What is in this article?:
- Tussle over government ethanol mandate heats up as drought lingers
- Ethanol advocates respond
- As a prolonged drought saps U.S. corn yields, a tug-of war over shrinking stocks has intensified between livestock/poultry producers and proponents of the government-mandated Renewable Fuel Standard (RFS).
- Ethanol industry says that corn and feed prices are minimally impacted by the RFS.
Ethanol advocates respond
Ethanol industry advocates were quick to downplay the coalition’s claims and encouraged the EPA to refuse the waiver request.
“A dispassionate review of the facts can lead to only one conclusion: a waiver of the RFS would simply reward oil companies that have long sought to repeal this very important and successful program,” said Bob Dinneen, RFA president and CEO, in a Monday statement. “The RFS has reduced our dependence on imported oil and saved consumers at the pump.”
Saying the marketplace – “the most efficient mechanism to ration demand” -- should be allowed to sort things out, Dinneen claimed that for the week of July 23, the ethanol industry’s corn usage was the lowest in over two years and down nearly 14 percent in the last six weeks.
Dinneen was backed by several farm and commodity groups.
The National Corn Growers Association “stands firm in its support of the RFS and will strongly oppose legislation to alter or repeal the RFS,” said NCGA President Garry Niemeyer. “Likewise, we believe it is premature for a waiver of the RFS provisions at this point. With the crop still in the field, it is too early to determine this year’s final corn supply. In addition, the ethanol industry now has a significant surplus of ethanol and RFS credits that can greatly offset ethanol’s impact on the corn supply.
“However, we recognize the severe impact of the drought on our farmers and our customers, here and abroad, with livestock, poultry, ethanol and other processing facilities, and we believe the flexibility of the RFS does work, and will work.”
National Farmers Union President Roger Johnson pointed to a recent study by the Center for Agriculture and Rural Development (CARD) at Iowa State University. The study “makes clear that calls for the immediate reduction, revision or repeal of the Renewable Fuel Standard (RFS) would not achieve the stated goals of those industries calling for” an RFS waiver. “The study showed that eliminating the RFS would reduce corn prices less than five percent.”
Johnson said that “rather than dramatically altering the RFS, we need to look at alternative options. Last fall NFU released a University of Tennessee study on the Market-Driven Inventory System (MDIS), which would reserve grain during periods of high production and low prices so that it can be used during times of low production and high prices like we are experiencing currently. This is a more sensible approach to saving taxpayer dollars than attacking the RFS.”
Addressing the CARD study, Elam said it was based on an average corn yield of 138 bushels per acre. “We believe that the yield will be significantly below 138, perhaps in the 120-125 bushel range when the final crop production reports come in. And the impact will be more than proportionally larger than the reduction in yield.”
Tom Buis, CEO of Growth Energy, ripped the coalition’s efforts. “Any objective source will see this argument for what it is -- an attempt to blame corn farmers and ethanol producers for an uncontrollable act of Mother Nature. The facts simply do not add up. The true root of this campaign is an attempt to increase the bottom line of the livestock and poultry industry at the expense of grain farmers. After years of the federal government subsidizing the production of corn, this coalition believes they are still entitled to subsidized corn prices. Smearing family farmers for finally selling their crop above production cost and without government subsidies shows the true motivation of big food -- protecting their bottom line, not consumers.
“If these groups desire is to pick and choose who gets first access to the available crop -- as opposed to letting the market determine the best and highest use thru supply and demand, then they should look at all uses for corn, not just ethanol.”
For more on the RFS, see here.