By DOUG SCHMITZ
Iowa Correspondent

HURLEY, S.D. — While the National Corn Growers Assoc. (NCGA) and other farm groups are welcoming the EPA’s approval of E15 use in older vehicles from 2001-06, food and meat representatives said the decision would ultimately drive up food costs for consumers and hurt the U.S. livestock industry.
“We have worked closely with the EPA during this process and are pleased to see they also realized what our industry has known for a long time: the use of higher blends of ethanol in vehicles is safe,” said Darrin Ihnen, a Hurley, S.D. corn grower who chairs the NCGA.

The EPA’s Jan. 21 move would allow the blend of ethanol in unleaded gasoline to increase from 10 percent to 15 percent for use in 2001-2006 model-year vehicles – a decision that follows the agency’s approval of the use of E15 last October for 2007 vehicles and newer cars, which some industry representatives sued last November to have overturned.

Ihnen cited a 2009 study suggesting that E15 would create more than 136,000 new jobs across America and inject $24.4 billion into the American economy annually.

“By using E10 in much of its fuel today, the United States has reduced its dependence on foreign oil by billions of gallons each year,” he said. “Increasing the blend level from E10 to E15 can avoid the importation of another 7 billion gallons of gasoline per year.”

Currently, Iowa remains the nation’s largest ethanol producer, with over 3 billion gallons produced annually at the state’s 40 ethanol plants.
Iowa Agriculture Secretary Bill Northey said he was glad the EPA is “continuing to confirm that E15 is safe to use.” 

“Our department will work with retailers to encourage the appropriate labeling of this fuel,” he said. “I hope now more retailers will consider offering E15 since it can be used in most vehicles and I would encourage customers to ask their fuel providers to make this clean, safe and affordable option available.”
If E15 were used in all vehicles covered by this decision, the Renewable Fuels Assoc. (RFA) said the “theoretical blend wall for ethanol use would be approximately 17.5 billion gallons.”

“The EPA continues to move in the right direction with respect to increasing ethanol blends, but challenges still remain,” said Bob Dinneen, RFA president. “The RFA continues to urge EPA to extend the waiver for E15 use to all cars and pickups.”

The EPA’s announcement would also “accelerate the timeframe in which most vehicles on American roads will be covered by the waiver,” he added. “However, given that not every vehicle on the road is being approved, labeling issues and misfueling concerns by gas station owners must still be addressed.”
However, J. Patrick Boyle, CEO of the American Meat Institute (AMI), said with these government mandates for increased ethanol blends, there has also been increased pressure on the corn supply that once again pushed prices above $6 a bushel – levels not seen since 2008, which he added would eventually increase food costs.

“This announcement only means that more corn will be diverted from an already-thinning supply and increased pressure will be put on the meat and poultry sector, which is already facing near-record, high feed costs,” he said.
“For consumers who are concerned about food prices, this decision will further increase prices at the grocery store,” he added. “Burning our food and feed as fuel is not a sustainable approach to solving this country’s long-term energy needs.”

In 2008, feed costs for livestock, poultry and dairy reached a record high of $45.2 billion, an increase of more than $7 billion over 2007 costs, according to the USDA’s Economic Research Service (ERS).

Randy Spronk, an Edgerton, Minn. hog and crop farmer who serves on the National Pork Producers Council (NPPC)’s board of directors, said the EPA’s decision means more corn would be used for ethanol production, raising “the price on a shrinking supply.”

“We don’t want a repeat of a couple of years ago when, due mostly to high feed-grain prices, pork producers lost an average of almost $24 a hog over a 28-month period, and the industry lost nearly $6 billion,” he said. “We saw a lot of family hog farms go out of business during that time.”

Dave Scott, president of the Texas and Southwestern Cattle Raisers Assoc. (TSCRA) and Richmond, Texas rancher, said the EPA’s increase would have a negative impact on ranchers by dramatically increasing livestock production costs.

“The high level of corn-based ethanol is one of the key factors driving price increases in corn products, including feed for cattle,” he said. “Over the past few years, it has become very clear that putting our food and fuel in competition with one another is bad for cattle producers and consumers.”