Policy Journal

October 25, 2013 08:43 PM

By Roger Bernard and Katie Humphreys

EPA Proposes Cutback in 2014 Ethanol Blend Volume

Reports of a draft from the Environmental Protection Agency (EPA) that sets the Renewable Fuels Standard for 2014 at 15.21 billion gallons appears to be just that—a draft.

"The agency has made no final decision on the proposed renewable fuel standards for 2014," said EPA Administrator Gina McCarthy after the draft surfaced in media reports. "No decisions will be made on the final standards without a full opportunity for all stakeholders to comment on EPA’s proposed 2014 renewable fuel standards and be heard on how to best foster a growing biofuels industry that takes into account infrastructure- and market-related factors."

EPA is said to be considering three options to reduce the corn-based ethanol mandate: a low of 12.36 billion gallons, a high of 13.18 billion gallons or the middle point, 13 billion gallons, which is the preferred level. This year, the volume of corn-based ethanol is 13.8 billion gallons, which would result in a 6% reduction, should the preferred volume make the final cut. Depending on where corn-based ethanol use falls, the advanced biofuel component would adjust to result in a total volume of 15.21 billion gallons.

The day the draft proposal surfaced, corn futures dropped. The leaked draft prompted Growth Energy CEO Tom Buis to call for an investigation.

"Because of the dramatic economic impact on commodity markets, there should be an immediate investigation by the Justice Department and the Commodity Futures Trading Commission to determine if this was an attempt to manipulate markets such as corn futures, ethanol futures and/or RINs markets," Buis said.

At press time, the draft was under review by the Office of Management and Budget.

2008 Farm Bill Extension Expires

Fortunately, when the one-year extension of the 2008 farm bill expired at the end of September, the immediate impact was minimal because it coincided with the partial government shutdown.

The recent expiration of the farm bill will result in similar impacts to the one that occurred in October 2012 when the 2008 farm bill initially expired. The most notable impacts include the following:

  • The enrollment period for new Conservation Reserve Program (CRP) and Wetlands Reserve Program (WRP) acres expired, although the contracts through the general CRP sign-up were accepted starting Oct. 1. Along with new CRP enroll­ments, continuous sign-up has also expired.
  • Funding for the Direct and Counter-Cyclical Payment (DCP) and Average Crop Revenue Election (ACRE) expired.
  • Two USDA export-related programs, the Foreign Market Development Program and the Market Access Program, have been suspended.

One significant difference with this year’s farm bill expiration versus 2012 is that payments have ceased in October—but that’s because of the partial government shutdown. Those payments include annual CRP rental and DCP. CRP payments typically start when the new fiscal year (FY) that begins on Oct. 1, but lack of funding is keeping the electronic payments from being made. Once the government shutdown ends, those will be issued. However, DCP and ACRE payments will face a reduc­tion due to the sequester or across-the-board cuts that are in effect for FY 2013.

"AgriTalk" Corner



"AgriTalk" is live Monday through Friday at 10 a.m. CST on more than 70 stations nationally.

To find an affiliate near you or to listen online, visit www.AgriTalk.com.



Renewable Fuels Standard

From Capital Hill, "AgriTalk," in partnership with Agri-Pulse, hosts a debate on the Renewable Fuels Standard between Bob Dinneen of the Renewable Fuels Association and Kristina Butts of the National Cattlemen’s Beef Association. www.FarmJournal.com/RFS_debate

Affordable Care Act

Dr. Roberta Riportella, Kansas Health Foundation professor of community health, breaks down the positive and negative aspects of the Affordable Care Act and how it will influence health care options and costs for farmers. www.FarmJournal.com/affordable_care_act


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