Editorial


NAMI to Challenge California Proposition #12

10/16/2019

Here we are again.  The North American Meat Institute (NAMI) has filed a lawsuit in the District Court for the Central District of California challenging the constitutionality of California Proposition #12.  The Institute has requested an injunction to halt implementation of the legislation enacted by ballot. NAMI claims that the space requirement for veal calves and gestating sows violates certain clauses of the U.S. Constitution.  This approach was litigated ad nauseum for Proposition #2 with respect to eggs and was upheld by by federal courts.

 

Proposition #12 adopted by California voters relates to sale of livestock products in the state.  Accordingly producers in other states intending to ship to California must adhere to the same standards as producers in California.

 

In a press release, the president and CEO of NAMI, Julie Potts stated, “If this unconstitutional law is allowed to stand, California will dictate farming practices across the nation.”  She added, “California overreach creates an unworkable patchwork of differing state regulations that will make it impossible for the supply chain, for small farmers or local grocer to function.” It should be accepted by Ms. Potts that California does effectively dictate farming practices with respect to products but only with respect to items sold in California.

 

There is little or no public support for veal crates or for confining sows during gestation.  Most of the hog integrators have transitioned to group housing for sows to comply with customers’ requirements. The owners of small family farms are reluctant to invest in new equipment to upgrade facilities or to change traditional farming practice despite their obsolescence. The train has left the station. Supermarkets, QSRs and restaurants have committed not to accept pork derived from systems confining sows during gestation. This market reality has effectively invalidated any opposition to Proposition #12 by NAMI.

 

The Organization should recognize that the egg industry has adapted to the housing requirements mandated by Proposition #2 and is working towards compliance wit Proposition #12 by erecting cage-free units in California. Producers in supplying states have also made capital investments to comply with California requirements.


 

Egg Industry News


Export of Shell Eggs and Products January-August 2019.

10/13/2019

USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing the first eight months of 2019 with the corresponding period in 2018:-

 

 

PRODUCT

Jan.-Aug. 2018

Jan.-Aug 2019

Difference

Shell Eggs

     

Volume (m. dozen)

75.0

90.4

+15.4 (+20.5%)

Value ($ million)

85.8

70.0

-15.8 (-18.4%)

Unit Value ($/dozen)

1.14

0.77

-0.37 (-32.5%)

Egg Products

 

 

 

Volume (metric tons)

21,650

20,289

-1,561 (-7.2%)

Value ($ million)

78.4

63.9

-14.5 (-18.5%)

Unit Value ($/metric ton)

3,621

3,149

-472 (-13.1%)

U.S. SHELL EGG AND EGG PRODUCT EXPORTS DURING

JANUARY-AUGUST 2019 COMPARED WITH 2018

Source USDA-FAS/USAPEEC


 

Egg Week

10/16/2019

USDA Weekly Egg Price and Inventory Report, October 16th 2019.

  • Hen numbers in production up 0.4 million to 327.6 million .
  • Shell inventory up a moderate 1.5 percent after two successive weekly declines
  • USDA Midwest benchmark generic prices for Extra large and Large unchanged at 59.5 and 57.5 cents per dozen respectively. Mediums were one percent lower at 49 cents per dozen. Relative stability for three weeks suggests a market bottom. All Midwest prices are below production cost for the Region.
  • Price of breaking stock up to 40.5 cents per dozen. Checks down to 26.0 cents per dozen reflecting shell-egg prices. Both categories substantially below cost of production

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on October 14 th the Midwest wholesale prices for Extra Large and Large as delivered to DCs were unchanged at 59.5 and 57.5 cents per dozen respectively. Mediums were 1.0 percent lower at 49.0 cents per dozen. All prices were below the USDA average 5-Region blended nest-run benchmark of 59.0 cents per dozen in September, excluding provisions for packing and transport. The progression of prices during 2019 is depicted in the USDA chart reflecting three years of data, updated weekly.

