EPA Urged to Reduce US Ethanol Mandate

By Susan Jones
CNSNews.com Senior Editor
(CNSNews.com, June 25, 2008) -

Cattlemen and other food industry representatives joined Texas Gov. Rick Perry in Washington Tuesday, all of them pressing the Bush administration to revise current food-to-fuel mandates.

In an April 25 letter to the Environmental Protection Agency, Gov. Perry asked EPA to halve the nationwide "renewable fuels standard" mandate. Instead of blending 9 billion gallons of corn-based ethanol into the nation's fuel supply, Gov. Perry recommended reducing the required amount to 4.5 billion gallons.

The goal is to reduce demand for -- and the price of -- corn.

The EPA opened a public comment period on the request, and that period ended on Monday. Now the EPA has until July 24 to issue a decision.

At the National Press Club on Tuesday, Gov. Perry addr essed a group of food producers, environmentalists and consumer advocates who also want the EPA to issue a waiver on the renewable fuels standard mandate.

"While I have no doubt this mandate was a well-intentioned effort to move our country toward energy independence, it is doing more harm than good and must be modified before our livestock industry suffers permanent damage," Perry said.

Beef and poultry producers, bakers, and others echoed his call:

"Cattlemen are now confronting $7 and even $8 corn, and that may just be the beginning," said Gregg Doud, chief economist for the National Cattlemen's Beef Association who shared the stage with Gov. Perry.

"Even before the wet spring pushed into June, we were already seeing a lot of acres migrating away from corn this year. By the time conditions improve in many of these fields, planting corn will no longer be an option."

With corn prices at record levels -- recently hitting $8 a bushel -- ran chers and consumers are feeling the pinch.

"The prices for beef, pork and dairy products have risen dramatically over the past few months and this upward trend will continue, as the food used to feed these animals is washed away by flood waters and the projected size of the corn harvest shrinks," said J. Patrick Boyle, president and CEO of the American Meat Institute.

Boyle added that recent flooding in the Midwest makes an EPA waiver even more urgent: "Mother Nature is refusing to adhere to Congressional mandates for corn production," Boyle said.

Bill Roenigk, senior vice president and chief economist of the National Chicken Council, said the Renewable Fuel Standard has "distorted the market" by placing higher costs on producers, which are then passed on to consumers through higher food prices.

Joel Brandenberger, president of the National Turkey Federation, said the turkey industry is committed to providing high quality products at an affordable price to the consumers. "However, with the current ethanol mandate diverting one-third of U.S. corn to gas tanks, feed prices have shot higher and higher, making it difficult for the industry to keep high-quality foods reasonably priced," he added.

The demand for corn has resulted in fewer acres devoted to wheat -- and that's a big concern for the American Bakers Association.

"The corn-based ethanol program is one of many factors impacting the current situation," said Robb MacKie, president and CEO of the American Bakers Association, which represents 85 percent of the nation's wholesale baking industry. "The recent flooding in the Midwest only further exacerbates this situation for all grains."

The National Restaurant Association said that of all the factors driving up wholesale food prices, government policies are the easiest to control -- and change. "We must ensure that we are not forcing our needs on food and fuel to compete against each other," sa id John Gay, senior vice president of government affairs and public policy for the National Restaurant Association.

"The restaurant industry supports the development of efficient renewable fuels -- including the promotion of the use of recyclable restaurant oil -- while safeguarding against price distortions in the food supply. These prices distortions have harmed our customers and businesses," Gay added.

"At a time when tens of thousands of Americans are turning to food banks to feed their children, no Administration could reasonably conclude that ethanol refiners should be given priority over working families, food companies, and livestock farmers," said Grocery Manufacturers Association President and CEO Cal Dooley.

Many of those who appeared with Gov. Perry on Tuesday are part of a new group called the Coalition for Balanced Food and Fuel. The coalition has set up a Web site that is /ldblquote dedicated to informing policy-makers, the media a nd the public about the impact of national ethanol policy on the industry and on consumers.""

Where the candidates stand

Sen. John McCain (R-Ariz.) opposes government subsidies for ethanol, and last month, he joined other Senate Republicans in urging the EPA to waive the current mandate for high ethanol production.

"It isn't a surprise that food prices are rising when more than 25% of the corn grown today is taken out of the food supply and instead used for subsidised ethanol production," McCain said in a statement. "We need to put an end to flawed government policies that distort the markets, raise food prices artificially, and pit producers against consumers."

Sen. Barack Obama (D-Ill.) told NBC's "Meet the Press" on May 4 that his "top priority is making sure people are able to get enough to eat. If it turns out we need to make changes in our ethanol policy to help people get something to eat, that has got to be the step we take. We have rising food prices around the United States. In other countries, we're seeing riots because of the lack of food supply, so this is something we're going to have to deal with."

Background information

The Energy Policy Act of 2005 established the Renewable Fuels Standard program, and volume levels were increased in the Energy Independence and Security Act, which was signed into law in December 2007. The 2005 energy law also included provisions enabling the EPA Administrator to grant a full or partial waiver if implementing the ethanol mandate would severely harm a state or region's economy.
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