US poultry sector again bemoans likely feed cost hike from RFS
The US Environmental Protection Agency (EPA) released revised volume amounts at the end of November. The new levels for the fuel types are drawing mixed responses from groups within the animal agriculture and feed crop producing sectors.
For groups like the National Corn Growers Association and American Soybean Association the amendments are positive. Though the ASA said the changes could have been more specific, and that the amounts could even have been raised higher with surplus soy oil a concern for the association, said Tom Hance, ASA Washington representative.
“We think that EPA could be a little more aggressive than they have been, but still opportunities for growth are there,” he told us.
The National Chicken Council (NCC) reiterated that an increase in the volumes of corn needed to meet the higher targets brings continued concerns about feed prices.
Mike Brown, National Chicken Council president, said:“The RFS [renewable fuel standard] has cost our industry $59bn more in feed costs since it was implemented."
The RFS was put in place in 2006 with the overarching goals of making the US more energy independent and to grow the use of clean and renewable fuels, said the EPA.
The revised volume requirements proposed an increase in all types of biofuel involved in the RFS program, said the EPA. The boosted limits were selected to drive production growth in 2017 for cellulosic biofuel, biomass-based diesel, advanced biofuel and total renewable fuel, and higher volumes were set for biomass-based diesel for 2018.
The new amounts would increase production of cellulosic biofuel from 230m gallons in 2016 to 311m gallons in 2017; move biomass-based diesel from 1.9bn gallons to 2bn in 2017 and 2.1bn in 2018; boost advanced biofuel from 3.61bn gallons to 4.28bn gallons; and raise renewable fuel in total from 18.11bn gallons to 19.28bn gallons in 2017, said the agency. Most of the amounts were raised from proposals put out earlier this year.
The most recent increase in the volume of ethanol to be produced for the domestic fuel supply in 2017 represent a jump of almost 200m gallons more that what was set in May, said the NCC.
Conventional or non-advanced ethanol is made from corn, added the EPA.
The new amount may exceed a statutory cap set in 2007, because the initial limit did not consider the role of the export market, the council said.
“Ethanol exports add nothing to US energy security and the RFS is not being administered in keeping with Congressional intent,” said Brown. “American chicken producers are only one drought, flood or freeze away from another crisis.”
Soy producers back increases
However, some feed crop producers have a different take on the biofuel market.
For soybean producers, the use of soybean oil in biodiesel production, which is a biomass-based diesel and considered an advanced biofuel, has offered another market for a protein meal by-product, said Hance.
“Soybean oil is a co-product of soybean production and processing,” he said. “The meal drives the demand in the market but you have the 20% oil co-product and you need markets for that or it serves as a drag.”
Some of the food uses for soybean oil have declined in recent years based on its composition, said Hance. “The soybean oil going into those markets has been displaced and biodiesel and other markets offer a home for that oil that has been displaced,” he added.