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Agriculture Today

Cattlemen dealt another blow; first drought, now EPA denies waiver

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Wilson County News
November 28, 2012 | 2,788 views | Post a comment

Feedlot operators across the nation who use corn in their feed rations are stunned, after the Environmental Protection Agency (EPA) Nov. 16 denied the Renewable Fuels Standard waiver request for such operations.

A coalition consisting of seven governors, including Texas Gov. Rick Perry; 180 members of Congress; and livestock groups, including the National Cattlemen’s Beef Association and the Texas and Southwestern Cattle Raisers Association, sent letters in support of the waiver.

According to the National Agricultural Statistics Service, “... corn production is forecast at 10.7 billion bushels ... down 13 percent from 2011. This represents the lowest production in the United States since 2006.” If the expected yield averages 122.3 bushels per acre, “this will be the lowest average yield since 1995.”

This is the second time a waiver was denied. The first time, in 2008, Perry filed for the state, to no avail.

The coalition is concerned about the inadequate domestic supply of corn to meet the needs for the production of ethanol as mandated by the government, to fill the need of livestock operators, and to be able to continue to export to other countries. The demand and shortage, in turn, have caused the price of corn to soar to record levels, causing an economic strain on ag producers.

EPA decision

In a Nov. 16 press release, the EPA, using “economic analyses and modeling done in conjunction with the U.S. Department of Agriculture (USDA) and the U.S. Department of Energy, ... has not found evidence to support a finding of severe ‘economic harm.’”

According to a Sept. 25 Congressional Research Service report, the waiver is included in the Energy Policy Act of 2005 to promote biofuels, including ethanol, in the U.S. fuel supply. Since its implementation, U.S. ethanol production rose from 3.9 billion gallons in 2005 to 14 billion gallons in 2011. For this production, 5 billion bushels of corn, or 40 percent of the 2011 crop, was used.

The congressional report included data on the severity of the drought that plagued the United States in 2012.

Corn prices of $5.30 per bushel in July 2012 soon rose to above $8 per bushel in mid-August, and since have dropped by 50 cents per bushel. In turn, cattle feedlot operators faced increased prices for corn, which could lead to higher meat prices at the meat counter.

“We recognize that this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers,” said Gina McCarthy, assistant administrator for EPA’s Office of Air and Radiation, after the ruling.

If the EPA had granted the waiver, corn prices would be reduced only by approximately 1 percent, while household energy costs would not be impacted, the report said.

As the government made its decisions, different groups weighed in with their concerns.

Groups respond

The Texas and Southwestern Cattle Raisers Association commented after the waiver announcement was made.

“It is truly unbelievable that a government agency would ignore the fact that we are facing a dire corn shortage in this country,” said Joe Parker Jr., rancher and president of the Texas and Southwestern Cattle Raisers Association.

“The EPA had an opportunity to show their support, in some regard, of the U.S. cattle industry,” Parker said. “Instead, they continue to put our food and fuel in competition with one another by giving one commodity a leg-up at the expense of another. Chalk this up to another instance in a long line of examples that demonstrates that the government, particularly the EPA, does not support the cattle industry or the free market.”

Bob McCan, another cattleman from Texas who also serves as the vice president of the National Cattlemen’s Beef Association (NCBA), also raised concerns in an Aug. 24 NCBA press release.

“Texas is the largest beef cattle state in the country. ... it’s evident that cattlemen and women nationwide are continuing to experience the negative effects of this drought.”

Yet another cattleman, Jim Peters, chairman of the Texas Cattle Feeders Association, said in the Aug. 24 NCBA release, “I’m not sure how anyone could still believe that the RFS [Renewable Fuels Standard] isn’t a market-distorting government policy that props up the ethanol industry at the expense of livestock producers and consumers.”

The National Corn Growers Association, however, voiced its support of the EPA’s decision in a Nov. 16 press release.

“... petitioners did not properly prove severe nationwide economic harm had occurred, thereby creating no justification for a waiver of the RFS [Renewable Fuels Standards],” said National Corn Growers Association President Pam Johnson. “The ethanol industry plays a pivotal role in job creation throughout the country supporting over 400,000 jobs nationwide. This includes many in ethanol plants in rural America. The RFS advances the use of domestically produced renewable fuels, encourages new technologies, and enhances U.S. energy independence.”

See related article, 7A, for more on this issue.

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