No Quick Decision Expected for Any Change in Corn RFS Mandate

August 6, 2012 03:56 AM

Via a special arrangement with Informa Economics, Inc.

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Sources say a coalition group has a right to urge a change via the administrative procedures act.

A livestock coalition has already urged the EPA to modify the Renewable Fuels Standard (RFS) mandate. While the group may not qualify for a specific waiver request in which a decision would have to come within 90 days of any qualified petition being received, sources say the coalition group has a right to urge a change via the administrative procedures act.

U.S. government contacts say that the request will be discussed in upcoming meetings between EPA and various other government agencies, including USDA and the Energy Department. Contacts signaled a review will not likely be completed soon, as several USDA Crop Production reports will likely be needed before a complete assessment can be made.

Several corn-user groups have met recently with EPA and USDA officials about the matter, and some of the meetings included USDA Secretary Tom Vilsack, who according to some contacts has "changed his tone" from previous comments about this topic. Participants at some of those sessions said government officials acknowledged "they get it" relative to the current tight corn supply situation. However, they gave no indication as to whether or not there would be RFS mandate changes ahead.

One livestock industry contact said that when the matter of available RINs were brought up in a discussion of corn-based ethanol, one person said, "Animals can't eat RINs. We need feed." Another participant noted concern about potential corn quality-related issues, including potential aflatoxin problems in some locations (southern Illinois was mentioned as one location it has already surfaced), and potential quality issues ahead regarding DDGs.

Comments: Based on my inquiries, there will be several interagency committee meetings on this matter before any final decision is made. While the EPA administrator technically would make any decision to alter the RFS for corn, in reality any change would come via the interagency recommendations and that panel would include direct representatives with close ties to the White House.

Upcoming USDA corn crop estimates and the price of corn are two pressure points that will likely drive the RFS corn mandate decision, we are told. While no government official we talked with would give a crop estimate or corn price trigger point for an RFS change, some congressional sources and others signaled pressure for change would begin in earnest if corn prices reach $9 and would crescendo if the $10 mark is reached.

Issues to be reviewed include the impacts on gasoline prices, food prices, soybean meal/DDGs price and supply, corn exports, feed supply and corn seed supply. Various experts within and outside the government would be consulted on these topics.

A post-election decision is the best timing answer based on my sources, unless the price parameters detailed previously come earlier than the Nov. 6 elections.


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