The October 14th USDA Egg Market News Report (Vol. 66: No. 41) documented a USDA Combined Region value rounded to the nearest cent, of $0.66 per dozen delivered to warehouses for the week ending October 9th. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $0.58 per dozen. At the high end of the range, price in the South Central Region attained $0.71 per dozen. The USDA Combined Price last week was approximately $0.24 per dozen below the three-year average and $0.48 per dozen below the price during the corresponding week in 2018.


 

Updated USDA Projections for 2018 and 2019 U.S. Egg Production

10/17/2019

The USDA Economic Research Service issued an updated forecast of egg production on October 17th, following the previous September 18 th report. The volume of eggs produced and per capita consumption in 2019 were increased by 2.7 and 1.9 percent respectively compared to 2018 data. Consistent with this disparity, the benchmark New York price was reduced by 34.7 percent in unit value. Production data reflecting 2016 and 2017 should be compared to 2015, impacted by the Spring outbreak of HPAI in the upper-Midwest. The price elasticity of eggs is denoted by the disparity in the decline in the New York price benchmark relative to forecast volume of production. The latest data is reflected in the table below:-

 

Parameter

2015

(actual)

2016

(actual)

2017

(actual)

2018 2019 Difference % 2020

(actual) (forecast) 2018 to 2019 (projection)

 

EGGS

       

Production (m. dozen)

6,938*

7,437

7,755

7,952 8,164 +2.7% 8,225

Consumption (eggs per capita)

255.8*

272.0

279.9

284.0 289.5 +1.9% 291.2

New York price (c/doz.)

182*

86

101

138 90 -34.7% 99


Source: Livestock, Dairy and Poultry Outlook -October 17th 2019

*Impacted by Spring 2015 HPAI outbreaks. Consumption in 2014, 267 eggs per capita

Subscribers to EGG-NEWS are referred to the postings depicting weekly prices, volumes and trends and the monthly review of prices and related industry statistics.


 

STOP PRESS

10/17/2019

China Comments on the Outcome of the October Trade Negotiations

 

Having absorbed the U.S. interpretation of the October 10th and 11th bilateral trade negotiations it is instructive to review comments from China since there was no post-meeting communiqué. According to a senior official of the Ministry of Commerce, Gao Feng, the position of his Government is as follows:-

  • All ‘additional’ (presumably those announced in August) tariffs due to have been imposed on October 15th and scheduled for December 15th must be rescinded
  • Both sides will reconvene to finalize details before an interim “Phase-1 Agreement” can be signed
  • China intends purchasing U.S. agricultural produce however no specific commodities, quantities or time periods have been stated.
  • No mention was made of structural issues that underlie the conflict including intellectual property, state subsidies or coercive trade practices.

Gao expressed the desire that both the U.S. and China will end the trade war that is mutually damaging.

 

The divergence between post-Negotiation statements as to what was agreed has assumed the proportions of Rashomon, the classic 1950 Kurosawa movie based on a traditional Japanese legend.


 

Status of 2019 Corn and Soybean Crops

10/15/2019

The USDA Crop Progress Report released on October 15th documented continued slow progress in maturation and harvesting both corn and soybeans after a delayed start to planting due to flooding. The deficit with respect to 2018 is evident in that only a quarter of the corn and soy crops have been harvested compared to half the crop in 2018. The delay in planting is expected to negatively impact yields as documented in the October 10th WASDE Report # 593 accessible under the STATISTICS tab. Current crop condition for both soybeans and corn are highly variable as to time of planting and generally inferior to the 2018 harvest as tabulated below. High topsoil moisture levels were evident in comparison with the corresponding weeks in 2018 until the past week. CHICK-NEWS and EGG-NEWS will report on the progress of the two major crops as monitored by the USDA through the end of the 2019 harvest in October.

