WASHINGTON D.C. — Corn growers hurting financially from too much crop are anxiously waiting an announcement expected soon from the U.S. EPA on whether changes will be made on the amount of ethanol blended in gasoline under the Renewable Fuel Standard (RFS).
Under the federal RFS adopted in 2005, the amount of ethanol in gasoline is to increase from 10 to 15 percent by the end of this year. The EPA has expressed hesitancy to go ahead with the mandate, though, creating uncertainty in the market already fighting an ongoing push from the oil industry to reduce or eliminate mandated ethanol blends.
Such uncertainty has resulted in several ethanol plants recently stopping production and has contributed to the drop in corn prices by adding to the oversupply, said Chip Bowling, president of the National Corn Growers Assoc. Manufacturers are also producing less machinery because of fewer orders from financially squeezed corn growers nervous about their pocketbooks being drained further if the upcoming decision by the EPA does not work in their favor, he said.
The effect on corn growers could be dramatic, given the mandate for a 10 percent ethanol blend is the primary factor behind economic turnaround in many of the nation’s farm communities, he said.
"Now, more than ever, we should be strengthening, not weakening, the RFS," said Bowling during a Thursday teleconference in Washington, D.C.
Joining him was Roger Johnson, president of the National Farmers Union, who feels the mandate of raising the ethanol fuel blend to 15 percent should stand after corn growers met the government’s request to raise production for meeting the volumes necessary for the initial blend of 10 percent.
"This has, perhaps, been the most successful rural economic development policy of my lifetime," said Johnson, who cited statistics he said shows the RFS has supported more than 852,000 jobs in the United States and generated an $184 billion economic impact.
The U.S. House Committee on Energy and Commerce issued a series of white papers as the first step in reviewing the RFS, which was created by the Energy Policy Act of 2005 and greatly expanded under the Energy Independence and Security Act of 2007.
The white papers show, among other things, that fuel consumption over the years has fallen short of the original projections and just a small percentage of motor vehicles are currently designed to burn a 15 percent ethanol blend.
The livestock industry seems largely opposed to the RFS, citing that demand for corn to produce higher volumes of ethanol has had a major impact on feed prices. Chase Adams, a spokesman for the National Cattlemen’s Beef Assoc., said it would like the RFS reformed or eliminated altogether.
"We can definitely support all commodities selling for a reasonable price, but we’d like to see that price market-driven. Not driven by a government mandate," said Adams.
The EPA under a court order must announce its decision on the RFS by Nov. 30. Johnson said what that decision will be is difficult to predict, with EPA not giving any indications in which way it might be leaning, but he believes opposition to the RFS from the oil and gas industry adds to the challenge.
"We are fighting that on a constant basis," said Johnson.
"It’s a David-and-Goliath type issue for us," noted Bowling.
