August 01, 2012
Ethanol industry has ally in Iowa senator
Published in E & E
Iowa's senior senator yesterday stood up for ethanol against pressure from livestock industries to waive the federal biofuels mandate.
In a speech on the Senate floor, Republican Sen. Chuck Grassley accused those calling for the waiver of spreading a misinformation campaign. He mostly focused on Smithfield Foods Inc. CEO Larry Pope, who wrote a scathing editorial in The Wall Street Journal last week blaming ethanol for high corn prices.
"I may start referring to Mr. Pope as Henny Penny from the children's folk tale Chicken Little," Grassley said. "Every time Smithfield has to pay a little more to America's corn farmers to feed his hogs, Mr. Pope starts up with the same argument that the sky is falling and it's all ethanol's fault."
Grassley's comments came two days after a coalition of livestock industries filed a formal petition to request a waiver of up to a year from the federal renewable fuel standard, which mandates that 13.2 billion gallons of ethanol be blended into the nation's fuel supply this year. The groups said that ethanol was exacerbating the drought by squeezing the supply of corn available for livestock feed, contributing to $8-a-bushel corn prices (Greenwire, July 30).
In his speech, Grassley called Pope "woefully uninformed" on ethanol issues, accusing him of using the drought to perpetrate the myth that ethanol was diverting corn from livestock use. Livestock companies, Grassley said, were just out to buy corn below the cost of production.
The senator also took issue with claims by livestock industries that ethanol production consumes 40 percent of the U.S. corn crop, noting that a third of that corn re-enters the market as distillers grains that are used in livestock feed.
"This is the inconvenient truth for ethanol detractors," Grassley said. "They prefer to live in a bubble where they believe that ethanol is diverting corn from livestock use. That's just not the case."
Waiving the mandate would be a "premature action that will not produce the desired result," he said.
Earlier this week, the Department of Agriculture said that 48 percent of the nation's corn crop is now in poor or very poor condition -- up from 45 percent last week.
In his opinion piece in The Wall Street Journal, Pope said that his company -- the largest pork producer in the world -- was now forced to buy corn from Brazil instead of the United States because of the high prices. Like the livestock groups, he called for an immediate waiver of the fuel standard.
"The RFS has diverted so much corn as a questionable substitute for gasoline that in the face of this drought-depleted harvest," Pope wrote, "major food-producing companies such as Smithfield are being forced to seek alternative markets for grain to meet the demands of their livestock and at more affordable prices."
A group of livestock-state senators, including at least six Democrats, are also considering asking EPA for a waiver from the corn ethanol mandate (E&E Daily, Aug. 1).
Grassley has long been an ally of biofuels. Iowa is the top ethanol state in the country, last year producing 3.7 billion gallons of ethanol in 41 refineries, according to the Iowa Renewable Fuels Association.
Iowa Gov. Terry Branstad (R) has also been a strong backer of biofuels. Earlier this year, he proclaimed June 15 "Iowa Ethanol Day" and this week also came out against a renewable fuel standard waiver, according to state newspapers.