Ethanol Production Ruffles Feathers at National Turkey Federation Convenion
Increased ethanol production and President Bush’s push for a greater emphasis on renewable energy sources seems to be the cause of some controversy in the poultry industry. Speaking at the National Turkey Federation’s annual convention in Tucson yesterday, Samantha Slater, director of congressional and regulatory affairs with the RFA, discussed the pros of ethanol before an audience confronted with ever-rising corn prices.
Though the poultry industry faces corn prices of about $4 per bushel, Slater said the grain-based ethanol industry is paying far less for product. “about $2.20 to $3 a bushel, though the spot price is much higher.”
More than 100 grain-based ethanol plants are “on the line” today, Slater said, with 77 more under construction to meet growing U.S. demand for the fuel source. In all, some 4.9 billion gallons of ethanol were produced in the United States last year against demand of about 6 billion gallons, Slater said. The remainder was imported from Brazil.
Economist Tom Elam, president of FarmEcon.com, said it will be difficult to seamlessly integrate ethanol into the U.S. economy. “An 8-million to 10-million acre increase in corn will drop prices, but cause soybean meal prices to rise” owing to corresponding declines in soy acreage, and at a time when McDonalds Corp. is looking to substitute soybean oil for Canola in their cooking oils.
Some argued that grain-based ethanol demand and resulting corn prices will add to the price of U.S. poultry exports, making them less competitive than exports from Brazil, which relies on sugar cane to manufacture ethanol. Elam said that as long as oil prices to remain high, so too will the price of corn, owing to greater demand for renewable fuels. “As long as crude oil prices are north of $50 [per barrel],” he said, “we’ll see corn above $3 [per bushel].