Tyson Foods supports the development and use of renewable fuels as a way to help reduce U.S. dependence on foreign oil. However, public policy should not promote the production of renewable fuels, particularly corn-derived ethanol, at the expense of our company, our customers, or consumers. Corn and soybean costs have a significant impact on our business. On average, corn costs make up 47 percent of the total cost of raising a live bird, while soybean meal contributes nearly 20 percent to the total cost. Corn and soybean meal are also significant feed components for cattle and hogs, and these costs have significant impact on the business of the independent cattle and hog producers who supply us with market hogs and finished cattle.

In 2005, and again in 2007, legislation was enacted that mandated the use of specific volumes of renewable fuels. We believe these mandates, which had the most immediate impact on the production of corn ethanol, were a significant factor in both a sharp rise in corn prices and increasing volatility in the agricultural markets. By mid-2008, our costs for feeding corn into our broiler operations had doubled since July 2006 from $2.90 per bushel to nearly $6.00 per bushel. In fiscal year 2008, we absorbed $593 million in increased grain costs over fiscal year 2007. These increases in input costs, resulting from government policies pitting food production against fuel production, directly affect our company's profitability. In 2008, independent hog producers were receiving high market prices for live hogs; however, they struggled to make a profit due to high feed costs.

Experts estimate that approximately 40 percent of the U.S. corn crop will be diverted from food and feed to fuel production by 2015 under current policies. Moving forward, we believe the current mandates should be reevaluated and that federal renewable fuel policies should focus on next-generation renewable fuels that do not rely on food-based feedstocks. This policy focus is good for the country and for our company's long-term sustainability.