RFS Mandate for Corn-Based Ethanol ‘Single, Most Important, Major Driver’ Impacting Corn Market, NCC tells House Energy and Commerce Committee

May 2, 2013

In response to the House Energy and Commerce Committee’s second white paper on the Renewable Fuel Standard (RFS), the National Chicken Council said its detailed comments to the committee that the federal government’s mandate for conventional biofuels (corn-based ethanol) has been the “single, most important, major driver” impacting the corn market since the Energy Independence and Security Act of 2007 was implemented. Not only has the mandate caused corn prices to increase to record levels, the volatility of corn prices has been unprecedented.  No other government program has resulted in such a costly burden to producing chicken nor has any other federal policy caused as many chicken companies to cease operations, file for bankruptcy, or be acquired by another company in such a short span of years, the comments added.

The continued distortions to the corn market have rippled from family farmers growing fewer chickens to home makers and restaurant patrons consuming fewer pounds of chicken.  Unfortunately, there has been no offsetting savings in energy costs, gasoline prices, nor other identifiable benefits.  NCC suggests the situation has actually been to the contrary.

With the blend wall now essentially capping the quantity of ethanol that can be blended, the Environmental Protection Agency (EPA) may be forced to reconsider the future schedule of the RFS for conventional fuel.  The fuel market has shown it does not want nor need ethanol above the 10 percent blend rate.  For EPA to find a way to force blending rates above 10 percent would be making a very costly situation for U.S. animal agriculture an even heavier burden to bear, NCC said.

This white paper assessment is the second of four white papers the Energy and Commerce Committee is requesting. The committee is gathering information in anticipation of a series of hearings that Energy and Commerce will hold on the RFS and the need for a review of this energy policy. The committee stated in the white paper assessment, “It has been more than five years since the RFS was last revised, and we now have a wealth of actual implementation experience with it. In some respects, the RFS has unfolded as expected, but in others it has not. It is time to undertake an assessment of the RFS.”

The committee’s request consisted of nine questions covering the impact of the RFS on corn prices, soybean prices, and other agriculture commodity prices, as well as jobs lost, gained or created.  The question of flexibility with regard to the Clean Air Act was also covered, as well as the role of cellulosic biofuels, foods prices, international agricultural production, and global land use changes.

To access the National Chicken Council’s comments click here.  Also available are Tom Elam’s report and presentation.

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