Texas Governor Rick Perry is to be congratulated for filing the first request for a waiver of the Renewable Fuel Standard (RFS) with the U.S. Environmental Protection Agency to reduce the amount of corn being used to produce ethanol, the National Chicken Council said today.
“Governor Perry is absolutely correct that ethanol demand is a major factor in increasing the cost of food production,” said NCC President George Watts. “It is time for Washington to pay attention to what is going on and grant some relief from the unrealistic demands of the ethanol program.”
Under the current RFS, nine billion gallons of ethanol are required to be added to motor gasoline this year. The amount rises every year until it tops out at 15 billion gallons – roughly ten percent of the motor gasoline supply – in the year 2015. Approximately 97 percent of the ethanol in the United States is distilled from corn, which would otherwise be used to make feed for livestock and poultry, or food products.
“While many other factors affect the price of corn, I need only to look at skyrocketing grocery prices to know that granting a waiver of RFS levels is the right thing to do,” Perry wrote in a letter to EPA Administrator Stephen L. Johnson. He asked Johnson to reduce the mandate by 50 percent. While the request came from the governor of Texas, any relief granted would apply nationwide.
“While the RFS was a well-intentioned policy,” Perry wrote, “it has had the unintentional consequence of harming segments of our agriculture industry and contributing to higher food prices. Corn prices are up 138 percent globally over the past three years and global food prices have increased 83 percent over the same time period, in part because of the artificial economic forces created by the RFS.”
Higher corn prices have already cost the Texas economy more than $1 billion, and if corn goes to $8 per bushel as some predict, the negative impact would be $3.6 billion, Perry told Johnson.
Watts noted that a recent study by FarmEcon LLC, an economics consulting firm, estimated that the ethanol program is adding unnecessary costs of $25 billion per year to the food production industry nationwide. The nation’s ethanol distilleries are expected to pull a third of the nation’s corn crop out of food and animal feed usage in the coming year and sent into the liquid fuel channel, where its use is heavily subsidized by a federal tax credit available to fuel blenders.
The EPA administrator is authorized by the federal Clean Air Act to grant waivers from the RFS based on economic or environmental harm. Perry’s request is believed to be the first official request filed under this provision of the law.
The National Chicken Council represents integrated chicken producer-processors, the companies that produce, process and market chickens. Member companies of NCC account for approximately 95 percent of the chicken sold in the United States.