Ever since grain prices began climbing in response to this summer’s drought, pressure has intensified for elimination, or at least a modification, of the Renewable Fuels Standard (RFS), which currently mandates 15.2 billion gallons of renewable fuels going into the nation’s fuel supply this year, most of that from corn. And for every group opposing the RFS, at least one other steps forward to defend it.
Last week, the Texas and Southwestern Cattle Raisers Association (TSCRA) called on EPA to waive the current RFS in light of corn shortages and soaring feed costs across the U.S.
The National Farmers Union (NFU) also submitted its comments to the EPA, in this case defending the RFS and its importance to the U.S. rural economy.
Also last week, the 25x'25 alliance announced its support for Fuels America, a coalition of renewable-fuel stakeholders who support the RFS. The 25x’25 initiative advocates for America’s farms, forests and ranches to provide 25 percent of the nation’s energy needs by 2025.
According to TSCRA, the government mandates that 40 percent of the U.S. annual corn crop go directly toward ethanol production; however, federal law does allow the EPA administrator to waive this requirement for up to 1 year if the implementation would severely harm the economy or environment of a state, a region or the U.S.
“As record drought conditions throughout the U.S. continue to push corn yields lower and prices upward, the economic ramifications for consumers, livestock and animal agriculture producers will become even more severe,” said Joe Parker Jr., rancher and TSCRA president, in comments submitted to EPA Administrator Lisa Jackson. “These ramifications are particularly severe in Texas, the leading cattle producing state in the nation.”
Writing on behalf of the NFU, the group’s president Roger Johnson stressed the RFS reduces U.S dependence on foreign oil, creates jobs and stimulates the domestic economy. Its existing structure provides sufficient market flexibility to deal with a reduced corn crop, he adds. “A possible RFS waiver is not only unnecessary, but most importantly would send strong negative signals to the nascent advanced biofuels industry. It would also jeopardize our nation’s energy security and the thousands of workers that depend on the industry.”
In his statement, Johnson countered arguments by RFS opponents that blame ethanol for high feed costs in the livestock sector by pointing to a recent Iowa State University analysis by Bruce Babcock that determined, in part, that eliminating the RFS would only reduce corn prices by less than 5 percent. “Since mid-June,” Johnson adds, “corn prices have climbed more than 50 percent, so the ethanol industry has already responded by reducing its demand for corn by 15 percent since the beginning of the year.”
At 25x'25, project coordinator Ernie Shea says "Because 25x’25 is so deeply rooted in agriculture, the Alliance understands the severity of the drought conditions and has great empathy for the crop and livestock producers who are suffering from its impacts this year. However, 25x'25 believes the RFS is a principal driver of the U.S. pursuit of alternative, clean and domestically produced transportation fuels – a pursuit that originally stemmed from a belief among policymakers that current methods of powering our vehicles were unsustainable and presented a risk to our national security.
"There is no current evidence that compliance with the RFS is causing severe economic harm, nor is there evidence that cutting back the RFS will improve the economic conditions of the states or the industries for which these waiver requests were filed.
"In fact, 25x'25 believes that cutting back the RFS would make very little difference in corn prices. However, setting aside ethanol requirements would likely keep gasoline prices higher and reduce the supply of the cost-competitive, high protein feed co-product of the ethanol production process, dried distillers grains with solubles (DDGS), used by many livestock producers.
For a detailed analysis of the possible effects of an RFS waiver, read “Will waiving RFS solve the problem for livestock feeders?” on Drovers/CattleNetwork.