The Hagstrom Report

Agriculture News As It Happens


Both sides of RFS waiver issue make voices heard


Groups in favor of waiving the Renewable Fuel Standard and groups opposing the waiver filed comments with the Environmental Protection Agency on Wednesday, the last day that the agency was accepting comments on the petition from the governors of Arkansas and North Carolina to waive it because feed costs have risen so high.

EPA is scheduled to make a decision on the petition by November 11, but is not expected to announce it before the November 6 election.

The RFS requires 13.2 billion gallons of corn-based ethanol to be blended into gasoline in 2012 and 13.9 billion gallons in 2013. There are estimates that the amount of corn used for that blend will be between 4.7 billion and 4.9 billion bushels of the nation’s 10.7 billion bushel corn crop, but the impact of that usage depends on whether the byproducts from ethanol used for feed are counted.

The Agriculture Department on Thursday cut its domestic corn production forecast to 10.706 billion bushels, down less than 1 percent from the 10.727 billion, down 13 percent from 2011 and the lowest level of corn production since 2006.

Corn prices rose 36½ cents, to $7.73 a bushel, while soybeans jumped 25¼ cents, to $15.49 a bushel, but those prices remained below the September record highs of $8.49 per bushel for corn and $17.89 per bushel for soybeans, the New York Times reported today.

Meat groups were uniform in their support for the waiver but gave different reasons for their views.

J.D. Alexander

J.D. Alexander
National Cattlemen’s Beef Association President J.D. Alexander, a Nebraska cattleman and corn grower said, “NCBA’s membership supports the American ethanol industry and we are committed to energy independence. However, this energy commitment has created challenges for America’s cattlemen and women now more than ever due to the current drought plaguing 70 percent of cattle country.”

“The production of ethanol from our main feedstock – corn – is significant to the cattle industry because of its impact on its availability and on corn prices,” Alexander added. “Our membership strongly opposes mandates on production and is simply asking for a level playing field when competing for a bushel of corn.”

The National Turkey Federation said it “inundated” EPA with comments from more than 1,500 members asking for a waiver for the remainder of 2012 and all of 2013, citing severe economic harm to the livestock and poultry industry and the nation as a whole.

Joel Brandenberger

Joel Brandenberger
“NTF collected more than 1,500 comments that spoke with one voice,” said NTF President Joel Brandenberger.

“Each comment made it painfully evident that the RFS is hurting the average American, our nations’ agriculture, and livestock and poultry businesses,” he said. “We are looking to EPA to use the waiver process as it was intended. If a waiver is not granted after this clear cry for help, then the current system is irreparably flawed.”

The National Chicken Council said that waiving the RFS would reduce corn prices by more than $2 per bushel.

Oxfam America also submitted comments from 17,500 Americans in favor of the waiver on the grounds that it would “help rein in runaway food prices that are leading to hunger in the US and around the world,” the international charity said in a news release.

But Fuels America, a coalition of pro-ethanol groups, pointed to the same studies and others, and said they showed that the RFS has no major effect on corn and feed prices and creates jobs in rural America.

“America’s Renewable Fuel Standard has spurred billions of dollars of investment in both conventional and advanced renewable fuel technologies, enhanced our country’s energy security and helped improve our environment,” Fuels America said in a news release.

“We can’t afford to reverse the progress we have already made. We hope the EPA takes into account the comments it has received from entrepreneurs, farmers, investors and security experts alike and protects the RFS.”

The coalition includes the Biotechnology Industry Organization, DuPont, the National Farmers Union, and the National Association of Wheat Growers as well as corn and ethanol groups.

Tom Buis

Tom Buis
Growth Energy, which represents ethanol plant builders and managers, said that a system of credits built into the RFS has already worked for a short-crop year. “There is simply no justification for waiving the RFS,” stated Growth Energy CEO Tom Buis. “These waiver requests are riddled with inaccuracies and misinformation and there is no merit to our critics’ arguments,” Buis continued.

“A decision to grant the waiver requests would come at a great cost to the United States, both economically and through the sacrifice of larger policy goals,” Buis added.

“A full waiver of the national Renewable Fuel Standard could lead to closed or idled biorefineries throughout the nation, resulting in as many as 3,000 to 8,300 job losses in ethanol producing areas and $2.9 to $7.8 billion in lost revenues,” Buis said.

“Consumers would then suffer much higher prices at the gas station, costing U.S. drivers more than $7.5 billion a year or $62.70 per household - far more than any potential impact on food prices,” he said. “The waiver could also mean losses of between $5.8 and $27.75 billion for U.S. corn farmers, exacerbating what is already a time of economic hardship in rural America.”

Bob Dinneen

Bob Dinneen
Renewable Fuels Association President and CEO Bob Dinneen said, “EPA has no option but to deny the waiver requests because they are procedurally incomplete, legally insufficient, and factually flawed.”

“Perhaps most outrageous is the fact the petitioners make no mention of the RFS program’s inherent flexibilities, and they blatantly ignore the fact that the ethanol industry is responding rationally to current grain market conditions by significantly reducing production,” Dinneen said.

“Supporters of a waiver overlook the impact of RIN credit banking, borrowing, and trading provisions,” he said. “The very provision that allows obligated parties to meet up to 20 percent of their current year RFS obligation with RINs generated in the previous compliance year was designed specifically to mitigate the impacts of a drought on agricultural markets.”

RFA also noted that five governors had written to EPA opposing the waiver.