The Environmental Protection Agency (EPA) this summer issued its proposal for the 2019 mandated used of ethanol in the U.S. fuel supply. Of course, it was set at the absolute maximum allowed by law.
This annual rite is a stark reminder of the costs heaped onto American chicken farmers by the misguided 2007 Renewable Fuel Standard (RFS). That policy creates an unfair advantage for the politically coddled ethanol industry by diverting corn away from food and feed and into gas tanks.
Ultimately, American consumers bear the added costs of the RFS, but poultry producers, meat packers and others face their own significant economic challenges. The price of corn feed is generally the most expensive part of raising chickens, and the RFS’ ethanol mandate has cost chicken producers an extra $62.5 billion in higher actual feed costs since 2007 compared with a 2006 baseline. Over that period, more than a dozen major producers have ceased operations.
The RFS has steadily grown more expensive and more detached from its original good intentions. At the time the RFS was adopted, the chicken industry was led to believe it included a workable “off-ramp” that would reduce mandates in times of economic crisis. That belief has proven to be very nave.
On two occasions — in 2008, the first year that expanded ethanol mandates were foisted on the market and drove corn prices to historic record highs, and in 2012 during the worst drought in more than 50 years — EPA ignored the promised economic safety valve. The results were devastating to the chicken industry. Today, chicken producers remain just one flood, freeze or drought away from another crisis; yet the RFS continues to be expanded.
The original 2007 statute set a cap on mandated ethanol use at 15 billion gallons but to little effect. Last year, total production of ethanol was 15.8 billion gallons, and average weekly production to date is running ahead of last year’s pace and on trend to hit nearly 16 billion gallons. That’s the equivalent of about 5.7 billion bushels of corn. To put that volume in perspective, the year the RFS was adopted, total U.S. corn production was 10.5 billion bushels.
The RFS is broken. Dozens of consumer and taxpayer advocacy organizations, hunger charities, engine manufacturers, restaurants, academics, and livestock and poultry producers agree. It’s time for Congress to stand up to Big Ethanol and reform the RFS.
• Mike Brown is president of the National Chicken Council (@chickencouncil) in Washington, D.C.