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Ethanol Supporters Say Rural Economy Will Pay Price for RFS Reduction

Ethanol Supporters Say Rural Economy Will Pay Price for RFS Reduction
Ethanol stakeholders gear up to present opinions in EPA hearing Thursday

Renewable Fuel Standard stakeholders are scheduled to lay it all on the table Thursday during a special Environmental Protection Agency hearing on the fate of the RFS policy. The Agency is considering finalizing a proposal to roll back required ethanol volumes.

The policy mandates a certain amount of renewable fuels be blended into the fuel supply annually. But the EPA is set to decrease those volumes to account for what it calls the "blend wall" – the point at which the E10 fuel pool is saturated with ethanol.

Ethanol stakeholders gear up to present opinions in EPA hearing Thursday

Stakeholders opposed to the move were out in full force on the eve of the event, with Iowa Gov. Terry Branstad, American Farm Bureau economist Matt Erickson and Renewable Fuels Association President Bob Dinneen weighing in on the policy's impact for rural areas during an RFA press call.

Branstad, a fervent supporter of the RFS, is scheduled to testify during the EPA's Thursday hearing.

The five-term governor said he has supported ethanol and the RFS policy from the start, noting its capacity to revitalize rural economies. With RFS volume decreases, Branstad said, the nation as a whole would be out 45,000 jobs.

But Branstad was quick to mention other drawbacks to an RFS retreat.

"It's not just the farmers and the jobs in the ethanol plants," Branstad said, pointing out that the trickle-down effect could drive down not only the price of corn, but also land values. That, in turn, could slow growth in ag manufacturing and purchases of ag equipment, he said.

"I was governor during the Farm Crisis of the 1980s when land values dropped 63%. I know what can happen when you have an agriculture depression, and we don't want to go back and revisit that," he said.

Like many ethanol supporters, Branstad suggested the proposed RFS volume decreases are the result of prodding from oil lobbyists.

"There's no reason why they should flinch under the pressure of big oil," Branstad said.

Matt Erickson, economist for the American Farm Bureau Federation, suggested the RFS changes, if approved, could have economic impacts down the line.

"This will definitely … dampen the prospects for advanced biofuels, now and in the future," Erickson said, explaining that the growth in ag exports, livestock output and crop output have all grown with the rise of ethanol.

Erickson also noted that while some policy opponents suggest that ethanol has a part to play in corn price increases, especially last year, the weather was more to blame.


"We saw $8.50 corn because of the drought," Erickson said. "We experienced the worst drought since the 1930s – if you look at right now, now we are seeing nearby corn futures at about $4.32 a bushel.

"We won't be starting the year off with $6 corn," he said.

In addressing concerns of a "legislative fix" for RFS policy, Dinneen said his organization remains opposed to the idea. In fact, he suggested, any sort of RFS alteration keeps the policy from functioning as a catalyst to advanced ethanol use and production.

"RFS was passed to make the marketplace do things that the market would not do otherwise; create incentives for new biofuels; to move this country forward – and this proposal takes our country backwards," Dinneen said.

About 145 people are scheduled to speak at the hearing, beginning at 9 a.m. on Thursday. The National Corn Growers Association said more than 30 corn farmers and their families would be attending the hearing on behalf of NCGA, representing 13 states.

Ten Iowa farmers and business owners will also be on hand, the Iowa Renewable Fuels Association said.

Proponents of the changes, including several livestock and poultry groups, are also expected to attend the hearing. The National Council of Chain Restaurants, which is leading a coalition of groups opposed to RFS policies, has said that the mandates drive commodity costs higher at the expense of consumers.

All stakeholders are invited to listen in to the hearing and weigh in on the proposed change via federal register comment until Jan. 28. Learn more about the hearing and how to comment.

TAGS: Regulatory
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