Renewable Fuel Standard Unable To Please All of Ag

Agriculture interests take their stance as House members question renewable fuel standard

Published on: Jul 25, 2013

The House Energy Committee Subcommittee on Energy and Power Wednesday continued the second round of two-day testimonies regarding the Renewable Fuel Standard, seeking input from livestock, grain and environmental interests.

The hearing, titled "Overview of the Renewable Fuel Standard: Stakeholder Perspectives," continues a review of the Renewable Fuel Standard kicked off earlier this year by a series of white papers and a June 26 subcommittee hearing.

Participants in the hearing included National Chicken Council Senior Vice President Bill Roenigk, National Council of Chain Restaurants representative Ed Anderson, Environmental Working Group Vice President of Government Affairs Scott Faber and Purdue University Professor of Ag Economics Chris Hurt.

Agriculture interests take their stance as House members question renewable fuel standard
Agriculture interests take their stance as House members question renewable fuel standard

Purdue's Hurt testified that the RFS, economically speaking, is driving up food prices and increasing the number of acres being put into corn production.

EWG's Scott Faber gave similar testimony, noting that, "the RFS was once heralded as a way to combat greenhouse gas emissions"; instead, Faber argued, the policy has actually increased emissions by encouraging farmers to plow up more than 23 million acres of land.

But while Faber slammed the RFS for contributing to more acres in production and thus more fertilizer and input use, he said second-generation biofuels have promise. Unfortunately, he noted, the marketplace is already too saturated by corn ethanol.

"To allow second-generation fuels to gain a foothold, Congress must reform the Renewable Fuel Standard to phase out the corn ethanol mandate. The RFS, as currently designed, simply does not provide a sufficiently powerful incentive to develop these fuels," he testified.

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National Corn Growers Association President Pam Johnson, however, supports the policy.

Johnson said the Renewable Fuel Standard is doing exactly what it was intended to do – create jobs, promote rural development and reduce greenhouse gases.

She placed special emphasis on the economic benefits; her community in rural Iowa has been able to build a new fire station, remodel the hospital and hire additional teachers because of the economic activity created by the local ethanol industry, she said.

As for land used for extra corn production, Johnson said corn farmers have produced more corn on roughly the same amount of land, and have actually decreased land use by 30% per bushel, despite continued demand for corn ethanol.

The food vs. fuel debate was also alive and well during the day's testimony. Hurt explained that the animal sector – which also represents food – has been significantly harmed by the increasing value of commodities, as have the communities tied to meat and poultry processing jobs.

"In 2005 the animal sector of U.S. agriculture represented 53% of farm receipts and crops were 47%, by 2012, animals had fallen to 44% of receipts and crops moved up to 56%," Hurt wrote in his testimony. "Food consumers were also negatively impacted. They had less product available and had to pay higher prices," he said.

But Johnson countered testimony from Hurt that suggested higher food prices are a result of corn ethanol production.

"Because the farm value of commodities represents such a small share of retail food prices, the impact of the RFS itself on food prices is indiscernible," her testimony said, citing World Bank figures that point the finger at rising costs on petroleum instead.

Strong arguments both ways dominated the discussion as Congress members asked questions of the panel ranging from inputs used to produce corn and the potential benefits corn ethanol offers consumers.

Per RFS targets, the 2013 mandate for production of all renewable fuels is 16.55 billion gallons, which the EPA projects to steadily increase to an overall level of 36 billion gallons in 2022.

Lawmakers said because the RFS was last revised in 2007, it is ready for a review, given that in the years since the nation’s energy landscape has "transformed dramatically."

For complete testimony, click here.