Ag Policy Blog
Lawmakers, Food, oil Interests Call for RFS Change
A bipartisan group of more than 130 U.S. lawmakers led by Rep. Bob Goodlatte, R-Va., is asking U.S. Environmental Protection Agency Administrator Gina McCarthy to adjust down the Renewable Fuel Standard, in a letter sent to McCarthy Monday.
"Unfortunately, despite the best intentions of the RFS, its premise and structure were based on many assumptions that no longer reflect the current market conditions, and the imposition of the 2014 volumes now threatens to cause economic and environmental harm," the letter states.
In an email sent out to ask lawmakers to sign on, it lists a number of interest groups supporting a change to the RFS including the American Meat Institute, the American Petroleum Institute and a number of other poultry, dairy and taxpayer groups.
"As you are aware, the U.S. corn market has been increasingly volatile since the expansion of the RFS in 2007," the letter states.
"This reflects the reality that more than 40% of the corn crop now goes into ethanol production, a dramatic rise since the first ethanol mandates were put into place in 2005.
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"While well intentioned, the rigid nature of the federal law has not allowed it to change as new realities emerge in the market place. Ethanol now consumes more corn than animal agriculture, a fact directly attributable to the federal mandate.
"Due to the dramatic expansion of corn ethanol, volatile corn prices have led to the conversion of millions of acres of sensitive wetlands and grasslands into production."
The RFS mandates the uses of 18.15 billion gallons of renewable fuels in 2014.
The letter said rising ethanol mandates and declining gasoline demand has "exacerbated the onset of the E10 blend wall -- the point at which the gasoline supply is saturated with the maximum amount of ethanol that current vehicles, engines, and infrastructure can safely accommodate."
Tom Buis, chief executive officer of Growth Energy, said supporters of scaling back the RFS have paid little attention to current market conditions.
"It appears that the ‘cheap corn caucus’ is back at it again, looking for ways to get below the cost of production corn at the expense of American farmers, American energy security, consumer choice and savings at the pump," Buis said in a statement.
"Despite false claims that biofuels are increasing the cost of corn, those who signed this letter failed to review the facts and recognize that just yesterday corn was trading at a 37-month low. Food conglomerates have enjoyed increased profit margins thanks to rising retail prices that are outpacing farm costs. During the 2012 drought, the farm value of chicken increased about 2 cents per pound compared to 2011.
"Wholesalers and retailers, such as fast food restaurants, increased their prices by about 13 cents per pound. Consumers paid an additional 8% -- leading to higher profit margins for the food industry.
"For instance, Tyson Foods, the largest U.S. meat processor, is predicted to report a 37% gain in profit to $797.6 million in 2013.
"While this is no surprise, it is clear that this letter is playing to the special interests of big oil and big food. With corn trading at a three year low, have food companies passed along any savings to consumers?"
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