Last week the U.S. Environmental Protection Agency (EPA) announced a new policy, backing off the amount of ethanol that must be blended into gasoline. This mandate, known as the Renewable Fuel Standard (RFS), was put into place when oil prices were soaring and our ability to import oil from unstable countries was in doubt.
Thanks in part to strong grain prices, agricultural states like Iowa have been a bright spot in the struggling U.S. economy. Now corn prices have dropped from $8 to around $4, and the EPA is proposing to withdraw a major market for U.S. corn.
“We are at a point of about the cost of production (for corn) and our concern is that reducing the Renewable Fuel Standard will actually drive the cost of corn below the cost of production, which will be damaging to our state’s economy,” said Iowa Governor Terry E. Branstad in an article published yesterday by The Des Moines Register. Preserving the RFS is extremely important to preserving this state’s farm economy.
Iowa leads the nation in biofuels production, with 42 ethanol refineries capable of producing over 3.8 billion gallons annually, and three cellulosic ethanol facilities under construction. In addition, Iowa has 12 biodiesel facilities with the capacity to produce nearly 315 million gallons annually.
With so much to lose, I’m having a tough time understanding just why the RFS change was even proposed! One excuse is the price of corn has been too high for the ethanol plants to make a profit, but I can easily dispel this myth. The price of corn is so low right now that it’s at or below the cost of production.
The market has adjusted, like it should, but the EPA is pulling the rug out from under the farmers that have made those adjustments. This is where I get really concerned… The U.S. government built the demand for corn with an ethanol mandate, and now administrators want to throw it away. That’s setting up farmers to fail! Why would we allow the EPA to screw up a good thing?
The EPA’s recent action reminds me of the Carter Administration’s embargo just before the Farm Crisis of the 80s. Our local towns and businesses suffered great hardships, and I remember the cost to tax payers when local economies suffered. Tax revenues were so low because no one was making any money.
Could history repeat itself? Consider for a moment the small town of Nevada in Central Iowa. Last Friday I attended a meeting there and was impressed with how prosperous this little town has become. Nevada is growing. New construction is underway. The economy is good. Why? Farmers have been making some money. (I know, terrible thing. Right?)
On the edge of Nevada is an ethanol plant. This plant is expanding to the next generation ethanol with cellulose. Now more people are needed to fill these jobs! But if the ethanol mandate is lowered, it will hurt the economy here.
With so much to lose, it’s no wonder about 200 people showed up with just one day’s notice to attend a rally in support of ethanol. Many Iowans were on hand to share their thoughts from biofuels industry leaders and farmers to local business owners and public officials. Everyone whom I heard speak had the same question, “Why would the EPA do such a thing?”
Increased soil erosion is also being blamed on ethanol production, but that’s simply not the truth. Opponents say the demand for more corn for ethanol has taken erodible acres out of conservation programs and into production. During a recent meeting with the editorial board from The Des Moines Register, U.S. Secretary of Agriculture Tom Vilsack refuted such claims. He told reporters that it’s inaccurate to say that just because CRP (Conservation Reserve Program) acreage has declined, all conservation has declined.
Vilsack goes on to say a record number of acres have been enrolled in conservation programs “under his watch.” More than 500,000 U.S. producers are engaged in record number of conservation programs including CSP (Conservation Stewardship Program) EQUIP, Wetlands Reserve, Wildlife Incentive and others.
Even some of our flattest, most productive farmland is at risk of erosion due to circumstances beyond our control. A series of weather events the last two years created even very flat farming ground to wash away, as you can see in this video I took on May 26. A whole year’s worth of rain fell in the spring!
Too many half-truths and mistruths are being spread about ethanol production. Be sure you get the facts!
“We are hopeful that in the comment period the agency evaluates this issue with a little more thought and ultimately modifies its proposal,” said Bob Dinneen, president of the Renewable Fuels Association, in an article published Nov. 24 by The Des Moines Register.
The EPA proposal will be open to a 60-day comment period, and the agency is expected to finalize the rule in the spring of 2014. Although the official comment period hasn’t yet opened, Governor Branstad says “it’s critically important for Americans to speak up now to push back on the EPA’s ruling.” He and Lt. Governor Reynolds have launched a new website to support the ethanol-biodiesel use. Comments submitted to ProtectTheRFS.com will be sent the EPA prior to the closing of the comment period.
Image Source: GasBuddy.com