Ethanol Mandates Blamed for High Chicken Feed Prices

The National Chicken Council (NCC), a Washington, D.C. trade organization, wants to reduce ethanol production driven by the Renewable Fuel Standards (RFS), which mandates renewable fuel volume in the United States. The lobby group is seeking to put an end to high feed corn prices for chicken producers, according to FeedNavigator.com.

The U.S. Environmental Protection Agency has already introduced yet-to-be-approved measures to decrease ethanol production, and the lobbyist group supports that effort. The NCC, however, wants more drastic cuts to ethanol production mandates for this year and next.

Chicken producers need corn for feed, and the crop is also a popular ingredient to make ethanol for biofuel in the United States. Rising demand for corn has sent prices skyrocketing, which “has created an uneven playing field for chicken companies to compete for necessary foodstuffs,” according to NCC President Mike Brown in FeedNavigator.com. In fact, he points out, feed costs for chicken producers has risen by $50 billion as a result of the standards.

Weaker demand from ethanol producers would likely ease the price of corn even though there are other market forces at work as well, such as the weather. However, higher demand from ethanol producers exacerbates the fallout from an unexpected event, such as a weak corn harvest.

Corn prices this year have ranged between $3.20 and $3.80 per bushel with about half of the crop yield projected to go to ethanol producers and the other half to chicken producers and for household consumption. A smaller harvest due to flood conditions in parts of the country, however, would see more of that harvest be directing toward ethanol production with prices surpassing $4 per bushel.

“These figures illustrate the dramatic advantage the RFS provides to the ethanol industry at the expense of other corn users, particularly when other factors drive up the price of corn,” said Brown to FeedNavigator.com.

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