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NCBA asks administration to oppose increase in ethanol blend percentage

The National Cattlemen's Beef Association sent a letter to members of President Obama's Cabinet March 31 opposing an increase in the ethanol blend percentage for gasoline.

The letter was sent to Secretary of Energy Steven Chu, Secretary of Agriculture Tom Vilsack, Environmental Protection Agency Administrator Lisa Jackson, and Assistant to the President for Energy and Climate Change Carol Browner.

The blend percentage is currently set at 10 percent, which is causing significantly more competition for corn and driving up feed costs for cattle producers.

The text of the letter follows:

"Dear Secretary Chu, Secretary Vilsack, Administrator Jackson and Ms. Browner,

"The National Cattlemen's Beef Association and its members urge you to oppose any administrative or legislative efforts to increase the amount of ethanol permitted to be blended with gasoline. Before the Administration or Congress proposes an increase in the ethanol blend percentage, a comprehensive assessment needs to address how such an increase will impact the market and if production will be able to accommodate a higher blend percentage.

"As you know, current corn-based ethanol production is capped at 15 billion gallons, which is the equivalent of 10 percent of the U.S. projected gasoline market. Increasing the blend percentage to 15 percent would mean the immediate addition of 4.5 billion gallons of ethanol, and would require an extra 1.6 billion bushels of corn. Based on 2008 yields, to reach this level an additional 10.4 million acres of corn would need to be planted.

"Corn ethanol production is significant to the cattle industry because of its impact on feed grain prices. Since January of 2008, cattle feeders have lost a record $4.3 billion in equity because of high feed costs. The additional 1.6 billion bushels of additional corn needed for an E15 blend percentage is equivalent to the entire amount of corn the cattle industry utilizes in one year.

"Cattle producers support energy independence and the development of the renewable fuels industry. However, this energy commitment has created opportunities and challenges for agricultural producers. NCBA's members continue to advocate for a market-based approach when building any industry. The marketplace offers many adequate risk management tools, which when combined with good business practices, help build a competitive and strong industry. Cattle producers do not support government interventions via subsidies and mandates; these practices disrupt the market and are never substitutes for good business practices."



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