Last week the governors of two more states separately sent letters to the chief of the Environmental Protection Agency in Washington D.C., requesting that EPA grant a waiver of the Renewable Fuels Standard. The standard is a federal law that requires petroleum refiners to blend a certain minimum amount of ethanol in gasoline. Corn prices being pushed to record highs this summer by the 2012 drought is prompting calls for the RFS to be reduced or suspended.
A growing number of members of Congress, fearing that making ethanol from corn is driving up the price of food, are also calling for the RFS to be waived. In addition, EPA has also received a request by a consortium of livestock and poultry industry organizations to waive part of the mandate, in hopes of holding the line on feed costs.
Governors Beverley Perdue, D-N.C. and Mike Bebee, D-Ark. separately requested that EPA Administrator Lisa Jackson grant a waiver of the Renewable Fuel Standard. The official petitions ask that EPA fully or partially waive renewable fuel requirements for the remainder of 2012 and also 2013. EPA is required to rule on the requests in 90 days, including a 30-day period for public comments.
Corn growers say granting a waiver on ethanol would be premature
"We think it's better to wait until harvest is well underway to see how much corn is being produced this year," says Kevin Ross, president of the Iowa Corn Growers Association. "Also, there are several studies by prominent economists that came out last week that say a waiver's effect on corn prices, if a waiver were granted, would be uncertain."
In response to the petitions filed last week, National Corn Growers Association president Garry Niemeyer said, "While we believe that it is still somewhat premature to consider a temporary, partial waiver to the RFS (as there will be much more accurate information about the size of this year's U.S. corn crop available with September's and October's USDA crop reports), we do respect the right of those withstanding to exercise the language contained in the RFS."
He adds, "The waiver process language in the RFS calls for careful objective analysis of the economic impact of the RFS on the U.S. economy. We have faith in, and support, the process laid out in this language. If indeed the analysis shows that the RFS is not causing severe economic harm, but instead ethanol production is responding to market forces rather than the RFS, then the request for a temporary partial waiver should be rejected. If however, the analysis clearly shows that the RFS is causing severe economic harm in light of the drought, then a temporary, partial waiver should be granted." Click here for the full response.
The Iowa Corn Growers Association will review the waiver request once it becomes public and determine a course of action based on the specifics of the request and actual harvest numbers, says Mindy Larson Poldberg, director of government relations for ICGA. Stay tuned for more updates on this topic.
Farmers reminded to work with crop insurance companies during drought
In other news announced by the Iowa Corn Growers Association last week, they reminded Iowa farmers to work with their crop insurance agents as they file crop insurance claims. Most crop insurance policies require claims to be filed in a timely manner, in some cases within 72 hours of discovering the damage. For more information from the USDA Risk Management Agency on crop insurance and drought damaged crops click here. For resources from the Iowa Governor's drought information page click here.