A new study conducted by Iowa State University’s Center for Agricultural and Rural Development finds a leading Renewable Fuel Standard reform proposal would ultimately result in lower corn prices.
Authored by Gabriel E. Lade, Sebastien Pouliot, Bruce A. Babcock, the study evaluates E15 and E85 demand under RIN price caps and an RVP waiver.
The report follows a series of meetings with congressional leaders representing Midwestern biofuel interests and oil interests to discuss the mechanics of the Renewable Fuels Standard. One compromise proposal emerging from these White House meetings is capping Renewable Identification Number prices between 10 cents and 20 cents in exchange for allowing year-round sales of E15.
The National Corn Growers Association says the report backs up what corn growers have been saying.
“The CARD analysis clearly shows an artificial cap on Renewable Identification Number (RIN) prices in exchange for an RVP waiver allowing year-round sales of E15 would be a bad deal for rural America and the nation’s consumers,” said Kevin Skunes, NCGA president. “Providing regulatory parity for E15 and higher blends helps address concerns about RIN values. Allowing the RIN market to operate freely with year-round sales of E15 would increase the production and consumption of renewable fuels, increase the supply of RINs available for compliance and lower RIN values. Combining RVP parity with a RIN price cap is counterproductive and would lower ethanol blending.”
The 25-cent-per-bushel-drop in corn prices predicted by the economists would be devastating to growers, Skunes said.
“Last week, corn farmer delegates in the National Association of Corn Growers Corn Congress unanimously passed a resolution urging President Trump to retain the current RIN market mechanism without change,” Skunes said. “This analysis supports our resolution.”
Source: NCGA, Iowa State University CARD