WEEK ENDING

Crop

October 6th

October 13th

5-Year Average

Corn Dented %

Corn Mature %

Corn Harvested %

93

58

14

96

73

26

100

92

49

       

Soybeans Dropping leaves %

Soybeans Harvested %

72

14

85

26

93

49

       

Corn will mature 25 days after the early dent stage implying harvest commencing late September as recorded extending through late October. Yield is reduced if corn and soybean fields are exposed to frost. Cold temperature before harvest contributes to higher moisture content requiring drying and susceptibility to Fusarium infection leading to DON contamination. Unseasonable freezing temperatures and up to 2 feet of snow were experienced in the Dakotas and some Northern corn/soy states during the Columbus day weekend. As yet the effect is not noticeable in the CME corn price although experience suggests that for each one percent decline in corn yield price increases by three to six cents per bushel. This said, 2019 is like no other year given trade disputes and political uncertainty.

Crop Condition

V. Poor

Poor

Fair

Good

Excellent

Corn 2019

Corn 2018

4

4

11

8

30

20

44

47

11

21

Soybeans 2019

Soybeans 2018

4

3

10

8

33

23

45

48

8

18

 

Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture: Past Week

10

16

55

19

Past Year

4

9

64

23

Subsoil moisture: Past Week

10

18

56

16

Past Year

7

13

64

16

 

The USDA Grain Stocks Report released September 30th documented old crop corn stocks in all positions on September 1 st 2019 totaling 2.11 billion bushels, down one percent from September 1st 2018. Of the total stocks, 753 million bushels (34 percent) are stored on farms, up 22 percent from a year earlier. Off-farm stocks, at 1.36 billion bushels, are down 10 percent from a year ago. June to August 2019 data indicated disappearance of 3.09 billion bushels, compared with 3.16 billion bushels during the same period last year reflecting combined domestic and export demand.

Old crop soybeans stored in all positions on September 1st 2019 totaled 913 million bushels, up 108 percent from September 1st 2018. Soybean stocks stored on farms totaled 265 million bushels (29.0 percent), up 162 percent from a year ago. This suggests that farmers are holding old crop soybeans in anticipation of a settlement of the trade dispute with China expec
 


John Starkey Attended International Egg Commission’s Global Leadership Conference

10/15/2019

John Starkey, president of USPOULTRY attended the International Egg Commission 2019 Global Leadership Conference in Copenhagen in October to represent the U.S. poultry industry in a global market.


 

PrimaLac Feed Additive Beneficial to Free-range Laying Hens.

10/16/2019

Star Labs. recently concluded a field trial to evaluate the benefit of PrimaLac probiotic feed additive on mature hens held under free-range management at the North Carolina Dept. Ag. Facility in Salisbury NC. The report prepared by faculty at the Prestaged Department of Poultry Science is available by accessing the link below.

 

View full article here

 

 

 

 


 

EU Imposes Welfare Requirements on Imported Eggs

10/16/2019

Duty-free status for imported eggs into the EU in terms of the recently concluded EU-Mercosur trade agreement will be conditional on complying with EU housing and welfare regulations.  This requirement resulted from campaigning by the Euro Group for Animals and was endorsed by the UK RSPCA.  According to John Clarke Director of International Affairs, Directorate-General for Agriculture and Rural Development at the European Commission, “there is a cooperation provision in the agreement on animal welfare with a very clear objective to improve the level of animal welfare particularly in the Mercosur countries to bring them up our world-leading standards.”

 

According to the European Egg Processors’ Association, compliance with E.U. requirements adds 15 percent to the cost of production of an egg.  Retaining tariffs on eggs from conventional cages would enable EU producers to compete with eggs from the Mercosur nations, Brazil, Argentina, Paraguay and Uruguay. 

A spokesperson representing Copa-Cogeca an organization representing European egg producers noted “a tariff on non-compliant eggs is central for us as currently animal welfare is not a universally accepted concept among trading partners”.  The British Egg Industry Council stated that the agreement was a step forward and the welfare requirement for eggs paralleled other animal-derived foods produced in the EU and imported into the UK.


