The nation’s largest livestock and poultry trade associations want legislators to allow the 30-year-old tax credit and a protective tariff for ethanol to expire as scheduled at the end of the year. The request was made in a letter signed by the American Meat Institute, the National Turkey Federation, the National Chicken Council, the National Cattlemen’s Beef Association, the National Pork Producers Council and the National Meat Association.

“…we strongly believe it’s time the mature corn-based ethanol industry operate on a level playing field with other commodities that rely on corn as their major input. Favoring one segment of agriculture at the expense of another does not benefit agriculture as a whole or the consumers that ultimately purchase our products,” the groups said in a letter.

The Senate Finance Committee is currently considering whether to extend the ethanol blender’s credit and the tariff on imported ethanol, both of which expire on Jan. 1, 2011.

The groups contend that “the blender’s tax credit, coupled with the import tariff on foreign ethanol, has distorted the corn market, increased the cost of feeding animals, and squeezed production margins, resulting in job losses and bankruptcies in rural communities across America.”

The groups say a September 2008 report by the Congressional Research Service (CRS) stated that the dramatic increase in livestock production costs were attributed to higher costs for feed. Between 2005 and 2008, corn prices quadrupled, reaching a record high of more than $8/bu., a pattern that is unsustainable for our industries, the groups said.

“There is no safety net to protect against the volatility in the commodity markets, forcing all industries to pay higher prices for input costs due to the fluctuations in the corn market,” the groups wrote.

The groups said animal ag has suffered serious economic hardship, including:

The letter notes that the recent Congressional Budget Office (CBO) report entitled “Using Biofuel Tax Credits to Achieve Energy and Environmental Policy Goals,” found producers of ethanol made from corn or similar feedstocks receive 73¢ to provide an amount of biofuel with the energy equivalent to that in 1 gal. of gasoline. The report also said the cost to taxpayers of using ethanol to reduce gasoline consumption by one gallon was $1.78.

The groups reminded the committee that animal agriculture is united in its support for energy independence and the development of the renewable fuels industry. “However, 30 years of support has created a mature corn ethanol industry that now needs to compete fairly in the marketplace and allow for the next generation of renewable fuels to grow,” they said.

For a copy of the letter, click here: bit.ly/budGtQ.
-- American Meat Institute release