Profound impact of subsidies on meat industry

by Editor
Wednesday, May 07, 2008

The mandate by Congress to utilise a key food ingredient as the dominant input for biofuels has inextricably coupled food to fuel prices.

This situation is driving up costs for consumers and affecting the economy, said AMI President and CEO J. Patrick Boyle in testimony submitted to the House Energy and Commerce Committee Subcommittee on Energy and Air Quality.

Valuing food for its energy content instead of nutrition is adding unnecessary inflationary pressure on the U.S. economy, he said.

Furthermore, he said that the goal of energy security is commendable and should be considered in relative context to risk posed to domestic and international food security.

Congressional and Administration leaders should develop and implement a plan to decouple the increasing price correlation of food from fuel. Boyle noted that, in 2007, livestock and poultry producers saw their feed prices rise by more than 65% and are anticipating an equally difficult environment for 2008.

Food to fuel mandates and subsidies have had a profound impact on the meat and poultry industry and its ability to source affordable feed, he added.

Boyle pointed out that the The Energy Independence and Security Act of 2007 (EISA), its predecessor the Energy Policy Act of 2005 (EPAC), and existing biofuel subsidies and trade protections have concentrated the adverse impacts on animal agriculture producers and consumers’ food budgets.

When the EPAC was signed, food inflation was coincidently at its ten-year average of 2.3%. In January 2008, the CPI food index was 4.9%, which is more than twice the ten-year average.

Food inflation creates a drag on the economy and reduces the purchasing power of consumers, Boyle noted.

Boyle added that corn is one of the largest components in the diets of livestock and poultry. Swine rations often contain about 60-85% corn, poultry rations contain about 65-75% and beef animals often have diets averaging 35 to 65% shell corn although some producers will feed 100% corn to beef animals as either shell corn, flaked, or silage.

As a result of a significant increase in ethanol production, animal nutritionists are being confronted with a new challenge in attempting to incorporate a significant amount of ethanol’s byproduct or distillers grains into existing feed rations and maintaining meat and poultry quality and the economic well-being of the livestock and poultry producer, he said.