WASHINGTON – A sharp spike in feed prices due to the continued drought is costing the nation’s poultry industry millions of dollars and threatening jobs.
"We have put on hold any plans to expand production and create new jobs because of the increased grain costs," said Gary George, president of Springdale-based George’s Inc.
The company, which produces 21 million pounds of poultry a week at facilities in three states, has seen corn prices jump from $5.51 per bushel to $7.34.
"With a 33 percent increase in corn prices, it will cost our company an additional $42 million for the next 12 months," George said. "As a result, we have put on hold any plans to expand production and create new jobs."
At Ozark Mountain Poultry in Rogers, chief executive officer Ed Fryar offered a similar story. At current prices, feed will cost them an extra $12 million over the next year.
"An increase in feed costs of this magnitude will be difficult for us to manage or survive," he said.
Without some relief, Fryar said the company may be forced to reduce production and lay off some of its approximately 500 employees.
Mark Hickman, president of Peco Foods Inc. in Tuscaloosa, Ala., said the high feed prices may cause layoffs at their processing facilities in Alabama, Mississippi and Arkansas.
The company, he said, had otherwise planned to expand its operations and possibly hire as many as 300 workers.
"We have put on hold any plans to expand production, hire new employees, add growers," Hickman said.
The poultry industry executives were among nearly a dozen from across the United States who sent letters recently to Rep. Steve Womack, R-Rogers, seeking relief.
The executives are urging Congress to repeal a federal Renewable Fuel Standard mandate that has forced oil companies to include corn-based ethanol at the pumps.
The mandate they claim is artificially inflating corn prices because the oil companies have no choice but to purchase corn for ethanol production no matter the cost.
While repeal is unlikely, more than 150 House members are urging the Environmental Protection Administration to suspend the mandate during this crisis.
Womack helped spearhead the effort and appeared at a Capitol Hill press conference Thursday urging EPA Administrator Lisa Jackson to follow through.
"The tool is in the toolbox. It’s time they used it," Womack said.
Reps. Mike Ross, D-Prescott, Rick Crawford, R-Jonesboro, and Tim Griffin, R-Little Rock, also signed the letter.
The EPA did not offer an immediate response.
But Sen. Chuck Grassley, R-Iowa, voiced his opposition to a waiver during a floor speech Wednesday in which he cited an Iowa State University study that found a complete waiver of the standard would reduce corn prices by only 4.6 percent.
"I would suggest that those claiming the sky is falling withhold their call for waiving or repealing the Renewable Fuels Standard. It’s a premature action that will not produce the desired result. And it would increase our dependence on foreign oil and drive up prices at the pump for consumers," Grassley said.
As Congress headed home Thursday for a month-long summer break, the House voted largely along party lines in favor of a bill to provide $383 million in drought assistance. Most Democrats voted in opposition.
Rep. Collin Peterson, D-Minn., ranking member of the House Agriculture Committee, called the bill a sad substitute for a five-year reauthorization of the farm bill.
The Senate has approved a five-year reauthorization and is waiting for the House to complete work on its bill so that they can hammer out a final version. The Senate, meanwhile, won’t have an opportunity to consider the $383 million House bill until it returns to session in September.