A coalition of livestock and poultry groups is urging Congress to reform the Renewable Fuel Standard. They say the call for change is supported by a new economic study conducted by Dr. Thomas Elam – President of Farm Econ LLC. Elam’s study found that federal ethanol policy has increased and destabilized corn, soybean and wheat prices to the detriment of food and fuel producers and consumers. According to Elam – the increases seen in commodity prices are strongly associated with the RFS mandate. He adds that because the promised benefits on oil imports and gasoline prices haven’t been seen – Americans are paying more for food without seeing lower prices at the pump. Elam calls it a lose-lose situation.
As several aspects of the Renewable Fuel Standard are examined by a Senate Biofuels Investment and RFS Market Congressional Study Group – the coalition says the study will provide critical facts needed to reform the standard. Among the results – the study found that the higher energy cost of ethanol and its negative effect on fuel mileage added about 14.5-billion dollars – or 10-cents per gallon – to motorists’ fuel costs in 2011. It also shows that the rate of change for the Consumer Price Index for meats, poultry, fish and eggs increased by 79-percent – while it decreased by 41-percent for non-food items since the RFS was revised in 2007. Other findings highlighted by the coalition include the rise in corn prices to more than six-dollars a bushel in 2011 from two-dollars in 2005, U.S. exports of 1.2-billion gallons of ethanol in 2011 and the increase in corn used for ethanol production from 1.6-billion bushels in 2005 to five-billion in 2011.
In urging RFS reform – the coalition 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. The coalition supports legislation sponsored by Representative Bob Goodlatte of Virginia and California Representative Jim Costa that would require a biannual review of ending corn stocks relative to their total use. The RFS could be reduced by different percentages when the ratio falls to certain percentages. According to the coalition – such relief is extremely urgent because of the recent spike in corn prices brought on by predictions the U.S. will run short of corn this summer as a result of the drought conditions. They say another short corn crop would be extremely devastating to the animal agriculture industry, food makers and foodservice providers – as well as consumers.
The Elam study was funded by 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. A full copy of the study is available through the National Chicken Council website at www dot nationalchickencouncil dot org (www.nationalchickencouncil.org).