The deteriorating of this year’s corn crop has provided the rationale for opponents of ethanol and the RFS to call on Congress to relax the amount of ethanol that has to be blended into gasoline, at least for this year. On the other side, ethanol producers note that ethanol is currently in surplus and even without a change in the RFS, fewer bushels of corn will be used for ethanol in the coming year. They also remind people that ethanol production only uses the starch in corn and most of the protein, mineral, and oil feed value is still available for animals in the form of dried distiller’s grains.

We would be remiss if we did not remind our readers that if we had reserve stocks in place the impact of the drought on grain and oilseed users would be lessened: We would not be on the edge of a cliff caught between supplies that might be adequate to pull us through to next year and inadequate supplies that will send us over the edge and prices into the stratosphere. That being said, farmers who end up watching their crops wither for the lack of moisture will still need protection for yield loss.

Given that the drought has added to the importance of getting a farm bill in place to provide farmers and ranchers with the planning security they need, House members in agricultural districts may get an earful when they go back home during the August recess. It will be interesting to see if Congress is spurred to action when they reconvene in September.

 

Daryll E. Ray holds the Blasingame Chair of Excellence in Agricultural Policy, Institute of Agriculture, University of Tennessee, and is the Director of UT’s Agricultural Policy Analysis Center (APAC). Harwood D. Schaffer is a Research Assistant Professor at APAC. (865) 974-7407; Fax: (865) 974-7298; dray@utk.edu  and  hdschaffer@utk.edu;  http://www.agpolicy.org.