Renewable Fuels Standard Under Fire

Coalition asks for a waiver of the standard that would use 9 billion gallons of ethanol this year.

Published on: Jun 20, 2008

The governor of Texas has a request before the U.S. Environmental Protection Agency to cut the Renewable Fuel Standard by half and a lot of groups would like to see it happen. Leaders from agricultural economics, environment and food companies urged EPA to revisit what they are calling "food to fuel" mandates.

Pointing to "tragic flooding I the Midwest and the skyrocketing cost of food around the world" the group wants action and notes the public comment period for the Texas request ends Monday, June 23. The request would cut the RFS in half for this year, from 9 billion to 4.5 billion gallons.

The group points to a new analysis to be submitted to EPA Monday that says the RFS has a small impact on gas prices, but its effects on food prices and security are huge. Thomas Elam, FarmEcon LLC, discussed the report during a conference call this week.

"It is clear that while America's ethanol mandate has done little to hold down the steadily climing gasoline prices, its negative effects on the security of our food supply and the cost to feed our families are huge," he says. "In light of recent events, it is imperative that the government re-examine and reduce these mandates. We are facing tighter and tighter supplies of grain that threaten to devastate meat, dairy and poultry producers and cause food price increases for the American consumer. The government must not allow this to happen."

Other participants in the call, including Richard Wiles, executive director for the Environmental Working Group also weighed in: "This year's 9 billion gallon RFS mandate will cause an estimated 100 million tons of soil erosion and put 300,000 tons of nitrogen fertilizer into Midwestern waters. Thanks largely to the ethanol mandate and an excessively wet spring, pollution levels in the Gulf of Mexico are expected to reach record levels, with a dead zone the size of Massachusetts."

Representatives of the cattle and poultry industries echoed the urgency of granting the waiver request. Biofuel mandates, tariffs and subsidies have hit these industries particularly hard, as the corn and soy used to feed animals comprises the bulk of their input costs. In the six months since the current RFS became law, the price of corn has shot up by over $3 per bushel. Soy prices have also climbed to historic highs.

"Until the recent flooding in the Midwest began, it might have been acceptable to have a lengthy debate over ethanol mandates," said James Herring, president and CEO of Friona Industries, the fourth-largest cattle feeder in the world. "But to be frank, floodwaters and high corn prices have wreaked havoc on the cattle industry and it is time to stop talking and take action."

The EPA must rule on the Texas request by July 24.

The National Cattlemen's Beef Association is also favoring the waiver noting that it does not believe that "issuing a partial waiver of the [RFS] will immediately reverse commodity price escalation, nor to cattle producers claim that it will single-handedly address the difficult marketing environment that currently exists in our industry," says Terry Stokes, CEO of the organization. "But, the RFS is clearly one factor contributing to higher feed prices."