statistics, Super says a poor corn yield this year could result in a4 percent increase in food prices. The drought has forced the price of turkey alone up 50 percent.

John Burkel of the National Turkey Federation suggested the holiday season could see a disproportionate effect.

"You will see a drop in production across all the meats and prices that just put the consumer in a position where they can't afford to buy meat anymore, or very little of it." he said, adding, "At Thanksgiving they'll splurge, but they're not going to put the extra bird in the freezer."

The petition comes little over a week since poultry groups lost a challenge to the mandate in federal court, the latest in the spat between some farming organizations and the ethanol industry. Opponents of the biofuel contend the federal mandate for its inclusion in gasoline is a form of non-competitive subsidy.

But not all agricultural groups are on board. On Friday the National Farmers' Union, which represents both ranchers and produce growers, questioned the practicality of eliminating the mandate.

"NFU stands by the belief that concerns from the livestock sector and some members of Congress are unwarranted," it said in a statement, adding that "eliminating the [Renewable Fuel Standard] would reduce corn prices less than 5 percent."

The stat is referencing a study released by Iowa State University on the impact of the drought. On the call a meat industry spokesman said that seemingly small figure translated into roughly $1 billion in revenue for meat distributors.

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Bob Dineen of the Renewable Fuels Association says while they understand the farmers' plight, the only beneficiary to an ethanol suspension would be oil companies.

"Waiving the RFS won't bring the type of relief the livestock groups are seeking, nor will it result in significantly lower feed prices," Dineen maintains. "In fact, because ethanol plants also produce a high protein feed, limiting ethanol production will only further complicate drought related feed issues and costs."

The NFU and other groups have called for the creation of a federally owned grain reserve, similar to the one in place for petroleum. When questioned on the subject, a livestock representative on the conference call said their organizations were focused on more "immediate relief."

This week Congress expects to vote on a number of measures aimed at disaster relief for the drought, particularly for beef, pork, and poultry farms - sectors that are not partially shielded by government subsidies.