Texas corn producers, the National Grain Sorghum Producers and Texas Farm Bureau applaud the Environmental Protection Agency’s decision to deny a request from Texas Governor Rick Perry for a Renewable Fuel Standard (RFS) waiver.
Texas Commissioner of Agriculture Todd Staples expressed disappointment in EPA’s decision.
Perry’s request would have reduced the RFS mandate by 50 percent.
“This is a victory for consumers because ethanol lowers gas prices, reduces air pollution and reduces our dependence on expensive foreign oil,” said David Gibson, Executive Director, Texas Corn Producer’s Board in Lubbock. “Every independent study has confirmed that using corn to make this cheap, clean, American-made fuel has no significant impact on food prices.”
“We’re satisfied that the EPA made the right decision,” said Scott Averhoff, Waxahachie grower and Chairman of the Texas Corn Producers Board. “We believe the tradeoff between the benefits of the RFS to the cost of gasoline to American homeowners outweigh any small increase in food costs.”
Averhoff said corn producers are sensitive to the needs of cattle feeders and other livestock producers and are working with them to help manage feed costs.
“We’re excited about the decision,” said Hanna Lipps, Communications Director,
National Sorghum Producers, also in Lubbock. “EPA made the right decision,” Lipps said.
That ruling emphasized the positive effect ethanol has had on the U.S. economy. “The decision shows that EPA stuck by the numbers,” Lipps said, “and shows that the bad press about ethanol has been just a lot of hyperbole.”
She said the ethanol and grain industries still face challenges, but with grain prices down and fuel prices declining in the past few days, “some of the panic has subsided. That panic has been fueled by the mainstream media who jumped on the anti-ethanol bandwagon.
“Our work is not done,” she said. “The fight is not over but this is a significant victory.”
Toby Bostwick, NGSP Chairman, said EPA made the right decision. “This ruling proves that the truth about ethanol prevails when scrutinized against hard numbers and economics. Ethanol is a benefit, not impairment, to the nation’s economy. Fuel prices are lower because ethanol is included in the U.S. fuel supply.”
Senator Tom Harkin (D-IA), Chairman of the Senate Committee on Agriculture, Nutrition and Forestry, also praised the decision.
“Renewable biofuels are one of the most important tools we have to reduce our dependence on foreign oil,” he said. “EPA’s decision to deny this waiver indicates that we are going to stay the course in pursing a national strategy of increasing production and use of domestic, renewable biofuels. It also sends a strong signal to encourage investment in renewable sources of energy.
“I commend EPA for denying this waiver and indicating that our country will continue to maintain a strong commitment to renewable energy. American agriculture, associated industries and rural communities in Iowa and around the country stand ready to meet the challenges to produce the biofuels, food, feed and fiber that are needed.”
The Texas Farm Bureau, in Waco, expressed strong support for EPA’s decision and says the RFS is an aggressive biofuels policy to lessen American dependence on foreign oil.
“We’ve disagreed with the reasons behind the governor’s request all along,” said Kenneth Dierschke, president of the Texas Farm Bureau. “Those claims used in the waiver request are unfounded.”
Dierschke said the role biofuels play in rising food prices is insignificant in comparison to cost increases brought on by soaring oil prices.
“I don’t think it’s a surprise to anyone that higher oil costs are the primary culprit behind higher food costs,” Dierschke said. “Texas Farm Bureau strongly supports the EPA’s decision to continue using alternative fuel sources such as ethanol. This strategy will lessen our dependence on foreign oil.”
Dierschke pointed to a recent study by the Texas AgriLife Extension Service that indicates a total waiver of the RFS would reduce corn prices by only 30 cents per bushel—a 5 to 8 percent decrease based on current prices. Other factors—rising oil prices, the declining value of the dollar, smaller world grain stocks and a growing middle class in developing countries—have a much greater effect on the cost of food than corn used for ethanol, he said.
In fact, he said some analysts predict oil and gas prices would be 15 percent higher if biofuel use was not increasing. “Texans can’t stand another 30- to 40-cent per gallon jump at the gas pump,” he said. “That is about the amount economists estimate as the positive impact ethanol has on fuel prices. We need policy that lowers—not adds to—the price of energy.”