 

Shortage of Yellow Peas Impeding Expansion of Vegetable-Based Meat Substitute

10/16/2019

The rapid rise in production of plant-based meat substitutes has created a demand for pea protein.  Beyond Meat incorporates protein extracted from yellow peas in its formula and the Company is now experiencing supply problems.

 

According to USDA, 1.1 million acres were planted to produce peas, a 28 percent increase over the previous year.  The laws of supply and demand will result in an increase in the value of dried peas which can be cultivated in the same areas as soybeans.  Currently in the U.S. in North Dakota and Montana produce 80 percent of dried peas and wide scale extension to soybean-producing states is unlikely.  Currently most of the dry pea production is non-GM but not as yet certified organic.  Should vegetable protein manufacturers require organic peas, expansion of output could be delayed for three years.

 

It remains to be seen whether the lofty projections for growth in the vegetable-based meat substitute will conform to commercial reality.  In addition, technology currently dependent on peas may allow substitution of alternative vegetable protein sources.  Any farmer would be faced with a difficult decision to establish organic-compliant acreage to produce organic peas three years hence with the uncertainty relating to acceptability of vegetable-based burgers and ground meat substitutes or the introduction of new vegetable protein sources.


 

Trade Mitigation Food Purchases

10/16/2019

U.S. Department of Agriculture has announced a pre-solicitation notice for chicken products to be purchased under the Trade Mitigation for Purchase and Distribution Program.

 

The USDA Agriculture Marketing Service intends purchasing product valued at $371 million under authority of Section 5 of the Commodity Credit Corporation Charter Act.  Products will be distributed to food banks and other nutrition assistance programs.


 

Trade War with the EU on the Horizon?

10/16/2019

Following over a decade of litigation, the World Trade Organization has confirmed that the U.S. is entitled to impose counter-measures in response to illegal subsidies extended by the EU to Airbus, a competitor of Boeing. The WTO decision will allow the U.S. to impose tariffs on $7.5 billion in imports including wine, cheese, whisky, clothing and other industrial products.

 

U.S. trade representative Ambassador Robert Lighthizer noted, “We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers”. The Administration apparently will not impose tariffs on the full $7.5 billion allowable in terms of the WTO decision but a tariff on EU automobiles and parts is under consideration. 

 

The Government of France announced that it will respond to the U.S. tariffs with retaliatory measures suggesting initiation of a new trade war that we do not need now or in the future.


 

Settlement in JBS Lawsuit

10/16/2019

Specialist legal periodical Law 360 reported a $42 million settlement between a shareholder and JBS SA the majority owner of Pilgrim’s Pride with close to 75 percent of equity.

In 2017, JBS engineered a purchase of Moy Park, an integrator located in Northern Ireland owned by JBS, to U.S. subsidiary Pilgrim’s Pride. The transaction was valued at $1.3 billion. At the time CHICK-NEWS questioned the validity of the sale which effectively transferred the purchase price from Pilgrim’s Pride to the parent company to the disadvantage of minority shareholders holding approximately 22 percent of the equity of Pilgrim’s Pride.

The justification for the financial maneuver was for JBS to raise $3.2 billion levied as a fine on the company as a result of illegal dealings. These included wide-scale bribery involving the highest levels of government and officials at the Brazilian Development Bank (BNDES) and State-employee pension funds.

The suit was filed in the Court of Chancery, the state of Delaware by Matthew Sciabacucchi who claimed that the transaction had not been approved by an independent committee of the Board and ignored the interest of minority shareholders. The Sciabacucchi claim was consolidated with a parallel suit filed by the Retirement System for Employees of the City of St. Louis.


