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Corn for ethanol ... going green or going broke?
The use of renewable fuels in the future is causing a stir across the nation with the Environmental Protection Agency’s (EPA) proposed reduction of ethanol in 2014. While proponents state that using field corn aids in the nation’s efforts to go green by cutting back greenhouse gas emissions, another group wonders at whose expense. Both sides cite the different uses for corn that add value to this commodity.
Iowa Gov. Terry Branstad, in a Dec. 4 media teleconference call, warned of the economic and environmental impact the EPA’s proposed reduction in ethanol production could have on his state and the nation if approved.
Branstad questions if the economic recession of the 1980s will recur if ethanol production is reduced by 1.4 billion gallons, as proposed under the Renewable Fuel Standard mandate. See “Corn debate grinds on,” Dec. 4.
The Iowa governor recalled when another gasoline additive, methyl tertiary butyl ether (MTBE), was used in the 1990s, resulting in water contamination. While western states such as California used MTBE, Iowa used ethanol to comply with the Clean Air Act Amendments of 1990. Both MTBE and ethanol were introduced as reformulated gasoline to reduce ground-level ozone.
Iowa leads the country as the No. 1 corn-producing state and leads the country in ethanol production -- 41 plants for ethanol and 13 plants for biodisesel, Branstad said. The production of ethanol also aids in the reduction of the need for foreign oil, according to Branstad.
The governor said if the proposed reduction occurs, 45,000 jobs will be lost nationwide, land value will decline, and a domino effect in the ag industry will follow. He foresees layoffs in small Iowa companies, as well.
Branstad urged President Obama and EPA Director Gina McCarthy to support the Renewable Fuel Standard and questioned why the EPA “flinched under pressure of the oil companies.”
Joining Branstad for the teleconference was American Farm Bureau Federation economist Matt Erickson, who said he is disappointed with the reduction, which strikes a blow against ethanol and biofuels.
While some critics cite ethanol as the cause for the price of corn reaching $8.50 per bushel last year, it was the 2013 drought, not the Renewable Fuel Standard, Erickson said.
Following the November U.S. Department of Agriculture’s (USDA) estimate of 14 billion bushels, corn price futures dropped by 97 percent. The future price for corn is listed at $4.32 per bushel, Erickson said. This downward trend is anticipated to level off in the range of $3.95 to $4.14 per bushel in 2014.
With the USDA national cost of production estimated at $4 per bushel, farmers will barely break even. This is the first time since 2005 farmers will see such low prices that do not cover expenses.
Branstad was one of 144 speakers scheduled to address the reduction during a Dec. 5 EPA hearing. While he outlined how ethanol use adds to the value of corn, National Cattlemen’s Beef Association past President Steve Foglesong of Illinois spoke in favor of the proposed ethanol reduction, also addressing the value-added aspect of field corn used as cattle feed.
He said the cattlemen are not opposed to the production of ethanol using corn, but the group seeks a reform of the Renewable Fuel Standard. The group said corn usage in ethanol production has increased by 32 percent in 10 years. Today, it is 42 percent.
The cattle industry has seen the cost to finish a market steer increase by more than $200 per head in the past four years, he said.
“These costs are not sustainable for a segment of our industry that relies on corn,” Foglesong said. “Last year, when state governors were denied a waiver of the RFS in light of the worst drought in over 50 years, it became evident that the RFS needs to be fixed.”
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