Governors of Maryland, Delaware Call for Waiver of Ethanol Mandate as USDA Slashes Corn Crop Estimate
August 10, 2012
WASHINGTON, D.C. – August 10, 2012 – As the severe effect of the worst drought in a half century becomes more clear, the governors of Maryland and Delaware have officially requested that the U.S. Environmental Protection Agency (EPA) take immediate action to save jobs, stave off rising food prices and limit the devastating economic consequences to the economy of the Delmarva region.
In a letter yesterday to EPA, Governor Martin O’Malley (D-MD) and Governor Jack Markell (D-DE) petitioned Administrator Lisa Jackson to exercise her statutory authority to waive the Renewable Fuel Standard (RFS) for the next year. Doing so “would make more than five billion bushels of corn available to the marketplace for animal feed and foodstuffs, driving down costs and significantly lessening the financial impact to Delmarva’s poultry farms and consumers.”
The governors warned that if the RFS standards are not waived, the consequences to Maryland and Delaware’s economy would be severe, including the loss of thousands of jobs.
“While there may be some who question the true price impact of waiving the RFS standards for a limited period, those debates are quantitative, not qualitative, as it is not in dispute that a waiver would put downward pressure on corn pricing,” the letter continued. “Given the likely impacts to the poultry industry, not to mention the increased cost of food for consumers, of this dramatic increase in price due to the under supply of corn, it is hard to imagine any scenario when exercising your authority would be more appropriate.”
The governors’ request coincides with a report issued by the U.S. Department of Agriculture that showed the drought desolating the U.S. Corn Belt has destroyed a sixth of the country’s corn crop in just one month.
In today’s World Agricultural Supply and Demand Estimates (WASDE) report, USDA forecasted the 2012-13 corn crop to be 10.8 billion bushels with a yield of 123.4 bushels per acre, down more than 22 bushels per acre from the last estimate. According to USDA, this severely reduced supply will result in an ending carry-over inventory of corn for the 2012-13 crop year of 650 million bushels, or 5.8 percent of total corn usage, and 533 million bushels lower than the previous estimates. It would be the smallest carry-over since 1995-96 crop year. USDA also forecasts record corn prices of $7.50 to $8.90 per bushel at the farm level, which could be more than 40 percent higher than the 2011-12 crop year. Further, USDA reduced its feed usage forecast from its report last month by over 15 percent; much of the burden of a short corn crop will fall heavily on poultry and livestock producers.
The National Chicken Council and National Turkey Federation responded to today’s report and offered strong support for the efforts undertaken by Governors O’Malley and Markell in support of an immediate waiver. The groups issued the following statement:
“Today’s report further confirms that the prolonged hot weather and drought has devastated this year’s corn crop yields and carry-over stocks. This means there will be no letup in the record spike currently being felt across animal agriculture. This historic drought increases the likelihood that poultry companies will end up paying more than $9.50 per bushel throughout the 2012-13 crop year to meet their feed needs, translating into billions of dollars in added costs for poultry producers. These additional costs will either be passed on to consumers through increased food prices, or poultry farmers will be forced out of business. The time for an RFS waiver is now – thousands of jobs and food prices are at stake. It is past time that the administration acts on calls by 156 U.S. House members, 26 U.S Senators, poultry and livestock producers, the United Nations, and now the governors of Maryland and Delaware to waive the ethanol mandate in attempt to provide some relief.”