Will the Renewable Fuel Standard Be Flood Damaged?

04:18PM Jun 16, 2008
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For the first time, the National Corn Growers Association (NCGA) has hinted it may support a waiver to the ethanol mandate as outlined in the energy bill, if there is a significant supply shortage of corn. NCGA President Ron Litterer says his primary interest is having his customers around for a long time. If "severe economic impact" is realized from a short supply of corn this year, as a corn industry representative the Greene, Iowa, farmers would support a temporary waiver to the Renewable Fuels Standard (RFS). However, he says it's far too early to make that recommendation.

In April Texas Governor Rick Perry filed a request with EPA for a 50% waiver of the RFS waiver. However, NCGA remains opposed to the Texas request. "We still remain strongly opposed to the Texas waiver request," says NCGA Spokesman Ken Columbini. EPA must deliver its ruling on that request by July 25.

Litterer says the industry will monitor the corn crop as the growing season progresses and while corn growers are experiencing difficulties this year, all is not lost for 2008. "There's potential to still salvage a crop," he says. "It certainly won''t be a bin buster, but we can still have a good crop. We'll know a lot more when USDA comes out with its June 30 Acreage Report."

"The long-term policy is for the RFS to have 15 billion gallons of corn ethanol by 2015. We're going to have ups and downs along the way, as we're having this year," Litterer said. "Corn growers understand we want our end users around for a long time, and it may require some adjustments."

The first real indication of the damage realized by flooding in the nation's number one corn producing state was from Iowa Secretary of Agriculture Bill Northey. Northey said last Thursday that initial estimates he's seen from the Farm Service Administration indicated 9% of Iowa's corn crop was lost to either prevented plantings or claimed from flooding. To date, 20% of the state's soybean crop was lost, though many of those acres could be reclaimed if fields dry out and flood waters recede.  

Assurances from the industry in the past months have not eased the rhetoric from the anti-ethanol lobby, however. In early April, Environmental Working Group Founder Ken Cook laid down the gauntlet and said the government's policy to ensure an adequate food supply this year was to "hope for good weather." Ethanol opponents, led by the EWG, the Grocery Manufacturers Association, and livestock and poultry groups have ensured the debate is front and center in the news media this spring. The debate will likely intensify through the summer as the assessment of crop losses is realized.

Last week, EWG Communications Director Alex Formuzis said, "Well, here we are." When asked if the recent events in the Midwest would enter into the anti ethanol debate, he replied, "Oh yeah."

So far biofuel opponents have not made much traction within the halls of Congress and at EPA, which is responsible for implementing the RFS. Changing the mandate must be granted by EPA and only then in concurrence with the Department of Energy and Department of Agriculture. So far the Energy Department is clear in its unwavering support of the RFS.

In a joint letter in response to questions from Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) about biofuel effects on food and fuel prices, Energy Secretary Samuel Bodman and Agriculture Secretary Ed Schafer expressed their support of biofuels. They stated biofuel production is moderating gas prices and "current biofuels-related feedstock demand plays only a small roles in global food supply and pricing."

EPA has called for public comments on the Texas request. Click here to read the EPA Federal Register notice.

The situation would have to get extremely bad for the waiver to be granted under current law, says American Farm Bureau Federation Energy Specialist Anne Steckel. "For them to initiate that waiver, they would have to prove severe economic harm to the economy or the environment. Or, obviously if we don't have the domestic supply to meet the requirement."

 Read all of AgWeb's Flood Coverage

 You can e-mail Greg Vincent at [email protected].