 

U.S. Department of Treasury Urged to Investigate JBS SA

10/16/2019

Senators Marco Rubio (R-FL) and Bob Mendez (D-NJ) have addressed a letter to the Secretary of the Treasury, Steven Mnuchin requesting an inquiry into purchase of U.S. meat processing companies by JBS SA.

It is a matter of record that JBS SA of Brazil controlled by family-held J and F Investimentos used bribery to acquire sweetheart loans from the Brazilian Development Bank (BNDES) and various pension funds. Proceeds were used to purchase U.S., Latin American and E.U. meat and poultry production companies.

The two senators also allege that the group has financial involvement with the Maduro Government of Venezuela contrary to U.S. sanctions regulations and is also partly financed from entities allied to the Government of China.

In 2017, J and F Investimentos reached a settlement with the Government of Brazil involving a fine of $3.2 billion. The principal officers of JBS S.A., Joesley and Wesley Batista relinquished their management involvement in the Group.

The letter addressed to the Treasury Secretary noted “We are troubled that JBS S.A. used financing that it received from BNDES totaling more than $1.3 billion to acquire American companies in contravention of the Foreign Corrupt Practices Act.

U.S. businesses acquired in the U.S. include Swift and Co in 2007; the beef operations of Smithfield Foods in 2008; Pilgrim’s Pride (75% equity ownership) in 2009; XL Foods in 2012 and the pork operations of Cargill Inc. in 2015.  

In 2018 JBS S.A. planned a U.S. IPO for meat businesses to be consolidated as JBS Foods International BV. Following the scandal in Brazil the intended IPO was withdrawn as inopportune.  

JBS S. A. businesses have encountered problems with compliance with employment regulations, food safety, transport regulations and deceptive practices contrary to GIPSA rules.


 

Smithfield Foods to Prioritize U.S. Customers Before Export

10/16/2019

With the possibility of the U.S. exporting significant quantities of pork to China as a result of the ongoing and extensive outbreak of African swine fever, Smithfield Foods, owned by the WH Group of China has indicated that it would prioritize supplying pork to the U.S. customer base.

For the week ending October 3rd 2019, China purchased 142,000 metric tons of pork from the U.S. compared to 20,000 tons in September of this year. USDA data confirmed export of 300,000 tons of pork muscle cuts to China in 2019 to date with 135,000 tons anticipated in 2020. China claims importation of 700,000 tons in 2019. The difference may relate as to whether their figure includes carcasses. The USDA intends to clarify the discrepancy in a future advisory. For 2019 to date China has imported 1,330,000 tons of pork in various forms nearly double the quantity imported during the corresponding first eight months of 2018.

The commitment to prioritize U.S. customers was made by Arnold Silver, Director of Raw Materials Procurement for Smithfield at a national meeting at the beginning of October. U.S. producers expanded by four percent in 2019 but prospects for wide-scale expansion will be limited in 2020.

Increased demand for hams and pork bellies by China may result in shortages in the U.S. resulting in greater consumption of turkey and broiler meat.


 

Albertsons Posts Q2 Profit in FY 2019.

10/17/2019

For the 2nd Quarter of FY 2019 ending September 7th Albertsons LLC, a privately held corporation, posted net earnings of $294.8 million on sales of $14.17 billion. For Q2 FY 2018 Albertsons posted a loss of $32.4 million on revenue of $14.02 billion. Results for Q2 2019 include a gain on property dispositions of $435.5 million ($135.8 million Q2 2018)

 

Comparing Q2 of 2019 with Q2 2018 gross margin advanced by 2.2 percent to 27.8 percent. Operating margin increased to 4.1 percent compared to 0.9 percent in Q2 of 2018.

 

Albertsons attained same store sales growth of 2.4 percent for Q2 FY 2019 and achieved a 40 percent growth in on-line and click-and-collect sales combined. House brands represented 25.3 percent of sales.

