Op-Ed: Renewable Fuel Standard flexibility needed

Renewable Fuel Standard flexibility needed
By Reps. Bob Goodlatte (R-Va.) and Jim Costa (D-Calif.)
The Hill's Congress Blog
09/20/12 11:04 AM ET

American dairymen, ranchers, and poultry and pork producers are facing economic hardships and even bankruptcy from a perfect storm of shrinking corn supplies and soaring corn prices. As one of the most severe droughts we've seen in nearly 50 years dries up the corn crop, it's clear that our federal ethanol policy isn't helping the situation. While not the only cause of rising corn prices, the demands of meeting the Renewable Fuel Standard (RFS) during these drought conditions is stretching our corn supplies thin. In order to provide much-needed relief for the animal agriculture industry, food producers, and consumers, it's critical that we make our ethanol policy more flexible.

The RFS mandates that 36 billion gallons of renewable fuels be included in our nation's fuel supply by 2022. Our continued reliance on corn-based ethanol to fulfill this mandate has significantly altered the use of the U.S. corn crop in recent years. Since the implementation of the RFS in 2007, the percentage of the U.S. corn supply used for ethanol production has continued to climb. In 2011, five billion bushels of the corn supply were used for ethanol – equal to nearly 40 percent of the entire U.S. corn crop. Last year marked the first time that a greater amount of the corn supply went into our gas tanks than to feeding livestock and poultry.

As increased food and feed stocks are diverted for ethanol production and extreme drought persists, corn prices have skyrocketed above $8.00 per bushel. These higher prices are passed on to livestock and food producers. In turn, hardworking families that are already struggling to put food on the table are met with an unwelcome added expense at the grocery store. The U.S. Department of Agriculture (USDA) has already estimated that food prices will rise by as much as 4 percent next year. If left unchecked, this trend could continue to have devastating effects on the bottom line of livestock and food producers and consumers.

Maintaining the current RFS at a time when there are real concerns about how we can satisfy both the ethanol mandate and the needs of our livestock and food producers is not feasible. Last month, 156 Members of the House joined us in sending a letter to Environmental Protection Agency (EPA) Administrator Lisa Jackson urging her to use her authority to waive the RFS for this year, providing immediate relief for producers and consumers. In response to numerous requests from governors, lawmakers, and agriculture groups, the EPA opened a public comment period on this waiver, which will close on October 11.

In light of the extreme drought, it is clear that reform of this mandate is greatly needed. The government cannot change the weather, but it can reduce mandated pressure that artificially inflates corn demand. Now more than ever, using food for fuel is neither the most efficient way to produce energy or provide stability in feed prices.

Last October, we introduced the Renewable Fuel Flexibility Act (H.R. 3097) to provide relief to livestock and food producers as well as consumers of these products across the country and around the world. This legislation links the amount of corn ethanol required to fulfill the RFS to U.S. corn supplies. When the USDA reports that corn supplies are tight, based upon the corn stocks-to-use ratios, this legislation would serve as a "relief valve" to trigger a reduction in the RFS. If this policy was in place now, the RFS would see automatic reductions from decreasing corn supplies and our farmers would see immediate relief.

The Renewable Fuel Flexibility Act ensures that the agriculture community, from Virginia to California, can continue to provide reasonably priced food products to consumers and is a common sense solution to ensure that we have enough corn supplies to meet all of our demands. In addition to 30 bipartisan cosponsors in the House, H.R. 3097 is supported by a diverse group of organizations, including: Action Aid, the American Meat Institute, the Grocery Manufacturer Association, the National Cattlemen's Beef Association, the National Chicken Council, the National Pork Producers Council, the National Turkey Federation, and Oxfam America.

The growing concern over corn supplies and soaring prices are a clear signal that Congress must reopen the RFS debate. While we urge the EPA to provide relief for producers, consumers, and our economy right now, Congress should also move forward with a legislative fix that would correct the unintended consequences of our current ethanol policy and make the RFS more flexible in the long-term.

Goodlatte and Costa are the original sponsors of the Renewable Fuel Standard Flexibility Act (H.R. 3097).