U.S. poultry industry faces feed shortages and price increases.

The U.S. poultry industry will need to hold the nation's lawmakers accountable if higher ethanol mandates result in further price spikes or shortages in feeding ingredients, National Turkey Federation (NTF) president Joel Brandenberger said. It will also have to "press them to help solve a problem they created", he added.

Writing in NTF's December newsletter, economics consultant Thomas Elam described the new ethanol mandate as a "game changer" for U.S. agriculture.

He said that significant marketplace and technical obstacles stand in the way of the higher mandate. The grain-based ethanol goal of 15 billion gallons would require 5.35 billion bushels of corn a year -- almost as much as will be used for poultry and livestock feed in the U.S. during 2008.

If U.S. corn yields increase at 1.5 percent per year (the average increase of the last 17 years), Elam said, enough would be produced to meet ethanol demand and slightly greater feed and food use but no increase in exports. A crop failure, however, would create difficulties.

In the hypothetical case of a 2021 yield of only 150 bushels per acre, corn production would fall 3 billion bushels below the required amount, he said. "The ethanol mandate requires that gasoline blenders buy 15 billion gallons, regardless of cost," Elam noted. "The 3 billion bushel shortfall will come from feed use, food use and exports. Corn could easily go to $6, $7 or even $10 per bushel to ration the supply. Ethanol prices will increase enough to cover the higher costs of corn and U.S. food production will drop."

In related news, corn stocks for the first quarter of 2007 are anticipated by many analysts to be higher than last year's levels as the overall bigger production should boost supplies, analysts said. Analysts also said the 2007-08 corn ending stocks will decline from the level projected last month as a result of the small decrease in production and continued strong export demand. That would lower the amount of corn expected to be left over at the end of the marketing year, analysts said. The average estimate for U.S. corn production was 13.109 billion bushels, 59 million bushels below the 13.168 billion forecast in November by USDA, according to a survey of 19 analysts by Dow Jones Newswires.