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Production of ethanol debate continues
Wilson County NewsNovember 28, 2012 | 1,124 views | 3 comments
With the news that the Environmental Protection Agency (EPA) has denied the Renewable Fuels Standard waiver as requested by a coalition of governors, congressmen, and state and cattle organizations, the Renewable Fuels Association continues to defend the EPA’s decision. The lack of a waiver means higher corn prices, which could result in higher food prices.
Even prior to the Nov. 16 decision, Bob Dinneen, president and CEO of the Renewable Fuels Association, held a post-election teleconference to discuss issues regarding clean energy. The Renewable Fuels Association, according to its website, is a national trade association for the U.S. ethanol industry that was organized in 1981, to provide “advocacy, authoritative analysis, and important industry data to its members, Congress, federal and state government agencies.”
Dinneen said the conditions to grant a waiver do not exist. The “drought has caused [corn] prices to increase in the ag sector” for the feedlot operators, Dinneen said. But corn prices for the Renewable Fuels Standard that mandates the production of ethanol to meet the national volume requirement in the renewable fuel standard program [13.2 billion gallons corn ethanol in 2012] is not impacted.
Dinneen said that the United States imported 60 percent of the energy used in the country prior to the establishment of the Renewable Fuels Standard in 2005. Today, that number has been reduced to 45 percent, due to the “evolution of biofuels,” he said.
Several studies have been conducted that support the production of ethanol and crush the myths that ethanol production will create financial harm to ag producers, such as feedlot operators.
Dinneen said the ethanol industry is “... buying corn at market price” just like feedlot operators.
See “What if?” for more on the economic impact of a waiver.
The waiver that supports the U.S. promotion of renewable fuels -- ethanol, cellulosic biofuels, and biomass-based diesel fuels -- while depending less on foreign oil, continues to fuel the debate about the increase of corn prices and even the cost of food.
For more on the outcome of the EPA’s decision, see related article, 1D.
Let’s talk turkey
“Now, you will hear some squawking from livestock and poultry producers who oppose the RFS [Renewable Fuel Standards] and ethanol,” Dinneen said in a Nov. 20 press release. “Food costs are driven by energy costs. Only 14 percent of the food bill goes to raw agricultural ingredients like vegetable oils, dairy products, corn, and other grains and commodities. Meanwhile, 86 percent of your [Thanksgiving] grocery bill pays for energy, processing, packaging, marketing, labor, and other costs,” he said.
In a Renewable Fuels Association white paper, “This Thanksgiving, Avoid Big Meat’s Baloney,” the association addressed food price increases. Highlights include:
•“The groups decry that ‘food prices have spiked nearly 18 percent since 2005,’ the year the first Renewable Fuels Standard was passed by Congress. That’s an average of just 2.57 percent per year, which is right in line with the 20-year average for annual food inflation.
•“Additionally, 2010 saw the lowest year-over-year food inflation in nearly 50 years. Meanwhile, the ethanol industry produced a record amount of fuel that year.”
The Renewable Fuels Association quoted data from a May “Center for Agricultural and Rural Development” study that “ethanol reduced wholesale gasoline by $1.09 per gallon nationally,” in its Nov. 20 press release. “Those savings have a very real impact on the average household budget. Ethanol reduced the average American household’s spending on gasoline by more than $1,200 last year, based on average gasoline consumption data. Since 2000, ethanol has helped save $39.8 billion annually in excess gasoline costs -- roughly $340 per household per year.”
The Renewable Fuels Association released the following key findings if the Environmental Protection Agency would have granted the Renewable Fuels Standard waiver for the Sept. 1, 2012, to Aug. 31, 2013, time frame:
•Corn use for ethanol would decline by 59 million bushels or -1.3 percent.
•Corn use for feed and residual would increase by 25 million bushels, or 0.6 percent.
•Corn exports would increase by 10 million bushels, or 0.8 percent.
•Ending stocks would increase 23 million bushels, or 3.1 percent.
•These demand shifts result in 2012-13 corn prices falling from $7.87 to $7.83 per bushel, or -0.5 percent.
•Retail pork prices would decline one penny from $3.59 to $3.58 per pound, a -0.04 percent reduction.
•Retail beef prices would remain at $5.30 per pound with or without a waiver.
Source: Food and Agriculture Policy Research Institute analysis report
Your Opinions and Comments
GRAND PRAIRIE TX
December 1, 2012 8:34am
Publius Valerius Publicola
November 30, 2012 12:36pm
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Dry Tank, TX
November 30, 2012 11:29am
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