Daily News Update, Dec. 18, 2007

Livestock producers disappointed with final energy package

Congress has completed work on energy legislation mandating that 36 billion gallons of renewable fuels be produced by 2022. Fifteen billion gallons of fuel are to come from grain-based sources such as corn.

The final version of H.R. 6, the Energy Security and Independence Act of 2007, passed the House of Representatives Tuesday afternoon by a vote of 314 to 100. President Bush is expected to sign the bill.

The current Renewable Fuel Standard (RFS) calls for production of 7.5 billion gallons by 2012–significantly more manageable than the 36 billions gallons mandated by the new bill. Members of the National Cattlemen's Beef Association (NCBA) adopted policy to oppose increasing this government mandate.

"We're not saying, 'let's hit the breaks' on ethanol production. We're saying, 'let's take our foot off the gas' when it comes to increasing the mandate even more," says Jay Truitt, NCBA's vice president of government affairs. "Allow the marketplace to become a factor in the growth of this industry, and allow the livestock sectors' concerns to be considered."

The debate surrounding ethanol production has reached a fever pitch in Washington and in the media. Proponents of the new RFS say the U.S. ethanol boom is paving the way toward energy independence and will help wean America off of Middle Eastern oil. Yet according to the U.S. Energy Information Administration, the United States gets the majority of its petroleum from Canada and Mexico.

"Renewable energy has drawn a lot of attention in the political arena, but the gravity of this issue demands more than campaign sound bites and stump speeches," says Truitt. "Energy independence is a mutual goal for all of us.  But it should be market driven and it should be sustainable."

Cattle producers are especially critical of the failure by Congress to impose any sort of mechanism to reduce the mandate in the event of a short corn crop.

"We have seen the impacts of drought and other natural disasters on prices and supplies in the past," said Truitt. "What happens to the needs of traditional users of corn if we simply don't have enough corn to meet this mandate? With corn prices trading above $4.00 for the foreseeable future, the livestock industry is facing some significant adjustments now that the government has stepped into the marketplace."