Renewable Fuel Standard waiver to increase net feed costs - study

07 February 2013 03:36  [Source: ICIS news]

LAS VEGAS, Nevada (ICIS)--The Renewable Fuel Standard in 2013 could raise net feed costs for livestock and poultry producers, a representative at a natural resource consulting firm said on Wednesday.

The Renewable Fuel Standard (RFS) was created by the Energy Policy Act of 2005 to establish a US fuel volume mandate to boost ethanol, biodiesel and other renewable resources.

Cardo-ENTRIX recently conducted a study that quantified the impact of net feed costs if the RFS reduced ethanol and biofuel output, which in turn would also reduce production of animal feed coproducts such as distiller grains and corn gluten, said John Urbanchuk, technical director of environmental economics at the firm.

The study found that corn price reductions would be offset by increased prices for other feed ingredients such as distiller grains and soybean meal.

Reducing corn use for ethanol slightly increases available supplies, reduces corn prices and results in higher demand for feed use, which is beneficial for the livestock and poultry industry, Urbanchuk said during a session at the National Ethanol Conference in Las Vegas.

However, lower ethanol output reduces distiller grain production by 4% and smaller soybean crush reduces soybean meal output by 10.2%, he said.

“So there’s a real wash out. The livestock and poultry industry really doesn’t benefit significantly from the grant or waiver when we take [those factors] into consideration,” Urbanchuk said.

In a low-scenario test, ethanol and biodiesel production were each reduced by 500m gal. Total feed costs for the dairy industry would increase by 4.1%, while those for hogs, broilers and cattle were below 1%.

By: Tracy Dang
+1 713 525 2653

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