Just in time for the Super Bowl, we’ve got folks in ag arguing over a chicken wing shortage.
Fox News ran a story yesterday that featured a quote from Bill Roenigk, chief economist and market analyst for the National Chicken Council. In essence, Roenigk said chicken supply is down because of high feed prices. Feed prices were up because of the drought and the RFS mandate. Growth Energy wasted no time in responding with a football-themed news release defending the RFS.
Reading through the news reports, my first thought was, “This country is pretty fat and happy to be worrying about a chicken wing shortage on Super Bowl Sunday.” According to the National Chicken Council, we’ll consume 1.23 billion wing segments on Super Bowl weekend. That’s 12.3 million fewer wings than we ate last year. I’m sure fans will fill the chicken void with pizza, Doritos or chili.
Whether or not the NCC did ag a disservice by blaming the RFS for feed prices is your call. However, I do take exception with Growth Energy’s response. Three of their points are debatable at best. Here’s a point-by-point breakdown.
“Roughing the facts” – 40% of the corn crop is not used for biofuel production, that is a complete fabrication. The reality is that only a net of 17% of the corn crop is used for renewable fuel production, as the production of biofuels has a co-product, distillers grains. In the process only the starch is removed from the kernel, leaving all of the protein, oil and fiber resulting in a highly nutritious, less expensive animal feed.
While I see Growth Energy’s point, the 40% number is not a “complete fabrication.” Economists have been wrangling over how to report DDGs in crop consumption numbers for years. To act like it’s a known fact that 17% is the correct way to report these numbers is a bit of a stretch.
“Offsides” – For calling the most successful energy policy the nation has enacted in the last forty years a mandate, when in fact it has reduced our dependence on foreign oil and increased our energy security.
The RFS mandates how much conventional and advanced biofuels will be produced each year. In 2013, RFS calls for 13.8 billion gallons of conventional biofuels and 2.8 billion gallons of advanced biofuels. If blenders are unable to meet the mandate, excess RIN credits may be substituted to make up for the shortfall.
“Personal Foul” - Trying to blame the ethanol industry for increased commodity costs is disingenuous and misplaced. The true culprit is Mother Nature and there is no tool available to alter the unpredictable weather.
I’ve spoken with multiple ag economists and farmers who genuinely believe the ethanol demand has in fact boosted commodity prices. Sure, the drought played a big part for the recent price spike. But, commodity prices have been on the rise for years prior to the 2012 drought. Most point to a growing ethanol industry and foreign demand as the primary drivers.