Pilgrim's and Perry slam ethanol decision
By ASHLEY TOMPKINS - Tribune City Editor
Friday, August 8, 2008 10:48 AM CDT
Pilgrim's Pride Corp. on Thursday voiced disappointment in the Environmental Protection Agency's rejection of Gov. Rick Perry's request for a partial waiver of the 2008 Renewable Fuel Standard.
Perry's request, had it been approved, would have temporarily reduced ethanol requirements for gasoline, perhaps bringing down corn prices, which Pilgrim's Pride has blamed for soaring feed-ingredient costs.
Gov. Rick Perry called the EPA's decision "a mistake."
Clint Rivers, Pilgrim's Pride president and chief executive officer, said the company's feed-ingredient costs for fiscal 2008 will increase $900 million from last fiscal year as a result of "the U.S. government's failed ethanol policy."
"The (Renewable Fuels Standard) has caused feed ingredient prices to spiral out of control, inflicting extreme economic damage on food companies, and ultimately, on consumers, in the form of increased food costs," Rivers said.
"It's apparent that the government intends to blindly pursue this misguided and destructive policy despite reams of data demonstrating its negative impact on the environment, food prices, and world hunger," he continued.
A federal bill passed last year requires that 9 billion gallons of ethanol be blended into gasoline from Sept. 1 to Aug. 31, 2009. In April, Perry asked to decrease the Renewable Fuels Standard to 4.5 billion gallons.
Perry has said the demand for ethanol is raising corn prices for livestock producers, like Pilgrim's Pride, and driving up food prices at grocery stores.
"Denying Texas' request is a mistake that will only increase the already-heavy financial burden on families while doing even more harm to the livestock industry," Perry said Thursday in a statement released by his office.
"Good intentions and laudable goals are small compensation to the families, farmers and ranchers who are being hurt by the federal government's efforts to trade food for fuel," the governor added. "Any government mandate that artificially props-up a single industry to the detriment of millions of Americans is bad public policy."
Rivers called the 2008 mandates "destructive" and said the scheduled mandate next year will increase another 16.7 percent from corn, consuming at least an additional 4.5 percent of the 2009-2010 corn crop than the expected 34 percent of the crop being consumed this year for ethanol production.
In April, Pilgrim's Pride Senior Chairman Lonnie "Bo" Pilgrim, said soaring feed-ingredient costs, fueled by the federal government's ethanol mandate, continued to create a crisis in the poultry industry, the true effects of which are being felt by consumers at the grocery store via increased costs.
Pilgrim's Pride said last week it expects to report a loss in the fourth quarter due to record-high grain costs that have made animal feed more expensive, hours after announcing a $52.8 million loss in its third quarter.
The loss comes despite the company raising prices in an attempt to pass along increased costs to its customers.
Since January the company has closed a processing plant and seven distribution centers, cut 600 jobs at its El Dorado, Arkansas, plant in response to record-high prices for feed, and announced it is cutting its production by 5 percent in an effort to force chicken prices higher to compensate for higher input costs.
Rivers said the company has eliminated about 1,700 positions so far this year.
