By DOUG SCHMITZ
Iowa Correspondent

INDIANAPOLIS, Ind. — As the demand for ethanol steadily increases, the EPA’s recently proposed ethanol blend hike would also present some unique challenges for the nation’s cattle producers, according to one U.S. beef industry official.

Julia A. Wickard, executive vice president of the Indiana Beef Cattle Assoc. (IBCA), said despite the IBCA’s support of renewable energy in America, the increased ethanol demand would weigh heavily on feed costs.

“The IBCA and National Cattlemen’s Beef Assoc. (NCBA) cattle producer members support energy independence and the development of the renewable fuels industry,” Wickard said. “However, this commitment is creating both opportunities and challenges for our nation’s agricultural producers.

“Cattlemen support a comprehensive energy plan and strategy and believe it is in the best interest of the United States of America,” she added.

“Ethanol production is important to the cattle industry because of its impact on feed prices. [But] by creating a greater demand for corn, ethanol production increases the price of corn used for livestock feed.”

What’s more, rapidly increasing prices for corn and other feed grains have raised operating costs for cattle feeders, which in turn has contributed to lower calf and feeder cattle prices, Wickard said.
“[The year] 2008 was the worst cattle feeding year in the history of the beef industry,” she added.

In fact, according to a recent Congressional Research Services report, feed expenses for the U.S. livestock industry were forecast to reach a record-high $48 billion in 2008, which was an increase of nearly $10 million over 2007.

“Since January of 2008, cattle feeders have lost more than $4.3 billion in equity because of high feed costs,” Wickard said.
“U.S. agriculture can accommodate both food and fuel over time.
“But arbitrary government intervention in the marketplace only serves to distort market signals in the interim and hurt cattlemen,” she warned.

“We encourage greater policy emphasis on the development of cellulosic fuels.”

Although the IBCA and the NCBA advocates for a market-based approach for the production and usage of corn ethanol, Wickard said it’s time to move towards a market-based approach for the production and usage of ethanol produced from livestock feedstuffs.

“Cattle producers support an open and free market as the best driver of competition and innovation in all industries, including the renewable energy sector,” she said.

“[But] supply and demand should be based solely upon economics, not government intervention in the marketplace via mandates and subsidies.”