ANALYSIS: Livestock producers want legislators to repeal ethanol law

Sunday, April 27, 2008 | 5:41 p.m. CDT; updated 5:42 a.m. CDT, Tuesday, July 22, 2008

JEFFERSON CITY — A newly implemented ethanol mandate coupled with rising livestock feed prices is dividing Missouri’s farmers.

It pits corn farmers, who are getting record prices for their grain, against livestock producers, who are struggling to feed their herds.

At the center has been a law that, starting this year, requires most Missouri gasoline to be blended with 10 percent ethanol if the biofuel is cheaper than regular gas.

Corn farmers defend the four-month old mandate as “one of the greatest Missouri economic development bills.” But livestock producers — many of whom voted for it two years ago — argue it’s contributing to a “livestock industry meltdown” by leading to higher feed prices. And they’re lining up to get it repealed.

Rep. Mike Dethrow, a hog marketer from rural southern Missouri who has filed legislation to lift the ethanol mandate, said knowing what he does today about where corn prices have gone, he would not have supported the bill requiring ethanol two years ago.

“It is a piece of the puzzle,” said Dethrow, R-Alton. “The solution is probably the free market. The solution is probably not more government.”

But corn farmers say misperception, foreign demand and a less valuable American currency spurring more grain exports are each much bigger factors than ethanol in the livestock feed prices puzzle.

“There are a lot of factors out there that are affecting this thing,” said Gary Clark, the senior director of market development for the Missouri Corn Growers Association. “There is just not that magic bullet that is all of a sudden going to take livestock prices up and grain and corn prices down.”

Clark said livestock producers see their feed costs rising, read about the state’s ethanol mandate and assume that one led to another because that’s the most obvious difference. But he argues it’s the less visible market factors that are actually driving prices. Plus, ethanol plants offset some of the corn they use by producing distiller’s grains that can be used to feed livestock.

The ethanol split has been a particularly public divide in a farming community that frequently aligns together in the Capitol to form a potent force, often able to offset the power of the more numerous suburban and urban lawmakers.

Even so, Missouri’s agricultural interests sometimes have been a divided monolith. In recent years, there have been breaks over whether cities and counties should be allowed to regulate concentrated animal feeding operations and genetically modified crops.

But schisms have generally separated large and small farming operations and not crops versus animals. The break over ethanol comes as some lawmakers want the state to create a similar mandate to require a biodiesel fuel blend.

Rep. Steve Hobbs, an ethanol backer and corn grower from mid-Missouri, likened Missouri’s farmers to neighbors: They want to help each other, but there is also a sense that people have to look out for themselves.

“There’s always been a delicate balance between grain farmers and livestock producers,” said Hobbs, R-Mexico.

Some livestock producers are convinced the state has sided with grain farmers by passing a law that creates a guaranteed market for corn whenever ethanol is cheaper than gas. That’s upset the equilibrium in a relationship where the participants want corn prices moving in opposite directions.

“That’s the rub, that we came in and helped one segment of ag, but we didn’t help the rest,” said Rep. Tom Loehner, who has cattle and sheep but also grows some corn and beans on his farm in Osage County south of the Missouri River.

Even if divided, grain growers and meat producers have so far remained civil.

Missouri’s corn commodity group is working with beef producers to find ways to use ethanol byproducts to feed animals and to better explain why they think livestock feed prices are increasing. During a hearing on the bill to repeal the ethanol mandate, livestock producers frequently caged their criticisms of it with the disclaimer that “I like corn farmers.”

“These guys, the corn growers, had some tough times,” said Loehner, R-Koeltztown. “They’re saying, ‘OK we’re making a few dollars, and we don’t want to give that up.’ And we don’t begrudge you, we just need to get our own prices.”

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Mike Sykuta April 28, 2008 | 2:21 p.m.

If the corn growers are comfortable in stating that Missouri's ethanol mandate does not play a large role in the run up of corn prices, then they shouldn't be too concerned about removing the mandate, should they? If the mandate didn't make prices go up much, removing it shouldn't make prices go down much. Then the livestock producers and corn growers can get back to being friendly neighbors and gasoline consumers can go back to buying fuel of their choice.

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