 The U.S. Environmental Protection Agency has proposed legislation
that would weaken the Renewable Fuel Standard. For Illinois farmers,
the diminution would come in the form of a reduction in the amount
of corn-based ethanol to be produced in 2014. This potential
legislation has proven to be extremely controversial so far.
The EPA's renewable volume obligations set annual targets for the
creation of biodiesel and other such renewable fuels. The proposed
rule would limit corn-based ethanol at 13 billion gallons. These
proposed volume obligations are a drastic reduction from current
limits, which are presently set at 1.4 billion gallons higher, or
14.4 billion gallons.
Organizations such as the National Corn Growers Association have
expressed great concerns with the passage of such legislation,
arguing that it would weaken the economy for everyone, farmers or
otherwise.
Martin Barbre, NCGA president, refers to the proposed change as
"ill-advised" and says it "should be condemned by all consumers
because it is damaging to our tenuous economy and shortsighted
regarding the nation's energy future."
Barbre also said that agriculture has remained a positive note in
an otherwise failing national economy.
Despite the relative good health of the agricultural industries,
corn prices are currently falling below the costs of production.
This legislation would damage things further.
Barbre also noted that the EPA proposal could "send the wrong
signals to automakers who want more direction on where they should
be spending millions of targeted investments on research and
development."
According to data from the U.S. Energy Information
Administration, U.S. oil imports have decreased by 15 percent.
Organizations such as the NCGA attribute part of this decrease to
the use of biofuels.
Going by the latest USDA projections, American farmers harvested
a corn crop last year of a record 14 billion bushels. As a result of
the massive supply, corn prices are falling, currently standing
close to where they were when the Renewable Fuel Standard was
enacted in 2007.
While the prices of buying corn have dropped, the cost of growing
it has only increased over the past few years. In 2012, it cost $655
per acre to plant corn. According to the NCGA, should corn prices
fall too far (using $3.50 a bushel as an example), farmers and the
rural economy could lose more than $10 billion. Such a loss is
expected by the NCGA should the new legislation pass.
"A shock of this magnitude to agriculture markets would send
ripples throughout the entire economy," said Barbre. "Congress must
carefully weigh the ramifications any changes to the RFS would have
on agriculture and related industries. The U.S. economy and
consumers can ill afford a downturn in this sector."
Some farmers are considering this to be a move by the government
to further their support of oil companies.
Paul Taylor, a family farmer at Esmond and former president of
the Illinois Corn Growers Association, commented: "Corn prices are
already below the cost of production, and this announcement will
cause corn prices to drop even further. Family farmers will have to
borrow money to cover their family's living expenses as a result of
this announcement, while Big Oil realizes massive profits yet
again."
Taylor continued: "Ethanol is one dollar cheaper than gasoline,
per the Chicago Mercantile Exchange. Anyone who contradicts that
ethanol is costing consumers more money needs to check it out for
themselves."
According to the ICGA, farmers supplied corn for a
13.8-billion-gallon ethanol industry last year after the worst
drought in 80 years. The ICGA is confident that Illinois farmers can
supply corn for a 14.4-billion-gallon ethanol industry this year,
when we are seeing record yields. Reducing the amount used for
biofuels could lead to a massive surplus of leftover corn.
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As asked by Kenny Hartman, ICGA vice president, of Waterloo:
"In 2012, during the worst drought I've ever experienced, I
raised 78 bushels of corn per acre. Yet, the ethanol plants
around me continued to run and still produced enough ethanol to
help our country meet the requirement in 2013: 13.8 billion
gallons. ... This year I produced an average of 160 bushels of
corn per acre, and my prices based on December futures are
around $4, which is below my cost of production. Why now, when I
have a record yield and the USDA predicts bushels and bushels of
corn to spare, would we consider reducing the ethanol
requirement, resulting in a massive surplus of corn and one less
market for my crop?"
Taylor also said that the fortunate part in all of this
discussion is that the legislation is only a proposal and not
officially a law as of this time. Any legislative reforms to the
Renewable Fuel Standard likely will not come until the end of the
year.
Illinois is one of the top biodiesel producing states in the
country. In other words, the EPA's approach to the matter is an
attempt to reduce what they believe will be a surplus of biofuels
created as a result of Illinois' growing corn crop.
"Illinois needs to show up with a good number of people voicing
their opinion against the EPA plan," said Gary Hudson, current ICGA
president. "We're hearing from D.C. that we really need to be seen
on the EPA docket and heard with phone calls into our congressional
offices. Numbers matter on this issue."
U.S. Rep. Bill Enyart, from the 12th Congressional District in
Illinois, voiced his opinion Jan. 17 on the proposal to reduce the
amount of renewable fuels, after receiving calls from those opposed
to the proposed legislation.
"Corn prices are already falling due to a record harvest, and
reducing the renewable fuel levels will cause prices to fall even
further, hurting our southern Illinois farmers," said Enyart. "This
proposal also sends the message that the U.S. is backing off its
commitment to biofuels as a pivotal component of our national energy
policy. I urged the EPA administrator to reconsider this proposal
and recommit to the support of biofuels research and production."
Currently, Illinois has 14 ethanol plants online and is one of
the top five producers of corn-based ethanol in the country. The
state ranks second in corn production. In total figures, the
Illinois ethanol industry equates to $76.5 million in revenue and
over 4,000 jobs. Should the proposed legislation become law, those
numbers will drop significantly.
The ICGA and the NCGA are urging people who feel strongly about
the issue to get in contact with their representatives in
government.
[By DEREK HURLEY]
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