Poultry, livestock coalition urges Congress to reform Renewable Fuels Standard

Study looks at impact of ethanol production on food, commodity prices

In response to a new economic study on the impact of corn ethanol production on food prices and commodity price volatility, a coalition of poultry and livestock groups is urging the U.S. Congress to reform the federal Renewable Fuels Standard, which mandates the amount of ethanol that must be produced annually.

Conducted by Thomas Elam, Ph.D., president of FarmEcon LLC, an Indiana agricultural and food industry consulting firm, the study found that federal ethanol policy has increased and destabilized corn, soybean and wheat prices to the detriment of food and fuel producers and consumers. “The increases we’ve seen in commodity prices are strongly associated with the RFS mandate,” said Elam. “At the same time, we haven’t seen the promised benefits on oil imports or gasoline prices.”

In urging reform of the Renewable Fuels Standard, the coalition cited the Elam study’s conclusion that the mandate should be revised to allow automatic adjustments to reduce incentives for ethanol production when corn stocks are forecast to reach critically low levels.

The study was funded by the American Meat Institute, California Dairy Inc., the Milk Producers Cooperative, the National Cattlemen’s Beef Association, the National Chicken Council, the National Pork Producers Council and the National Turkey Federation.