Unintended consequences of RFS

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American farmers will plant 96.5 million acres of corn this year, according to estimates by the U.S. Department of Agriculture. Private industry forecasts suggest acreage could be even higher, depending on planting conditions this spring.

Is all that corn a good thing?

If you’re feeding cattle or hogs this year you’re probably hoping for a bumper crop of corn and lower grain prices, as livestock margins have been miserable for months. And, if you’re like most livestock producers, you probably oppose the federal government’s Renewable Fuel Standard (RFS), which requires transportation fuel sold in the United States to contain a minimum volume of renewable fuels such as corn-based ethanol. A total of 13.2 billion gallons of ethanol was added to American fuels in 2012, and 13.8 billion gallons must be added this year.

Over the last two years nearly 40 percent of the U.S. corn crop has been used to make ethanol, and the increased demand has helped drive corn prices higher. From an economic standpoint for rural America, higher corn values have provided benefits. An increase in farm income and the trickle-down effect for rural communities have been welcome.

Additionally, Midwest farmland values have reached record levels. The Federal Reserve Bank in Chicago says farmland values increased 16 percent during 2012, the third-largest gain in the last 35 years. And that increase was seen during one of the worst droughts in recorded history. In Iowa, the average price of farmland in 2012 was $8,296 per acre, a 23.7 percent jump from just the previous year.

But the list of those opposing the RFS is lengthening, and at least one group argues we should look beyond the immediate economic impacts of corn and focus on the environmental impact.

The Environmental Working Group (EWG), a 20-year-old environmental-health research and advocacy organization, claims America’s RFS is creating unintended consequences for our environment. For instance, research from South Dakota State University, using satellite imagery, found that from 2006 to 2011 U.S. farmers converted more than 1.3 million acres from grassland to corn and soybean production. National acreage data shows the dramatic increase as plantings in 2005 totaled 82 million acres but jumped to more than 96 million acres in 2012.

“The loss of this grassland is having adverse impacts on water quality, soil health and wildlife habitat in a region that includes Iowa, Minnesota and North and South Dakota,” says Alex Rindler, policy associate for EWG.

The South Dakota researchers, Christopher K. Wright and Michael C. Wimberley, focused on grassland conversion in areas close to wetlands in the Prairie Pothole Region — a critical Midwest flyway for migratory birds. They wrote that, “in South Dakota...80 percent of grassland conversion is occurring within 500 meters of neighboring wetlands.”

Rindler and others believe the demand for ethanol is helping destroy some fragile ecosystems and that Congress must take action. Late last month, several organizations concerned with the negative impacts of government ethanol mandates wrote a letter of support for proposed Senate legislation that would cap ethanol use in fuel at 10 percent.

The letter, addressed to Sen. Roger Wicker (R-Miss.) and Sen. David Vitter (R-La.), was signed by a diverse group of stakeholders, including livestock and dairy producers, food and fuel manufacturers, environmental and anti-hunger organizations and budget watchdogs. The letter suggests E15 blend damages engines, and “an increase in ethanol content will have well-documented detrimental effects on food and feed prices at home and abroad, and on the environment.”

The RFS seemed to be well-intentioned when first proposed and implemented. But as the mandate has increased and the full impact of $7 and $8 corn becomes known, it has become obvious that changes are needed.

Last month, Alaska Sen. Lisa Murkowski, the ranking republican on the Senate Energy and Natural Works Committee, said what many livestock growers believe about the RFS. “Let’s not be afraid to admit we might need to reform it, we might need to revamp it, we might need to make it more technology- neutral,” Murkowski said. “That’s not saying we have failed. It might be acknowledging we didn’t appreciate all of the consequences that might be attached to this.”


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