 

Long-term debt, lease obligations and related liabilities increased to $15.57 billion from $13.64 billion in Q2 of 2018. Total assets increased to $24.70 billion in Q2 2019 from $ 20.78 billion for the corresponding quarter of FY 2018.

 

Albertsons operated 2,262 stores at the end of Q2 FY 2019, down from 2,291 at the end of the corresponding quarter in FY 2018.


 

Michigan Moving to Cage-Free Housing

10/17/2019

The Senate Agriculture Committee of the Michigan Legislature approved Bill 174 and sent it to the full Senate where it will be voted on within weeks. This legislation conforms to UEP standards and will be fully effective by 2025. The sponsor of the Bill, Sen. Kevin Daley, (R-Lum), stated “Michigan is home to 15 million egg-laying hens and our state is sixth in the nation in egg production, which makes this legislation vitally important to the future success of our state’s egg industry,” If passed and signed into law,  

Michigan would be the fifth, and to date the largest egg producing state in the U.S. to adopt a cage-free requirement. California, Washington, Oregon and Rhode Island have enacted similar cage-free housing laws.


 

Cal-Maine Foods to Acquire Egg Production Assets of Mahard Egg Farm

10/17/2019

In an October 17th release Cal-Maine Foods, Inc. announced that it has reached a definitive agreement to acquire substantially all of the shell-egg assets of Mahard Egg Farm, including production, processing, distribution. Subject to the completion of this transaction assets will include commercial shell egg production and processing facilities with current capacity for approximately 3.9 million laying hens and permitted capacity for up to 8.0 million laying hens, a feed mill, pullets and related production facilities located in Chillicothe, Texas, and Nebo, Oklahoma, and a distribution warehouse located in Gordonville, Texas.

 

Commenting on the announcement, Dolph Baker, Chairman and CEO of Cal-Maine Foods, Inc., said, “We are very pleased to announce the acquisition of these assets from Mahard Egg Farm. Cal-Maine Foods already has a market presence in Texas, and, with the addition of these facilities located near the major market areas north of Dallas, we have an opportunity to reach more customers in Texas and southern Oklahoma with this additional production capacity. This proposed transaction is commensurate with our strategy to grow our business through selective acquisitions, as well as through expansion of our existing facilities. We look forward to the opportunity to extend our market reach and deliver greater value to both our customers and shareholders.”

Mahard Farms is a third-generation egg enterprise that adhered to traditional practices and standards at variance with the present industry. Their approach to biosecurity, maintenance, systems, welfare and marketing were more reminiscent of the 1960s than the present. It is evident that low prices for commodity eggs over a prolonged period depleted their working capital leading to the sale of the business. It is possible that the Mahard sale is a bellwether for mid- to large-sized, family-operated U.S. egg producers, predicating more consolidation


 

Egg Export Training Seminar

10/17/2019

AEB hosted an intensive training session for U.S. egg exporters on Wednesday October 16th in Atlanta. The comprehensive session included information on egg market opportunities, quality advantages of U.S. eggs and a review of government safety oversight with a review of foreign market resources. 

 

For the first eight months of 2019 shell egg exports attained 90.4 million dozen up 20 percent from the corresponding period in 2018. Unit value was down 32 percent reflecting the balance between availability and demand from the two leading importers, Hong Kong and Mexico collectively representing 70 percent of export volume.

 

For the eight-month period exports of egg products attained 20,289 metric tons, down 7 percent from 2018. Unit value declined 13 percent to an average of $3,149 per ton. The value of exported egg products was $64 million for the eight-month period.

 

Combined exports of shell eggs and products represented 2.9 percent of U.S. production corresponding to approximately 9.5 million hens.

 


 

EU Designates Reference Center on Welfare

10/17/2019

In an October 7th press release by the European Commission, it was announced that a reference center dedicated to the welfare of poultry and other small farm animals has been established.  The center will comprise a consortium formed by the Agence Nationale de Securite Sanitaire de l’Alimnation of France, the Institute de Recerca of Spain, Aarahus University of Denmark and the Instituo Zooprofilatico Sperimentale della Lombardia e dell’Emilia Romagna of Italy. 

