The Hagstrom Report

Agriculture News As It Happens


Corn estimate results in calls on RFS, farm bill

The corn estimate has produced the usual calls for a waiver of the Renewable Fuel Standard and the usual defense, while farm leaders issued new calls for passage of a five-year farm bill.

ActionAid USA, a group that focuses on Third World development group that has long opposed the corn for fuel, once again called on the Environmental Protection Agency to waive the RFS.

“As the U.S. is the largest exporter of corn to other countries, $8.90 corn could push the world to the edge of a new global food price crisis, hitting people living in poverty hard,” said Marie Brill, a senior policy analyst for ActionAid USA.

“Already wheat is being substituted for feed internationally to offset lower corn exports and high corn prices, pushing up wheat prices too. It is time to re-think ethanol mandates that ensure that cars eat before people,” she said.

Brill also said policymakers should “confront the causes of climate change” and continue funding for foreign assistance programs that help smallholder farmers, especially women, improve their productivity so that countries can reduce their dependence on food imports.

Oxfam America also called for the waiver.

“Urgent actions, including waiving U.S. mandates for ethanol, could calm markets and ensure that corn is available for food rather than fuel,” said Eric Munoz, senior policy adviser for Oxfam America, who also called for aid to smallholder farmers.

Meanwhile, Tom Buis, CEO of Growth Energy, which represents ethanol plants, said there is no reason to waive the RFS.

“We will have enough corn — in fact, USDA’s report demonstrates how the market is already working to cut demand as they actually increased available corn stocks at the end of the year — showing over one billion bushels of corn surplus,” Buis said.

“Ethanol production is already down 15 percent in the last month alone. Any attempt to change the Renewable Fuel Standard, our nation’s successful biofuel policy, would simply be a knee-jerk reaction to the benefit of Big Oil,” he said. “The current policy has flexibility built in for exactly these types of situations.”

The Renewable Fuels Association said, “What this report does not do is provide justification for waiving the Renewable Fuel Standard for the rest of 2012. Given the abundance of RFS credits, ample ethanol stocks, and various other flexibilities, obligated parties under the RFS will have every opportunity to demonstrate compliance this year.”

RFA also said that there are 2.6 billion RFS credits refiners could use to meet their obligations, which represents 950 million bushels of corn.

RFA Vice President for Research and Analysis Geoff Cooper acknowledged that “USDA numbers were slightly worse than expected by analysts; on average, they had expected a crop of 10.97 billion bushels on a yield of 126.2 bushels per acre,” but still the eighth-largest corn crop on record.

Globally, total grain output (coarse grains, wheat, rice) was cut 2.9 percent, and total grain supply was cut 2.1 percent, and grain ending stocks were reduced 4.3 percent, Cooper noted.

“Still, 2012-13 global grain output would be the second largest on record, trailing only last year,” he added. “Based on today's USDA estimates, the U.S. ethanol industry will use 2.9 percent of the world grain supply on a net basis in 2012-13, the lowest percentage since 2008-09.”

The 25x25 Alliance, a pro-ethanol group, called on policy makers “to exercise good judgment and recognize that while today’s USDA report on crop production suggests real stress on U.S. farms, it still gives no good reason to back away from our federal Renewable Fuel Standard.”

Barth Ruth, chairman of the 25x25 Policy Committee, also called for passage of a five-year farm bill with disaster assistance.

“Calls to waive all or part of the RFS are based on alarmist forecasts from interests who are seeking to boost their own revenues, not the least of which is the oil industry,” Ruth said. “This is a critical time in our nation’s energy evolution and today’s report should not stop the vast progress made in just the past few years.”

The National Corn Growers Association said it stood firm in its support of the Renewable Fuel Standard.

“At the same time, we support the waiver process that is embodied in the current RFS, and ask that any parties who would seek RFS changes do so in this manner, rather than through legislation,” the NCGA said.

“Many of our farmer members are suffering immensely from the drought,” noted NCGA President Garry Niemeyer. “Many are also in the same predicament as our customers because they have livestock or own ethanol plant shares. Now is the time for all of American agriculture to pull together and work together for solutions that benefit us all.”

“What farmers and ranchers are experiencing clearly demonstrates the pressing need for Congress to pass a farm bill this year,” Niemeyer added. “The Senate and the House Ag Committee have already done their job, and we thank them for that. In light of the evolving situation, we strongly urge the Speaker of the House to get the farm bill on the House floor for an open debate and quick vote.”