Cargill CEO Gregory Page has called on the US government to temporarily curb its ethanol quotas. He added that the expected drop in global corn production is 'manageable' with the right response.
Page said on CNBC that the US biofuel mandate 'needs to be addressed' through policy tools, becoming the highest-profile executive to call for some relief from the Renewable Fuels Standard that requires that over a third of the corn crop is made into ethanol for fuel.
Global corn crop
With the global corn crop expected to fall about 3-4% below trendline norms as the worst drought in over half a century decimates the US harvest, anyone who consumes corn will be forced to begin cutting back, Page said.
He said on the business news channel: "If all of that (demand rationing) is only on livestock or food consumers, it really makes the burden disproportionate. What we see are 3 or 4% declines in supply lead to 40 to 50% increases in prices, and I think the mandates are what drives that price elasticity which I think needs to be addressed."
He added: "There are mechanisms in place for a combination of agencies, there are some controls. There is a methodology to reduce the amount of biofuels that is mandated in the US."
Earlier this week, US livestock groups including many poultry organizations appealed to the Environmental Protection Agency (EPA) to curb or suspend the mandate. Smithfield Foods CEO C. Larry Pope addressed the US government with a similar request.