 

The consortium will operate effectively from the beginning of 2020 and the objective is to improve the enforcement of EU legislation framed under Regulation EU 2018/329 covering the housing, management, transport and slaughter of livestock.


 

Tariff Reductions Follow U.S.-Japan Trade Agreement

10/17/2019

According to the terms of the recently concluded U.S.-Japan Trade Agreement, tariffs on egg products will be reduced progressively over a four-year period. Dried egg yolk purchased by Japan in significant quantities will be reduced from a base rate of 18.8 percent to 12.5 percent in Year one declining progressively to 3.1 percent in Year four. Dried whole egg will decline from 21.3 percent to 10.7 percent and frozen whole egg from 21.3 percent to 3.6 percent in year four. The duty on egg albumen currently at 8 percent will be waived after one year.

The reduction in duty effectively places the U.S. in the same bracket as members of the Comprehensive and Progressive Trans-Pacific Agreement formed in 2017 after unilateral withdrawal by the U.S. from the Trans-Pacific Partnership.

During the first eight months of 2019 Japan was the first-ranked importer of U.S. egg products representing 27.6 percent of volume with 5,549 metric tons but a decrease of 29.4 percent compared to the first eight months of 2018. Total value of egg products exported during the first eight months of 2019 was $22.1 million down 33.2 percent from 2018. On a value basis Japan represented 34.5 percent of U.S. egg products exported but down from 42.2 percent for the first eight months of 2018. Unit value was $3,982 ($4,213 in 2018) compared to the average value of $3,180 for all egg products exported during the first eight months of 2019. This is consistent with purchase of dried egg yolk incorporated into noodles and dried albumen for traditional foods.


 

Just Crack an Egg Promotion

10/17/2019

The partnership between AEB and Kraft Heinz is in progress, with egg cartons now on the shelf in many stores. More than 13 million coupons will be distributed across 12,000 grocery stores during October and November.

The instantly redeemable in-store coupon is valid toward a $1 saving with the purchase two Just Crack an Egg packages.

 

 


 

Commentary


2020 RFS Dispute Settled

10/16/2019

Establishing the quantity of ethanol to be incorporated into gasoline degenerates into an annual conflict between the biofuels industry and oil refiners with lobbying from both sides and pressure by corn-state legislators. After delays the U.S. Environmental Protection Agency and the USDA announced the Administration policy for 2020.  The EPA has called for public comment on the proposed 2020 renewable volumes standard and the biomass-based diesel volumes for 2021. 

 

EPA has determined that 15 billion gallons of conventional ethanol will be blended into gasoline in 2020. The EPA will also address the issue of small refiner exemptions based on protests over the total of 54 SREs awarded since 2017.  Following the decision to allow year-round sales of E15, the EPA will issue new rules relating to labeling and will “remove other barriers” to the sales of E15.  The USDA will consider infrastructure projects to facilitate higher biofuel blends.  This probably implies subsidy of pumps which can blend a range of ethanol levels. 

 

The joint announcement by EPA and USDA was applauded by legislators representing corn states including Senator Joni Ernst (R-IA) and Senator Chuck Grassley (R-IA) and Governor Pete Ricketts (R-NE).

 

Establishing the renewable fuels standard was established under the Energy Policy Act of 2005 and extended under the Energy and Dependence and Security Act of 2007.

 

Over the past 15 years, the U.S. has become energy independent. This invalidates the initial and principal objective of the RFS to reduce reliance on potentially antagonistic nations for energy. The RFS has become a consumer-funded support program for corn growers and the ethanol industry to the detriment of livestock production and ultimately all who eat and drive.


 

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10/16/2019


 

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Dr. Simon M. Shane
Simon M. Shane
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