WASHINGTON, July 19, 2012- Livestock and poultry groups urged Congress to reform the Renewable Fuels Standard (RFS) today after releasing a study outlining the impact of corn ethanol production on food and commodity prices.
The American Meat Institute, California Dairy Inc., the Milk Producers Cooperative, the National Cattlemen’s Beef Association, the National Chicken Council, the National Pork Producers Council and the National Turkey Federation funded the study conducted by Thomas Elam, Ph.D., president of FarmEcon LLC.
According to the study, federal ethanol policy mandating the amount of ethanol produced annually has increased and destabilized corn, soybean and wheat prices. The RFS, first imposed in 2005 and revised in 2007, this year requires 15.2 billion gallons of ethanol to be produced.
“The increases we’ve seen in commodity prices are strongly associated with the RFS mandate,” Elam said. “At the same time, we haven’t seen the promised benefits on oil imports or gasoline prices. This means that while Americans are forced to pay more for food, they’re also not seeing lower prices at the pump.”
The livestock and poultry groups cited the Elam study’s conclusion that the mandate should be revised to allow automatic adjustments to reduce incentives for ethanol production when corn stocks are forecast to reach critically low levels.
“Because of the RFS, however, corn-based ethanol manufacturers are protected from sharing the full burden of a corn harvest shortfall,” stated to the coalition.
The coalition supports the “Renewable Fuels Standard Flexibility Act” (H.R. 3097), sponsored by Reps. Bob Goodlatte, R-Va., and Jim Costa, D-Calif. The legislation would require a biannual review of ending corn stocks relative to their total use. If the ratio falls below 10 percent, the RFS could be reduced by 10 percent. If it falls below 7.5 percent, the mandate could shrink by 15 percent; below 6 percent, it could be reduced by 25 percent; and if the ratio falls below 5 percent, the ethanol mandate could be cut by 50 percent.
“Such relief is extremely urgent,” according to the coalition. “The recent spike in corn prices prompted by drought conditions in much of the Corn Belt has analysts predicting the United States will run short of corn this summer. Another short corn crop would be extremely devastating to the animal agriculture industry, food makers and foodservice providers, as well as consumers.”
National Corn Growers Association President Garry Niemeyer released a rival statement today, claiming that the RFS “is revitalizing rural America, reducing our dependence on foreign fuel and reducing the cost of gasoline. Making changes to the RFS now would only ensure that consumers suffer due to significantly higher fuel prices.”
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