Struggling Ranchers Seek Waiver on Ethanol Mandate

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U.S. ranchers and poultry producers are asking the government to waive its ethanol mandate for one year.

The industry says suspending the mandate will help curb the rising cost of grain brought on by this year's historic drought in the Midwest.

They also said lowering feed costs could help consumers by bringing down the price of meat.

Cutting Losses

For corn producers like Brad Feuerhelm in Merrill, Iowa, this year's drought is all about cutting losses. 

"There's not a lot of corn out there, which is disappointing," he said. "You spend all the time and money getting the crop and you end up with a product that doesn't have any corn in it."

Feuerhelm is chopping down his crop 45 days before traditional harvest time, hoping to salvage the stunted corn to be used as feed for dairy cows.

"We tried to wait as long as we could," he said. "But we came to the conclusion that we better just go chop what we can before it gets too dry -- make feed out of it before it's too dry."

Meanwhile, the devastating dry spell across the Midwest shows no signs of relenting, and that's bringing the debate over using crops for fuel back into play.

The government mandate, known as the Renewable Fuels Standard (RFS), requires that more than one-third of the U.S. corn harvest be used for motor fuel.

Consequently, with the corn supply dropping and prices rising, pork producers like Smithfield are starting to buy corn from places like Brazil.

Smithfield and other beef, pork, and poultry producers are now asking the government to waive the mandate, a move that would make more feed available to them. That in turn could help keep the price of meat down.

The government's latest forecast on food prices estimates that the cost of beef will rise 4 or 5 percent next year, with slightly lower increases for pork, egg, and dairy products.

Critics argue that waiving the mandate will only help big oil and shift U.S. policy. Congress enacted the RFS in 2007 and the Environmental Protection Agency has not granted a waiver since then.

Up till now, the RFS has enjoyed years of bi-partisan support, helping to boost income for U.S. farmers and reduce dependence on foreign oil.

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