A discordant note came from Texas Commissioner of Agriculture Todd Staples.
“I am disappointed in the Environmental Protection Agency’s decision,” Staples said. “To be perfectly clear, agriculture has a leading role to play in lessening our nation’s dependency on foreign oil. However, our renewable fuel’s policy should not be driven by government mandates that are not sustainable, but rather by consumer preference and choice.
“Hopefully this will be a wake-up call to our federal government to promote future policies that ensure the sustainability of both our energy and food security in the long- and short-term. As we develop these sound policies, we must resist the urge to regulate ourselves out of free market solutions. Our government should not be in the business of picking winners and losers.”
Texas cattle feeders also expressed displeasure and released the following statement:
“Texas Cattle Feeders Association appreciates Governor Rick Perry’s efforts on behalf of the livestock industry, which brought national attention to the challenges U.S. ethanol policy has created for livestock producers. We still believe his position is correct. At the price peak of June 27, 2008, corn prices had increased just over 200 percent since the implementation of the federal government’s RFS program in 2005. We remain concerned that the late planting and delayed maturity of this year’s corn crop may cause yields to suffer and result in higher prices. “We must also remember that the RFS mandate for corn-based ethanol will increase from 9 billion gallons this year, to 11.1 billion gallons in 2009 and ultimately to 15 billion gallons per year. Livestock producers will continue to suffer from higher corn prices driven by government ethanol subsidies. “The government’s policy still favors one industry over another by giving ethanol producers a competitive advantage over cattlemen in corn purchases. Cattle feeders nationwide have incurred a record of approximately $1.5 billion in losses between January and June of 2008.”
Dierschke said American-produced ethanol diversifies the nation’s fuel sources and provides a cheaper alternative to oil supplies controlled by foreign governments. Ethanol, he added, is also a cleaner burning fuel.
“Even with RFS standards in place, the price of corn has dropped during the past few weeks,” Dierschke said. “This proves there are many other factors affecting supply and demand for this important commodity.”
“We’re pleased that the EPA did not turn its back on the promise of renewable fuels,” said American Farm Bureau President Bob Stallman.
Implementation of the RFS will continue as legislated in the Energy Policy Act of 2007, according to the EPA.
The RFS target for 2008 is 9 billion gallons of renewable fuels including ethanol and biodiesel. That rises to 11.1 billion gallons in 2009 and 36 billion gallons in 2022.
According to Stephen Johnson, EPA administrator, the Texas request did not meet the criteria for a waiver. EPA is authorized to waive the national RFS if the agency determines mandated biofuels volumes would cause “severe harm” to the economy or the environment.
“In addition to strengthening the first-generation biofuels industry, the RFS plays a crucial role in fostering the continued development of second- and third-generation biofuels including cellulosic ethanol, biomass-based biodiesel and other advanced biofuels,” said Stallman.
The Ethanol Promotion and Information Council welcomed the decision and said it “ensures that consumers will continue to benefit from an expanding supply of domestically produced renewable fuel, which is helping to lower gas prices.”
Those savings at the pump are considerable — as much as $500 per year for the average family, according to estimates by Merrill Lynch, Iowa State University and others.
“Today’s decision is an important win for American consumers,” said EPIC Executive Director Toni Nuernberg. “People are justifiably focused on pocketbook concerns in today’s economy. Ethanol is one of the few things helping families save money.”
EPA released a fact sheet explaining their motives for denying the waiver. It states that: “EPA determined that evidence indicates that even if the RFS mandate were to have an impact on the economy during the 2008/2009 corn marketing year, it would not be of a nature or magnitude that could be characterized as severe. Even in the modeled scenarios where a waiver of the RFS mandate might reduce the production of ethanol, the resulting decrease in corn prices is anticipated to be small (on average $0.30 per bushel of corn), and there would be an accompanying small increase in the price of fuel (on average $0.01 per gallon in fuel costs).
“The average increase in corn prices in all modeled scenarios, including scenarios where the RFS mandate would and would not have an impact, was $0.07 per bushel of corn. Such levels of potential impacts from the RFS program do not satisfy the high threshold of harm to the economy to be considered severe.”