Friday, October 09, 2015

Renewable Fuel Standard uncertainty hurting farm economies, agricultural groups say

The National Farmers Union and the National Corn Growers Association released a paper on Thursday "claiming that uncertainty surrounding the Renewable Fuel Standard (RFS) is a major factor in projected drops in net farm income," Spencer Chase reports for Agri-Pulse. The paper "pointed to USDA's Economic Research Service's projected 26 percent drop in net cash income for farmers. The paper calls the RFS 'the most significant growth factor for agriculture since its inception' and says that the 'agricultural economic revolution spawned by the renewable fuel industry helped raise farm incomes across nearly all agricultural sectors.'”

"The Environmental Protection Agency has been under fire for its administration of the RFS for some time after delayed Renewable Volume Obligations (RVO) announcements led to a lawsuit from the American Petroleum Institute and American Fuel and Petrochemical Manufacturers," Chase writes. "That lawsuit resulted in a timeline for announcement of 2014 and 2015 RVOs, and the EPA is voluntarily announcing the 2016 RVOs along the same schedule. An announcement is expected by the end of November."

Thursday's paper says "the uncertainty in the blending requirements under the law led to uncertainty at ethanol plants across the country, forcing many to close," Chase writes. NCGA president Chip Bowling, who said he lives by one of those closed plants in southern Maryland, told reporters, "It has changed the basis in the price that we receive for our corn; it has changed the way we are buying equipment; it has changed the way we to go out to dinner.” He said one local equipment dealer has seen a 30 to 40 percent drop in orders, mostly "due to the uncertainty in the renewable fuel standard because that's what built the farm economy up.”

"In May, EPA proposed incremental increases in every biofuel category, including corn ethanol used in E10 and higher blends at gas pumps across the country," Chase writes. "In 2015, the agency is proposing 16.3 billion gallons of renewable fuels—short of the 20.5 billion statutory target—with the potential for 13.4 billion of those gallons coming from corn ethanol. In 2016, the agency suggests further increases to 17.4 billion gallons of biofuels—a jump of about 1.5 billion gallons from actual 2014 production but below the 22.25 billion called for in statutory language—with the potential for corn ethanol to account for 11.4 billion of the total." (Read more)

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