NCC Calls for Freeze on Ethanol at ‘14 Levels; Says EPA’s Administration of RFS Disruptive to Market

July 27, 2015

Washington, D.C. – The National Chicken Council (NCC) is supportive of EPA’s proposed actions to adjust the biofuels targets for 2014, 2015, and 2016 to reflect the practical limits imposed by the blendwall, the group said today in comments submitted to the EPA regarding the agency’s proposed Renewable Fuel Standard (RFS) volume targets.

“NCC would, however, support further reductions in the target level for conventional biofuels for 2015 and 2016 to account for the distorting effects the RFS has on the market for corn, substitute feed products, chicken prices, and food prices in general,” said NCC President Mike Brown in the comments.

Brown wrote to EPA Administrator McCarthy that the use of corn for ethanol has created an uneven playing field for chicken producers. Since the RFS was enacted in 2007, chicken producers have faced more than $50 billion higher in feed costs due to the RFS. “With both increased required volume obligations in 2015 and 2016, as well as increased ethanol exports, the U.S. chicken industry is again only one supply shock, flood or drought, away from high volatile corn prices as in 2009 and 2012. Where chicken producers have to adjust production and limit flocks due to corn prices, the RFS protects ethanol producers from having to make the same type of adjustments.”

Additionally, Brown pointed out that ethanol exports are supported by the RFS and diverting more corn from the feed market, which was not foreseen in 2007. Through the first five months of 2015, ethanol exports are on pace to exceed 900 million gallons, which would represent more than 320 million bushels of corn diverted from the feed market in addition to that diverted by the domestic supply of ethanol.

When Congress set the 15 billion gallon cap on corn ethanol under the RFS, it did so to prevent ethanol production from diverting too great a volume of corn from the feed, food, seed, and industrial market for energy. With the increased required volume obligation for 2016 proposed at 14 billion gallons, and the projected trend in ethanol exports, conventional corn ethanol production will likely exceed 15 billion gallons in 2016.

“EPA’s implementation of the RFS to date has resulted in a program that has departed from the underpinning statutory purposes,” Brown continued. “It is now all the more critical that EPA adopt appropriate standards in the present proposed rulemaking.

“NCC recommends a significant reduction in the 2016 required volume obligations sufficient to bring the conventional corn ethanol volume below the 10 percent blend wall.

“These are clear and continued signs that the RFS, and its implementation, are broken beyond repair,” Brown concluded. “Fortunately, legislation has been introduced in both the House and the Senate this year to repeal the RFS corn-ethanol mandate, with broad bipartisan support. I urge Congress to immediately take up this legislation and fix this RFS mess.”

The full comments can be accessed by clicking here.

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