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Talking turkey over energy

The pre-American Thanksgiving decision by the U.S. Environmental Protection Agency to deny the meat industry requests for a waiver on that country’s renewable fuel standard did little to calm the rhetoric between the livestock and ethanol sectors over who should have access to limited corn supplies this year.

Shortly after the announcement, the National Turkey Federation and other meat industry groups issued a press release warning that the decision would cause food prices to soar. The Renewable Fuel Association fired back with a white paper entitled: “This Thanksgiving, avoid Big Meat’s baloney.”

Here are excerpts from the RFA’s release.

More than 39 million Americans will take to the road for their Thanksgiving holiday, travelling an average distance of 588 miles, according to AAA. That means the average American family travelling by automobile this holiday will save $29.13 on gasoline purchases because of ethanol (based on average mileage of 22 miles per gallon and ethanol savings of $1.09/gallon.)

In May, the Center for Agricultural and Rural Development (CARD) released a study by economists at the University of Wisconsin and Iowa State University finding that in 2011, ethanol reduced wholesale gasoline prices by $1.09 per gallon nationally.

Ethanol reduced the average American household’s spending on gasoline by more than $1,200 last year, based on average gasoline consumption data. Since 2000, ethanol has helped save $39.8 billion annually in excess gasoline costs – roughly $340 per household per year.

“Ethanol and the Renewable Fuel Standard (RFS) are also helping to reduce this country’s dependence on foreign oil, thus creating a stronger country and a stronger economy. Ethanol is a product made by Americans for Americans and we are proud that on this most American of holidays that we can offer a solution to sky-high gas prices,” said Bob Dinneen, president and CEO of the Renewable Fuels Association.

“Now, you will hear some squawking from livestock and poultry producers who oppose the RFS and ethanol. Don’t let their scare tactics ruin your holiday. The fact is turkey prices are lower this year than the last two years, according to the Bureau of Labor Statistics,” Dinneen said. “The bottom line is ethanol production has nothing to do with the price of Thanksgiving dinner.

“Food costs are driven by energy costs. Only 14 per cent of the food bill goes to raw agricultural ingredients like vegetable oils, dairy products, corn and other grains and commodities. Meanwhile, 86 per cent of your grocery bill pays for energy, processing, packaging, marketing, labour and other costs. Don’t let Big Food fool you into believing anything different.”

  •  Turkey prices are lower this year than in 2011 and 2010. The U.S. city average price for turkey is $1.66/lb., down slightly from the previous two years, according to the Bureau of Labor Statistics.
  •  USDA projects 2012 turkey hen prices will be just 3.8 cents/lb. higher than 2011 prices, while 2013 prices could decrease by nearly five cents/lb.
  •  Turkey production is projected to hit a five-year high in 2012, followed by strong output again in 2013.
  •  Thanksgiving dinner for 10 people will be $0.80 lower this year in Virginia and $0.61 lower in North Carolina, according to the same Farm Bureau sources.
  •  The groups decry that “food prices have spiked nearly 18 per cent since 2005,” the year the first RFS was passed by Congress. That’s an average of just 2.57 per cent per year, which is right in line with the 20-year average for annual food inflation.
  •  Additionally, 2010 saw the lowest year-over-year food inflation in nearly 50 years. Meanwhile, the ethanol industry produced a record amount of fuel that year.
  •  If there was any truth to the myth that retail food prices have increased abnormally since 2005, it would be mostly because of surging energy prices. In fact, 86 per cent of the average household’s food bill pays for energy, transportation, processing, packaging, marketing, and other supply chain costs. Just 14 per cent pays for the raw agricultural ingredients in our groceries.
  •  Contrary to Big Food’s rhetoric, ethanol is helping reduce the cost of the Thanksgiving holiday for the average American family.

Recent economic analysis from Louisiana State University, the University of Wisconsin and Iowa State University demonstrates that ethanol significantly reduces gasoline prices.

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