A US analyst has warned that the Renewable Fuel Standard (RFS) is causing the cost of chicken and turkey to rocket, leaving many producers facing bankruptcy.
Speaking at a press briefing earlier this week, Thomas E Elam, president of agricultural and food industry consulting firm FarmEcon, pointed out that corn production in the US had declined over the past three years, but RFS mandates have increased, resulting in huge increases in feed costs.
“Smaller supplies have resulted in more than a doubling of the most important input cost to poultry production feed. Since RFS’ enactment in 2005, annual feed costs for chicken producers have risen $8.8 billion, and turkey by $1.9 billion,” he said.
In total, food and feed commodity costs increased by over $70 billion last year, said Elam, leading to big increases in poultry prices. “USDA’s average wholesale broiler meat prices leapt from US$0.68 in 2005 to a record-high $0.91 in December 2012 — a 35% increase,” he said. “Turkey meat soared from $0.79 in 2005 to a record high of £1.20 a few months ago.”
In addition to adding extra burden to householders’ budgets, the RFS has left the poultry industry in dire straits, Elam claimed, pointing out that eight “major” poultry producers have filed for bankruptcy since 2008.
“The current corn supply crisis, to the extent that the unmodified RFS is artificially boosting the use of corn for ethanol production, is raising the cost of poultry production, and creating financial distress for poultry producers and their contract farmers,” he said.
Elam called on the US congress to “inject a dose of reality” into the RFS by considering a rethink of the mandate to increase the use of corn for ethanol production.
“The RFS is broken, but Congress can fix the rule by acting now and opening an inclusive, robust debate that leads to extensive reform. I urge Congress to start the process now,” he said.
Elam was speaking on behalf of the poultry industry at the media briefing, which was also attended by ActionAid, Taxpayers for Common Sense, American Fuel & Petrochemical Manufacturers, the Environmental Working Group and the National Marine Manufacturers Association.