By The Associated Press

WASHINGTON - The chicken industry and other meat producers are "deeply disappointed" by the Environmental Protection Agency's refusal to grant a waiver of the ethanol mandate that is diverting billions of bushels of corn from livestock and poultry feed into motor fuel, according to the National Chicken Council.

Texas Gov. Rick Perry asked the EPA to cut the federal ethanol mandate in half for a year. Federal law allows EPA to grant a waiver of the ethanol mandate if needed.

An energy bill passed in December required 9 billion gallons of ethanol to be blended into gasoline from Sept. 1 to Aug. 31 of next year. Perry asked the EPA in April to drop the Renewable Fuels Standard requirement to 4.5 billion gallons because demand for ethanol is raising corn prices for livestock producers and driving up food prices.

Springdale-based Tyson Foods Inc. has been vocal about the food verses fuel debate since last summer.

Following Thursday's announcement Tyson Foods released this e-mailed statement: "We join consumers, food producers and others in expressing our extreme disappointment in EPA's refusal to grant the waiver. As we noted in our letter in support of Governor Perry's request, we believe there is clear evidence the government's support of using food for fuel is having a significant adverse impact on the economy."

As the nation's second largest chicken processor, Tyson Foods said it expects to spend an extra $500 million on grain this year, due largely in part to the government's ethanol mandate.

Siloam Springs-based Simmons Foods recently acquired neighboring Peterson Farms, which cited higher grain costs compromising profits for the primary reason it decided to sell. Simmons Foods said recently it cut broiler production by 6 percent in hopes of bringing the industry margins back into the black.

Industry analysts estimate chicken processors have lost an average of 5 cents per pound this year, compared to 8 cents earned in the same period of 2007.

The chicken council estimates that higher feed-grain prices due largely to the ethanol program have cost companies in the broiler chicken industry more than $6 billion since October 2006.

EPA Administrator Stephen Johnson, during a conference call with reporters, said the agency's assessment looked at the livestock issue and found feed prices have increased because of biofuel production.

"However, is that the result of the (Renewable Fuels Standard) mandate? Our conclusion is no," Johnson said. "And second, are those price increases meeting the statutory requirement of severe harm to the economy? And our conclusion is no."

The EPA has failed to heed the very clear signs that the food-to-fuel policy is causing severe harm to the economy, said George Watts, president of the National Chicken Council.

"When food prices are rising and chicken companies are losing money because of high feed costs, it is outrageous that the federal government continues to require and even to subsidize the diversion of corn from the food supply into the fuel supply," Watts said.

Joel Brandenberger, president of the National Turkey Federation, agreed. "This decision is going to have a major effect on our turkey producers who have been suffering the effects of more than one billion dollars in additional feed costs over the last two years," Brandenberger said.

Texas Gov. Rick Perry made the request to the EPA in April asking for a temporary reduction in ethanol requirements for gasoline in hopes of bringing down corn prices.

Gov. Rick Perry called the EPA's decision "a mistake" and "bad public policy."

"I am greatly disappointed with the EPA's inability to look past the good intentions of this policy to see the significant harm it is doing to farmers, ranchers and American households," Perry said. "For the EPA to assert that this federal mandate is not affecting food prices not only goes against common sense, but every American's grocery bill."

The American Meat Institute also supported Gov. Perry's proposal, and estimates under the mandate consumers could pay 25 percent more for some pork cuts and 40 percent more for some beef cuts by 2009.

-The Morning News reporter Kim Souza contributed to this report.