WASHINGTON — The American Meat Institute has announced that leaders in agricultural economics, the environment and the food industry have urged the U.S. Environmental Protection Agency to address several issues regarding food inflation costs.
Experts are calling for the EPA to revisit so-called "food-to-fuel" mandates in light of the recent flooding in the Midwest and the skyrocketing cost of food around the world spurred by record commodity prices.
The EPA is considering Texas Gov. Rick Perry's ethanol mandate waiver request to reduce this year's Renewable Fuel Standard (RFS) by half. The EPA's public comment period on the request ends June 23.
Dr. Thomas Elam of FarmEcon LLC is submitting findings of a new analysis to be submitted to the EPA. The study finds that the RFS — which mandates 9 billion gallons of ethanol be blended into the nation's fuel supply this year — has a small impact on gas prices, but its "effects on food prices and security are huge," Elam said.
"It is clear that while America's ethanol mandate has done little to hold down the steadily-climbing gasoline prices, its negative effects on the security of our food supply and the cost to feed our families are huge," said Elam. "In light of recent events, it is imperative that the government re-examine and reduce these mandates."
The ethanol policy also raises environmental and economic concerns. "This year's 9-billion-gallon RFS mandate will cause an estimated 100 million tons of soil erosion and put 300,000 tons of nitrogen fertilizer into Midwestern waters," said Richard Wiles, executive director of the Environmental Working Group. "Thanks largely to the ethanol mandate and an excessively wet spring, pollution levels in the Gulf of Mexico are expected to reach record levels, with a dead zone the size of Massachusetts.
"That's a high environmental price to pay for a biofuels policy that is straining family food budgets for the poorest Americans, and is doing next to nothing to lower gas prices."
Representatives of the cattle and poultry industries have echoed the urgency of granting the waiver request. Biofuel mandates, tariffs and subsidies have hit these industries particularly hard, as the corn and soy used to feed animals comprises the bulk of their input costs. In the six months since the current RFS became law, the price of corn has shot up by over $3 per bushel. Soy prices also have climbed to historic highs.
The broiler industry is feeling a similar squeeze.
"Rising corn and soybean prices have cost the broiler chicken industry approximately $5 billion since October 2006," said Mark Hickman, head of Peco Foods, based out of Tuscaloosa, Ala., and former chairman of the National Chicken Council. "We are willing to compete in the marketplace, but it is not fair to expect us to compete with a government-subsidized market that will take one-third of the corn crop this year unless it is reformed."
Rod Brenneman, president and CEO of Seaboard Foods, a major pork producer and processor in Kansas emphasized that although many other dynamics contributed to high food prices and production costs, biofuels policy is one factor the U.S. government can control.
The EPA must issue a decision on Gov. Perry's waiver by July 24.
