The Hagstrom Report

Agriculture News As It Happens


Brown says buy bourbon, end RFS, but ethanol wins in court

Environmentalist Lester Brown, who on Thursday said that USDA has underestimated the decline in the corn harvest, has noted that food and drink prices are likely to go up because so many U.S. food and drink items are based on corn, including bourbon.

Lester Brown
Lester Brown
“If you drink Maker’s Mark, I would recommend getting a case in hand as soon as possible,” Brown said during a telephone briefing for reporters on Thursday.

“We don’t eat a lot of corn, but everything has corn in it,” said Brown, who heads the Earth Policy Institute.

Although some analysts have said that meat prices may go down temporarily as ranchers liquidate their herds because they do not have enough grass and feed prices become high, Brown said he believes people will see increases in meat prices, poultry, milk and eggs.

Higher meat prices could intensify the decline in meat consumption, which is already going on due to cultural shifts, Brown said.

“Moving down the food chain is a healthy thing to do,” Brown added. “There is a basic rethink going on.”

While some nutritionists and healthy-eating advocates have questioned why so much of the nation’s land is devoted to corn rather than fruits and vegetables, Brown said he is more concerned about people “living too high on the food chain.”

“Corn is an extraordinarily productive crop,” he said. “No other grain comes close to it in terms of producing calories. It has an important role to play in the world. There are a lot of people in the world who are now malnourished so using corn to produce chicken or eggs is the easiest way to get at that lack of protein.”

Brown said he sides with the meat companies in the criticism of the Renewable Fuel Standard, which requires the production and use of corn-based ethanol.

Noting that he had written as early as 1981 that the world faces competition between cars and people, Brown said, “We made a big mistake in deciding to try to get a large share of automotive fuel from crops.”

But Brown is an advocate of renewable energy, and believes that cars should run on electricity produced by wind power.

Meat and dairy groups held a news conference with Rep. Bob Goodlatte, R-Va., on Thursday to urge Congress to change the Renewable Fuels Standard. Others have said that the Environmental Protection Agency should waive the current requirement, but Obama administration officials have said there is so much ethanol already produced that is not necessary.

Garry Niemeyer

Garry Niemeyer
But National Corn Growers Association President Garry Niemeyer noted that corn and other ingredients are only a small percentage of the cost of food and said there is no reason to change the RFS because the size of the corn crop is not yet known.

Niemeyer noted that a White House news conference on Wednesday, Agriculture Secretary Tom Vilsack said farmers only receive a fraction — about 14 cents — of every dollar spent on food at the grocery store.

“Look at corn, for example, which even at its current price is an inexpensive food ingredient,” Niemeyer said. “The corn in a box of corn flakes only costs about a dime, and there’s just over a quarter’s worth of corn in a pound of beef.”

Niemeyer also said the RFS is working because it is “revitalizing rural America, reducing our dependence on foreign fuel and reducing the cost of gasoline.”

Making changes to the RFS now would only ensure that consumers suffer due to significantly higher fuel prices, he said

“We won’t know the actual size of the 2012 corn crop until months from now," said Niemeyer. "In the meantime, the market is working. All corn users are responding to market signals. Ethanol production and exports are down. In addition, there is currently an ethanol surplus in the United States that will further reduce demand on the 2012 corn crop.”

The U.S. Court of Appeals for the District of Columbia Circuit today rejected a petition by the National Chicken Council, National Meat Association, and National Turkey Federation challenging EPA’s Renewable Fuel Standard regulations issued on March 26, 2010.

The challenge was focused on a provision in the rules addressing ethanol plants built in 2008 and 2009 and the requirements they must meet to generate trading credits under the program, Farm Futures reported.

Growth Energy CEO Tom Buis and RFA President and CEO Bob Dinneen issued a joint statement praising the ruling.

“Today's decision is nothing short of a victory for American ethanol producers and renewable fuel advocates,” their statement said.

“This was the last of many challenges to the RFS2 rulemaking and each one was rejected. With the court denying this latest challenge, they have vindicated the rulemaking process of the RFS2.”

The American Feed Industry Association today urged President Barack Obama to waive the ethanol blending mandate.

“AFIA was extremely disappointed to hear Secretary Vilsack this week again state there is no reason for the administration to consider waiving all or part of the ethanol RFS mandate,” AFIA President Joel Newman wrote. Citing rising feed costs, Newman added, “It is imperative the White House preempt, or at the very least minimize to the extent possible, the ultimate negative impact of the current drought.”