NEW YORK - C. Larry Pope, CEO of Smithfield Foods Inc., the world??s largest pork producer, is calling the U.S. government??s ethanol mandate worse the current drought that??s plaguing Midwest farmers and the nation??s corn supply.
In a Wall Street Journal op-ed, Pope suggests that the Renewable Fuels Standard (RFS) is adding insult to injury, which requires 15.2 billion gallons of ethanol blended into the U.S. fuel supply this year.
"The RFS has diverted so much corn as a questionable substitute for gasoline that in the face of this drought-depleted harvest, major food-producing companies such as Smithfield are being forced to seek alternative markets for grain to meet the demands of their livestock and at more affordable prices. Ironically, if the ethanol mandate did not exist, even this year's drought-depleted corn crop would have been more than enough to meet the requirements for livestock feed and food production at decent prices," wrote Pope.
Smithfield purchases about 128 million bushels of corn and corn equivalents a year from U.S. farmers to feed 16 million pigs on farms across 12 states. "This makes us one of the largest consumers of corn in the country. In addition, we contract with about 2,135 U.S. hog producers," he wrote.
Pope adds that the government can address the current crisis by taking steps to ease the pressure on corn supplies and prices and help prevent food inflation.
His suggestion: "the Environmental Protection Agency should grant a nationwide waiver to the RFS. That will have an immediate positive impact on the corn market by removing the demand created by the mandate."
Pope also lends support to legislation introduced in the U.S. House of Representatives by Reps. Bob Goodlatte (R-VA) and Jim Costa (D-CA) that would automatically reduce the ethanol mandate when corn stockpiles, as a percentage of total usage, fall below a certain level, writes the Journal.
"We can't control drought. But we can and must address the impact of politics on corn supplies and prices by taking steps to ease the pressure and help prevent food inflation: We can waive the ethanol mandate now, and then work on a longer-term plan," wrote Pope.