In recent years, U.S. livestock and poultry producers have increasingly complained about limited feed availability and resulting higher feed costs. A Wednesday afternoon hearing of the House Subcommittee on Livestock, Dairy, and Poultry focused on the feed issues.

The panel’s testimony uniformly painted ethanol -– with its government backing and production mandates -- as a key cause of livestock/poultry producers’ dipping profits and a coming rise in consumer prices.

“My difficulties with U.S. fuel ethanol policy arise from the provision of subsidies for the product’s usage, protection against imports which have, until recently, been lower-cost that U.S.-produced ethanol, and, most of all a mandate that forces ethanol to be used regardless of the economic circumstances, especially those that pertain to competing users of corn,” testified Steven Meyer, President of Paragon Economics, an Iowa-based livestock and grain market analysis firm. He spoke on behalf of the National Cattlemen’s Beef Association.

“I realize that we cannot ‘un-ring the bell’ on ethanol subsidies and tariffs,” Meyer continued. “In combination with the promise of an ever-growing market through the Renewable Fuel Standard (RFS), these policy instruments drove the rapid construction of an ethanol production segment that has for several years been large enough to meet the ultimate 15 billion gallons of forced ethanol usage in 2015 contained in the RFS.”

Further, Meyer testified “subsidized ethanol has meant record high corn prices, record-high costs of production for meat and poultry, resulting lower per capita meat and poultry output and, finally, record-high meat prices. The U.S. pork industry lost $6 billion in equity from 2007 through 2009 but improved profitability did not stop the exodus of pork producers in 2010. From 2007 through 2010, 6,350 hog operations exited the industry and 84 percent of them held 500 of fewer hogs in inventory. During that same five years, 30,510 cattle and calf operations and 24,350 beef cow operations exited the industry. Most were small.”

While livestock operations have become more efficient, “lower feed availability will eventually mean still lower meat and poultry output and still higher meat and poultry prices.”

For full testimonies before the subcommittee see here.