July 31, 2012
Livestock producers request waiver on ethanol rule
Published in Des Moines Register
WASHINGTON — The livestock and poultry industry asked the Obama administration on Monday to temporarily suspend a mandate requiring ethanol to be blended into gasoline, a measure they said is having a devastating impact on producers and consumers suffering through the worst drought to hit the United States in more than 50 years.
In a petition submitted to the Environmental Protection Agency, a coalition of nearly 20 cattle, chicken, turkey and pork groups asked for a waiver “in whole or in substantial part.” They argued the drought and the ethanol-for-fuel requirement is causing severe “economic harm” to their members, who will have to eventually pass on their rising costs to the public in the form of higher meat prices at their local supermarket.
The groups contend the seven-year-old Renewable Fuel Standard, which requires 13.2 billion gallons of corn-based ethanol to be blended into the vehicle fuel supply in 2012, has made it even more expensive to acquire the feed they need, and a waiver could help lower prices by freeing up millions of bushels of corn. Ethanol is expected to consume about 40 percent of the country’s corn production this year, the U.S. Department of Agriculture said on July 11.
“We are having trouble buying corn to feed our livestock. The prices are at record highs that I’ve never had to pay before,” said J.D. Alexander, a third-generation Nebraska cattleman and president of National Cattlemen’s Beef Association. “It’s really putting a burden on our operation and many other producers across the nation. I find it concerning to the viability of the livestock industry that these mandates are allowed to continue today in the worst drought I have seen in my lifetime.”
The one-year waiver, if granted, would be the first time the EPA has approved this type of request. The EPA could grant a waiver by rolling back part or all of the standard if the agency determines the requirement causes severe environmental or economic harm. A cut to the mandate could be especially damaging for ethanol-producing states such as Iowa, the nation’s largest. In 2011, its 41 plants produced about 3.7 billion of the 13 billion gallons of ethanol produced nationally.
The request had been widely expected amid the worsening drought and rising corn prices, but it remains far from certain if the coalition will be successful in lobbying the EPA. A request by Texas Gov. Rick Perry was rejected in 2008.
The EPA could not be reached for comment on the waiver request. USDA Secretary Tom Vilsack told reporters on July 18 the Renewable Fuel Standard was not something he thought needed to be addressed. “There is no need to go to the EPA at this point and time based on the quantity of ethanol that is currently in storage,” he said.
The ethanol industry fired back Monday, accusing livestock and poultry producers of unfairly pinning the rise in corn prices on the Renewable Fuel Standard rather than the weather.
Tom Buis, chief executive of Growth Energy, said the United States will not run out of corn, and he encouraged the EPA and others to let the marketplace continue to adjust to the tight supply. Despite many ethanol plants recently scaling back on production, the country has a healthy ethanol surplus of nearly 1 billion gallons, he said.
“The true root of this campaign is an attempt to increase the bottom line of the livestock and poultry industry at the expense of grain farmers,” said Buis, whose group represents ethanol producers. “These groups are playing on people’s fears during a time of economic difficulty and a national crisis.”
A recent study by Iowa State University economics Professor Bruce Babcock found a total waiver of the Renewable Fuel Standard would reduce corn prices by about 5 percent.
“I think it’s a little bit premature because we don’t know what the U.S. corn yield is going to be. We don’t how bad this drought is actually going to affect production. There have been surprises before,” said Babcock. “I think that (the EPA) will wait for the next USDA crop report and then decide what to do.”