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TIME TO QUIT RANCHING & START FARMING ?

HAY MAKER

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Livestock industry nervous as Bush calls for 35 billion gallon RFS
Tuesday, January 23, 2007, 2:48 PM

by Peter Shinn

Audio related to this story

AUDIO: Peter Shinn reports (2 min 25 sec MP3).

Ethanol backers got another boost from Tuesday night's State of the Union address. As expected, President Bush called for a more than four-fold increase in the Renewable Fuels Standard from its current level of 7.5 billion gallons by 2012 to 35 billion gallons by 2017.

The policy statement is generated immediate excitement among ethanol supporters. But the nation's largest and most politically influential livestock groups want the Bush administration to consider the negative impact high feed costs may have on U.S food production.

This year's call for increased dependence on renewable fuels is not the first from President Bush. Last year, the President's call to end the nation's "addiction to foreign oil" gave fresh momentum to the U.S. ethanol industry. And there’s little doubt the President’s use of the bully pulpit helped drive growth in renewable fuels. That's according to Randy Klein, Director of Marketing for the Nebraska Corn Board.

"The President's reference to the need for growth in renewable fuels and to lessen our dependence on foreign oil, that really pushed things forward at a faster pace," Klein told Brownfield. "So his leadership has certainly been a factor in helping this industry grow as it has."

And Craig Floss, CEO of the Iowa Corn Board and Iowa Corn Growers Association, told Brownfield President Bush’s embrace of renewable energy has facilitated acceptance of ethanol outside of the Corn Belt. "Obviously, here in the Midwest, we know a lot about ethanol because it's been in the news for a long time," Floss said. "But outside the Midwest it's not as well known, so the President bringing that kind of visibility to renewable fuels and specifically ethanol has been very helpful."

Floss said the ethanol industry’s growth shouldn't come at the expense of the Hawkeye State’s livestock industry. That’s why he said research funding to increase the usability of dry distillers' grains (DDGs) in swine and poultry is as important as research on cellulosic ethanol.

"One of the key things that we have been after at the federal level, although cellulosic research is important for the future, we do not in any way want to ignore the corn-based feedstock programs," said Floss.

Indeed, Klein said leaders of the Nebraska Corn Board are trying to facilitate growth in Nebraska’s livestock industry, because they believe DDGs will be so plentiful that more livestock will be needed in Nebraska to prevent an oversupply of the ethanol co-product.

"We have the ability to produce corn - we have a system of doing that very efficiently - and we have a lot of cattle and livestock that can utilize those co-products," Klein explained. "We'll continue to work to develop those two industries, and that will benefit rural Nebraska."

But while corn growers express confidence continued growth in the ethanol industry can continue unabated with minimal negative impacts on the U.S. livestock industry, livestock groups themselves aren't so sure. In fact, the largest U.S. livestock groups have serious concerns about the high feed prices the ethanol industry’s explosive growth has created.

And Tuesday, the American Meat Institute, National Cattlemen’s Beef Association, National Chicken Council, National Pork Producers Council and National Turkey Federation joined the National Milk Producers Federation (NMPF) in sending a letter to U.S. Ag Secretary Mike Johanns. In the letter, the groups ask Johanns to form a working group within the office of USDA Chief Economist Collins to study the relationship between increased ethanol production and higher food prices.

NMPF Vice President of Communications Chris Galen told Brownfield the livestock industry supports renewable energy. But according to Galen, the Bush administration shouldn't trade food security for greater energy security.

"We definitely want to wean ourselves off of foreign oil - that's certainly a very commendable goal," Galen said. "But if the trade off means more dependence on foreign dairy imports and foreign meat imports, then we're basically robbing Peter to pay Paul."

Collins himself has suggested the development of cellulosic ethanol will be necessary to relieve some of the demand pressure created by corn-based ethanol production. But technologies to make cellulosic ethanol cost-competitive with corn-based ethanol are still being developed, and may still be years away. In the meantime, Galen said there's no question higher corn prices are having a negative impact on the dairy industry right now.

"This past year, 2006, was a tough year for dairy prices," Galen pointed out. "Dairy prices are going to be better this year, but profits are going to be constrained by the higher input costs, especially high corn costs, and so talking about what may happen in 2010 doesn't address the real concern about how do we make it from now until then."
 
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Anonymous

Guest
I see where corn was $4.08 today- even wheat took a little jump...

I haven't raised corn since I was a kid- but now might be the time to be sticking a couple hundred acres of the irrigated ground into it.....
 

Manitoba_Rancher

Well-known member
Ot- Barley is climbing up here as well. It seems to be following your corn track onthe futures down there. Good for people who grow it to sell but damn tough on us cattle feeders. Think I might grow some barley to sell next year...lol
 

ocm

Well-known member
In the short term this is painful. In the long term, depending on what the govt pours into ethanol, this will be good for ranchers. High corn prices hurt pork and chicken, as they have few alternatives. At the same time it will increase the value of beef pounds put on with forage (grass). It will likely increase the average select choice spread as well, making choice beef quite valuable.

It will however likely put a squeeze on cattle feeders as it will put pressure to leave cattle on feed a shorter time. That will require less pen space and feeders may have to compete vigorously to fill their capacity.
 
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