Government would bail out ethanol plants that bought expensive corn.
The U.S. Department of Agriculture (USDA) is proposing to bail out some ethanol companies that speculated on rising corn prices and lost when futures prices dropped by half.
Plants could be eligible for government refinancing or loans to offset their bad decisions, says USDA Secretary Ed Schafer.
“There's going to have to be some credit applied to companies to buy some lower-priced corn to blend with their higher-priced corn,” he adds.
In response to this announcement, National Pork Producers Council (NPPC) CEO Neil Dierks expressed “extreme disappointment” that USDA is considering extending rural development loans to ethanol plants because some may be struggling economically due to decisions made earlier in the year to lock in corn prices that have since lowered in price.
He declares: “Many pork producers used prudent risk management but encountered cost concerns, yet there has been no relief offered to them.
“The livestock and poultry industries have been dealing with — and suffering from — high input prices for nearly two years in large part because of the rapid rise in ethanol production.
“Recent estimates indicate that U.S. pork producers have lost nearly $3 billion of equity in their operations over the past year.
“Anything that has even the appearance of a bailout for an industry that already is being propped up through government production mandates, tax credits and import tariffs is a slap in the face to all of animal agriculture and is anathema to our free enterprise system.
“Rather than giving the ethanol industry what seems to be special consideration, NPPC renews its request for eliminating or significantly reducing the array of government support programs for the ethanol industry.
“Pork producers just want to be able to compete on an equal footing with other users of corn.
“Additionally, NPPC again calls on USDA to create a task force to address the negative consequences of ethanol mandates on feed prices.
“Finally, while some believe this will be a banner year for agriculture, it certainly will not be for the livestock industry, and we would hope that policymakers in Washington remember that,” Dierks stresses.
NPPC was among a handful of livestock and poultry groups that wrote Agriculture Secretary Ed Shafer in late October to object to his announcement.