The Hagstrom Report

Agriculture News As It Happens


FAO director-general calls for RFS waiver, countered by Global Renewal Fuels group, BIO

In light of rising global food prices, United Nations Food and Agriculture Organization Director-General Jose Graziano da Silva called Thursday for the United States to waive the Renewable Fuel Standard, but the Global Renewable Fuels Alliance said today it is not necessary.

“Much of the reduced crop will be claimed by biofuel production in line with U.S. federal mandates, leaving even less for food and feed markets,” Graziano da Silva, a Brazilian in his first year in his FAO office, wrote in an op-ed article published in the Financial Times.

“An immediate, temporary suspension of that mandate would give some respite to the market and allow more of the crop to be channeled towards food and feed uses,” he wrote.

But the Toronto-based Global Renewable Fuels Alliance said Graziano’s call “is unjustified.”

“The flexibility of the RFS and the market are the most effective way of reducing demand for corn during these difficult times,” the industry group said in a news release.

“Already we have seen U.S. ethanol production curtailed by 14 percent this year while refiners are sitting on 2.6 billion RFS credits that can be used to meet their compliance obligations,” the group said.

“This market flexibility combined with large ethanol stocks makes the waiver of the U.S. RFS unnecessary. While the current drought in the U.S. Midwest has placed tremendous pressure on farmers, any action to reduce or eliminate the RFS would be premature and have immediate consequences in lost jobs and an increased reliance on crude oil imports.”

The U.S. ethanol industry uses only 2.9 percent of the world grain supply, the group said.

Also reacting to Graziano da Silva’s statement, the Biotechnology Industry Organization said today that the RFS is the “pathway to energy security today and in the future.”

“The United Nations call for a suspension of the RFS is unwarranted,” said Brent Erickson, executive vice president for BIO’s Industrial & Environmental Section.

“Long-term policy changes are not the answer to short-term conditions,” Erickson said. “Solutions proposed to-date will provide no immediate relief to animal producers or farmers impacted by the drought, but congressional action could have unintended economic impacts on farmers and biofuel producers over several years.”

U.S. meat groups and members of the House and Senate have previously called on the Environmental Protection Agency to waive the RFS.