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Dairy’s Downward Spiral a Consequence of Broken Biofuels Policy

Friday, November 9, 2012

California dairymen are being regularly referred to suicide hotlines as many go broke from rising feed costs, the San Francisco Chronicle reports.

The Chronicle quotes the California-based trade group Western United Dairymen as saying that since 2009, three farmers have committed suicide after losing their family’s dairies. Western Dairymen board member Frank Mendonsa tells the Chronicle that conversations with distressed dairy farmers are “counseling session[s] to stop people from hurting themselves.”

California’s $8 billion dairy industry is in crisis in large part because corn prices have risen 60 percent since June. Animal feed now accounts for more than 70 percent of farmers’ total dairy operating costs, according to California Dairies, Inc., the state’s leading dairy processing cooperative. By the year’s end, California, the nation’s largest dairy state, may lose more than 100 dairies to bankruptcies, foreclosures and sales. Meanwhile, farmers struggle to feed their cows with high-priced corn amidst widespread drought.

There is little hope in sight. U.S. corn futures remain well over $7 a bushel, prices boosted by a shrinking corn harvest, dried-up pastureland and a misguided mandate for greater use of corn ethanol in the U.S. fuel supply.

Dairy farmers across the country are taking extreme measures to stay afloat. Milk cows are being culled at the fastest rate in more than 25 years, with more than 2 million slaughtered nationwide in the first eight months of this year. In California, farmers are supplementing corn feed with local commodities like almonds and apples, but neither alternative provides animals with enough nutrients.

For an increasing number of dairymen, last-ditch efforts just simply aren’t enough to survive. Unable to pay bills or make loan payments, some families have been forced to sell off homes and dairies inherited from parents and grandparents.

This desperation isn’t unique to the dairy industry. Ranchers and livestock producers are struggling with escalating feed prices because more than 40 percent of the U.S. corn crop is being diverted to fuel. According to the U.S. Department of Agriculture, last year, feed costs for the livestock, poultry and dairy industries reached a record high of $54.6 billion – an increase of more than $9 billion from 2010.

Since 2007, more than 60,000 pork, poultry and beef operations have closed. Cattle herds have shrunk to the smallest level in two generations. Almost 9.9 million hogs were slaughtered in August – more than any other August in recent memory. And in just three years, the beef industry lost a record $7 billion in equity due to high feed costs, according to the National Cattlemen’s Beef Association.

To a great extent, these economic woes result from Congress’s decisions to build out the corn ethanol industry at taxpayers expense and to expand the mandate for the blending of “conventional biofuels” – predominantly corn ethanol — into the U.S. transportation fuel supply.

Consumers have not been spared. According to the Congressional Budget Office, corn ethanol production has contributed to the rise in corn and food prices, which in turn have boosted federal spending on mandatory nutrition programs by as much as $900 million. Likewise, diverting corn from food to fuel has contributed to a whopping 79 percent increase in the Consumer Price Index – a measure of food inflation for meat, poultry and eggs – since the mandate was expanded in 2007. Those hit hardest by high food prices – close to 18 million U.S. households considered food insecure – cannot literally afford to have corn ethanol eat before they do.

For the poor in developing countries, the stakes are even higher:

  • Oxfam, the international relief organization, has calculated that biofuels have endangered the livelihood of 100 million people and dragged more than 30 million people into poverty;
  • The United Nations, the International Monetary Fund, the National Academy of Sciences and other authoritative bodies have cited corn ethanol as a factor in food price increases.
  • A major study commissioned last year by the so-called G20 nations, the world’s leading economies, concluded that biofuels mandates are a leading driver of food price volatility and should be abolished; and
  • A recent report by ActionAid, a leading anti-poverty organization found that from 2005 to 2011, U.S. ethanol expansion cost corn-importing countries $11.6 billion in higher corn prices, with more than half that cost borne by poorer countries.

It’s time to ask our nation’s leaders why they continue to support a policy that causes irreparable harm to farmers, ranchers and livestock producers. How many more dairies need to go out of business in California, New York or Vermont before Congress and the White House act in our best interest?

The corn ethanol mandate is killing jobs in rural America, jacking up the cost of basic staples at home and abroad and weakening the U.S. and global economies.

It’s bad agriculture policy masquerading as clean energy, and it needs to go.

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