Cattlemen's Capitol Concerns: NCBA files comments in support of RFS waiver request

TSCRA Daily News Update, June 20, 2008

NCBA files comments in support of RFS waiver request

The Environmental Protection Agency (EPA) is accepting comments through June 23 on the petition filed by the State of Texas to reduce by 50 percent the Renewable Fuels Standard (RFS) mandating production of grain-based ethanol in 2008.

The reduction would trim the mandate to 4.5 billion gallons of feedgrain-based ethanol, from the current 9 billion gallons. This mandate - which is scheduled to expand to 15 billion gallons by 2015 - was included as part of the Energy Independence and Security Act of 2007 (EISA) that passed in December 2007.

In keeping with its member-driven policy on renewable energy development, NCBA has filed comments in support of the waiver request.

While NCBA recognizes that the RFS is only one of many factors behind skyrocketing grain prices, cattlemen believe the waiver should be granted in light of current grain supplies and troubling crop conditions.

"NCBA does not believe that issuing a partial waiver of the Renewable Fuels Standard (RFS) will immediately reverse commodity price escalation, nor do cattle producers claim that it will single handedly address the difficult marketing environment that currently exists for our industry," says NCBA Chief Executive Officer Terry Stokes in his comments. "But, the RFS is clearly one factor contributing to higher feed prices."

NCBA notes that 25 percent of 2007's record corn crop was processed to produce ethanol. That percentage will likely be much higher this year, as corn acres have been reduced and spring crop progress has been extremely slow. Grain harvest projections recently received another major setback as a result of catastrophic flooding in critical areas of the Corn Belt.

As one of the criteria for granting a RFS waiver, EPA must consider the issue of economic harm caused by the RFS. In its comments, NCBA emphasizes that ethanol production driven by the RFS is not only creating hardships for livestock producers, but for consumers and other industries as well.

"As corn and other grain prices continue to rise, buoyed by the RFS, the national economy is severely harmed, causing substantial losses in many industries and contributing to food price inflation and overall higher inflation rates," Stokes adds. "Next year's higher mandate will bring about even greater economic harm as the beef industry begins to contract and retail prices rise substantially as a result."

While NCBA policy supports the development of alternative energy sources and the overall goal of energy independence, cattlemen want to see a greater emphasis on fuels produced from cellulosic, non-feedgrain sources.

NCBA maintains that until grain-based ethanol production operates in a climate that is less driven by federal mandates and government subsidies, the nation will continue to see extremely slow development of alternative fuel sources.

For more information on this proceeding, visit: www.epa.gov/otaq/renewablefuels.