China Trade Barriers to Blame for California Chicken Woes

Here we go again! Misinformation and an incomplete picture of the facts are distorting the truth about biofuels and renewable, clean-burning ethanol. This time, Rep. Jeff Denham (R-Calif.) is trying to scapegoat ethanol for putting a California poultry producer out of business – when the real culprit lies in trade barriers with China.

This isn’t the first time that Big Meat has told a Big Lie about American-made ethanol. Here’s the truth: ethanol production makes high-protein animal feed as well as renewable fuel. Renewable ethanol fuels America and feeds the world.

That hasn’t stopped Big Meat from pointing fingers at ethanol throughout 2011 in an attempt to blame ethanol for high commodity prices. Why? Because corn is the low-hanging fruit when it comes to the commodity blame game. Corn is used in everything from feed to high fructose corn syrup to ethanol, so it’s an easy – through inaccurate – leap to say that ethanol’s use of grain causes higher food prices.

What’s really driving prices both on the commodity market and at the checkout counter are the high costs of oil, driven by OPEC, and Wall Street speculation, driven by greed.

Study after study continue to demonstrate that ethanol’s use of grain has, at best, a minimal impact on commodity prices and that a variety of other factors – including marketing, transporting, fertilizer, speculation, weather, a weak dollar and the price of oil – have a much more significant impact on prices.

And what’s continually ignored in this whole debate is that roughly one third of every ton of corn used in ethanol production returns as livestock feed in the form of distillers grains, which have a higher protein, fat and fiber concentration than corn. The only thing taken out of the corn kernel with ethanol production is the starch, leaving the proteins, the oils and the fiber behind as animal feed.

At 80 percent of the cost of No. 2 corn and with better nutritional value, distillers’ grains are in high demand as a part of dairy, beef and poultry rations.

As an illustration, at a 2010 Export Exchange, one nutritionist at Tyson Foods – the second largest processor and marketers of chicken, beef and pork – spoke about the benefits of distillers grains as a cost competitive feed source.

So it’s pretty tough for Rep. Denham to blame ethanol – which produces an affordable, high-value animal feed for poultry, beef and pork – for the demise of Fulton Valley Farms.

More likely culprits that Rep. Denham chooses to ignore are the trade barriers deployed by China, meaning American chicken producers are losing in an important market. U.S. Trade Representative Ron Kirk said in September that China’s imposition of duties on imports of American chicken products are a billion-dollar threat to America’s poultry processing sector.

“Since these duties have come into force, U.S. exports to China are down 90 percent. According to industry sources, if these duties are not lifted, the U.S. poultry industry will have lost approximately $1 billion in sales to China by the end of this year alone,” Ambassador Kirk said in his statement.

What is probably most telling is that Fulton Valley Farms announced its closing more than a year and a half ago due to recession. In March 2010, General Manager John Cochrane, told the Press Democrat that it was closing its chicken slaughterhouse off River Road because “The recession has dampened demand for its more expensive organic and free-range chickens, and that was the final straw.”

It is reckless for lawmakers to blame ethanol for another industry’s woes, when the facts show a different picture. It is far more reckless for lawmakers to use these flimsy excuses to undermine ethanol through legislation, such as Rep. Denham has proposed in his plan to eliminate the Renewable Fuel Standard.

Dismantling or weakening will not lower feed prices. In fact, numerous studies have concluded that the RFS is a minor contributor to corn prices and removing the mandate would only risk American jobs, raise gas prices and put OPEC further in control of our economy. Dismantling the RFS would only strengthen foreign oil’s grip on our economy. That’s not going to help anybody, particularly chicken producers who are losing ground in China.

If Rep. Denham wants to bolster the poultry industry and save consumers money at the grocery store, he should support policies that open the market to more ethanol – not oppose them.