Revise fuels standard to ease corn crunch: NCC
July 8, 2011
by Meat & Poultry Staff
WASHINGTON -- To ensure food producers are not cut short of corn by increasing demand from the ethanol industry, Congress should revise the Renewable Fuels Standard, the National Chicken Council told a Congressional committee on July 7.
“The RFS needs to be subject to an adjustment when market forces and the corn harvest are such that all market needs cannot be met at a reasonable cost to users,” said Mike Brown, NCC president, while testifying to the Energy and Environmental Subcommittee of House Committee on Science, Space, and Technology. “We support proposed legislation to permit individual states to opt out of the corn ethanol portion of the RFS. States could determine for themselves the trade-off of higher food costs versus more gasoline blended with ethanol.”
At present, the RFS requires a fixed amount of ethanol to be added to motor gasoline. The 2011 quota totals 12.6 billion gallons of ethanol, an amount that will rise every year until it tops out at 15 billion gallons in 2016. Nearly all ethanol in this country is derived from corn. And approximately 40 percent of this year’s corn crop will be devoted to ethanol production, driving the price of corn to more than $7 per bushel, which is far above its cost when ethanol demand took hold.
Corn is the largest component in chicken feed and the largest part of the cost of producing a live chicken.
“Allowing states to make this critical call is a step toward taxpayers and consumers better deciding for themselves what is in their best interest,” Brown said. “The policies and rules of the games for corn-based ethanol must be re-balanced and the playing field must be leveled to permit chicken producers and other animal agriculture producers to more fairly compete for the very limited supplies of corn this year and most likely for the next few years,” he said.
Such a modification would be a true compromise in the RFS, more so than the legislation that has been floated to phase out the Volumetric Ethanol Excise Tax Credit (VEETC), or blenders’ credit, while granting the ethanol industry new subsidies for so-called ethanol “infrastructure,” such as blender pumps and storage facilities, he said.
“Compromise means the ethanol industry needs to allow for a good measure of flexibility in the ethanol policy and program going forward,” Brown said. “Dressing-up ethanol policy in another dress is not a compromise.”
Dismay was also voiced by Brown at the Environmental Protection Agency’s decision to legalize the sale of gasoline with as much as 15 percent ethanol content. The current level of ethanol in gasoline is limited to 10 percent except for a high-level blend of 85 percent ethanol and 15 percent gasoline sold at a few service stations.
Brown called for a study by the National Academy of Sciences to assess the ramifications of the use of mid-level ethanol blends, meaning any blend level above E-10.