Biofuel groups encourage lawmakers to maintain the RFS

By Erin Voegele | May 01, 2013

Several biofuel trade organizations have weighed in on white paper published by the House Energy and Commerce Committee on the impact the renewable fuel standard (RFS) has had on the U.S. agricultural sector. The report examines a number of concerns that have been brought up with regard to relationship between the RFS and agricultural producers and poses a number of questions for discussion.  The committee requested that interested stakeholders submit responses.

Brent Erickson, executive vice president of the Biotechnology Industry Organization’s Industrial & Environmental section, responded to the white paper by emphasizing that the biggest impact to agricultural production, livestock feed costs and consumer food costs is the volatile price of oil. “Through the mandate of the RFS and the increased use of biotechnology, we are beginning to see the rapid development of biofuels and the biobased economy, which can help mitigate the volatility energy prices cause to commodities, transportation, energy costs, and processing,” he said. “The RFS is spurring the development of biotechnology in agriculture, which can continue to increase productivity for corn and other grains without increasing fertilizer and chemical loads, which is a key to sustainably meeting demand.  Grain farmers will always seek markets for grain that add the most value, and biotechnology can add value to the sugar and proteins from grains and create new markets.”

A letter issued by the Fuel America coalition also addressed the RFS’s impact on the price of corn and food. “According to the United States Department of Agriculture’s Economic Research Service, 84 percent of retail food costs are derived from non-farm costs, leaving the cost of food that derives from the value of farm products at 16 percent. In other words, 16 percent of the dollar that someone spends at the grocery store goes to pay for the farm products that made the food they’re buying, like corn, while the rest goes to things like energy, labor, marketing, packaging and transportation. The price of food is driven by the price of oil – in fact, since 2000, the two have correlated almost perfectly,” said the group in the letter.

Fuels America also outlined the importance of maintaining the RFS for the continued development of the cellulosic and advanced biofuels sector. In addition, the coalition’s letter pointed out that America’s farmers are growing more using less land.

In its comments, the American Coalition for Ethanol discussed the benefits the RFS provides to U.S. and international agriculture. “The RFS provides an economic incentive for scientists and technology firms to help farmers sustainably produce significantly more bushels of corn on an acre of existing cropland,” said Brian Jennings, executive vice president of ACE, in the organization’s comments. He also noted that the benefit isn’t exclusive to the U.S. agricultural community, as world corn production grew by 12 billion bushels from 2000 to 2011. During that time, 43 nations, mostly in Africa and the former Soviet Republic, doubled their corn production. “Repealing the RFS would simply discourage farmers around the world from planting corn, which runs contrary to what the meat and livestock groups supporting repeal want,” Jennings said.

The Renewable Fuels Association also weighed in on the white paper, noting that a central objective of developing the ethanol industry was to increase demand for agricultural products and enhance farm income. “Girded by the RFS, ethanol has become the single most important value-added market for American grain farmers, stimulating investment in agricultural technology and enhancing economic opportunities for rural communities across the country,” said Bob Dinneen, RFA president and CEO. “The emergence of the ethanol industry over the past decade has served as an incredibly important economic catalyst, transforming the grain sector from a stagnating, surplus-driven marketplace to one that is vibrant, high-tech, and demand-driven. As a result, the net impacts of the RFS and ethanol production on the agriculture sector have been decidedly positive, and U.S. meat output and retail food prices have not been adversely affected.”

Growth Energy also touted the positive economic impacts of the RFS in its comments. “The RFS has been one of the most successful energy policies in the last 40 years and it has had a tremendous positive impact on the agriculture sector and on consumer prices at the pump,” said Growth Energy CEO Tom Buis. “The RFS has significantly increased value to farmers for their crops and hard work and has driven production efficiency.”