New Analysis of Possible RFS Waiver Shows Possibility of Increased Feed Costs
New analysis commissioned by the Renewable Fuels Association and conducted by Cardno-ENTRIX shows that waiving the Renewable Fuel Standard in 2013 could actually lead to higher net feeding costs for livestock and poultry producers. According to the study - if a waiver reduced biofuel output - trivial corn price reductions would be partially or fully offset by increased prices for other feed ingredients like distillers grains and soybean meal. The U.S. ethanol industry produced 40 to 42-million tons of animal feed in 2011 and increased production of biodiesel from soybean oil has facilitate growth in soybean meal production. According to the study - if a waiver reduced production of ethanol and biodiesel - it would also reduce the available supply of DDGS and soybean meal - leading to higher prices for those key feed ingredients.
If ethanol and biodiesel production were each reduced 500-million gallons in 2013 under a waiver of the RFS - the analysis shows total feed costs would increase 4.1-percent for dairy, .8-percent for layers, .5-percent for hogs and .2-percent for broilers. Feed costs for beef cattle might fall - but by just .6-percent. The Renewable Fuels Association says these results are corroborated directionally by the recent Food and Agricultural Policy Research Institute study. FAPRI found a 1.3-percent reduction in ethanol output under a waiver could lead to slightly higher distillers grains and soybean meal prices.
RFA President Bob Dinneen says most analyses conducted to date have only focused on the potential impacts of a waiver on corn prices. He says it's important to consider the overall net effect on the cost of feeding livestock and poultry - as corn is only one feed ingredient for typical livestock and poultry rations. In fact - Dinneen says DDGS now comprises one-fifth to one-half of most livestock and poultry rations today. He says those supporting a waiver clearly did not consider the impacts of a waiver on the prices for feed ingredients other than corn.
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