RFS proposal ag impacts discussed at RFA teleconference

By Chris Hanson | December 04, 2013

The negative agricultural impact of the U.S. EPA’s proposal to lower the 2014 Renewable Fuel Standard targets was the subject of a teleconference hosted by the Renewable Fuels Association (RFA).

The conference began with the benefits of the RFS, such as lower CO2 emissions and lower gasoline costs. “Revitalizing rural communities, boosting farm income and reducing farm program costs were also important policy objectives of the RFS,” said Bob Dineen, CEO of the RFA. “Two dollar corn had been unsustainable. Congress was looking for value-added programs that would allow farmers to get more of their income from the marketplace than from the federal government in the mailbox. The RFS has certainly helped to do that.”

Iowa Governor Terry Branstad weighed in on the agricultural industry implications of an RFS modification. The proposal, he said, could cost 45,000 jobs nationwide. “That’s 45,000 families that would face undue financial hardship and stress," he said. 

The governor recalled when the oil industry used methyl tertiary butyl ether (MTBE) as a fuel additive to meet oxygen requirements in the 1990 Clean Air Act Amendments, which led to groundwater pollution issues. “[The Oil Industry] was wrong when they promoted MTBE. They were wrong again when they said ethanol couldn’t fill the bill, and we’ve able to do that. And now, of course, they’re resisting because they don’t want something they don’t control,” explained Branstad. “They want something that they’re only going to profit from, not something that’s going to benefit the economy of this entire agricultural heartland of America.”

The EPA’s decision could have dramatic implications on the economic viability of Midwest communities, said Branstad. “I’m concerned this would be devastating to what has been a robust economic recovery here in the strongest region of the United States,” he added.

Conventional ethanol production and advanced biofuels prospects would be dealt a harmful blow, said Matt Erickson, economist at the American Farm Bureau Federation. Since the implementation of the RFS 2 in 2007, agriculture exports increased 57 percent, total livestock output increased 31 percent and total crop output increase by 44 percent, he showcased. As of November 1, corn production was up 30 percent greater than 2012 and could be a new production record for the U.S. at 14 billion bushels.

“What the EPA proposed rule would do for 2014, would essentially shed 500 million bushels from corn demand if this proposal were to be finalized,” Erickson said. “Which would ultimately make ethanol exports the key ingredient to make up for this lost demand.”

The teleconference was the second in a series on the RFS program hosted by the RFA.