On the eve of the deadline for providing comments to the Environmental Protection Agency on the Renewable Fuel Standard (RFS) waiver request, the ethanol industry has released a new study that indicates a waiver could actually increase the cost of feed for livestock and poultry producers.
The analysis, conducted by Cardno-ENTRIX and commissioned by the Renewable Fuels Association (RFA), finds that if a waiver of the RFS resulted in reduced biofuel output, the minor reductions in corn prices would be partially or fully offset by increased prices for other feed ingredients like distillers grains (DDGS) and soybean meal, according to a release from RFA.
“When viewed in the context of changes in the prices for other key feed ingredients such as distillers dried grains with solubles (DDGS) and soybean meal, the change in total net feed costs for livestock, dairy and poultry feeders would either increase slightly or decrease by a negligible amount if a waiver was granted,” according to the study, conducted by economist John Urbanchuk. “This is due to the fact that if a waiver reduced biofuel output, it would also reduce the available supply of DDGS and soybean meal, which would naturally lead to higher prices for those key feed ingredients.”
The analysis shows that if ethanol and biodiesel production were each reduced 500 million gallons in 2013 under a waiver of the RFS, total feed costs would increase 4.1 percent for dairy, 0.8 percent for layers, 0.5 percent for hogs, and 0.2 percent for broilers. For beef cattle, feed costs might fall by just 0.6 percent with a waiver.
These results are corroborated directionally by a recent study by the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri. FAPRI found a 1.3 percent reduction in ethanol output under a waiver could lead to slightly higher distillers grains and soybean meal prices. According to FAPRI, “Lower corn price means lower feed costs for livestock producers, unless offset by slightly higher soybean meal and distillers grains prices.”
Thursday, October 11, is the deadline for providing comments to the Environmental Protection Agency on the Renewable Fuel Standard (RFS) waiver request and stakeholders are urged to make their voices heard before the end of the day tomorrow. More information on how to make comments to EPA can be found at ChooseEthanol.com.