Ten governors and a coalition of farm groups were upset on Friday to see the Environmental Protection Agency (EPA) deny requests that corn production requirements be waived. While corn farmers were likely glad to see the ruling, farmers in the poultry, hog and cattle industries were not. They're seeing big increases in corn-based feed costs in this drought-heavy year as corn is diverted for ethanol used in vehicle fuel. The EPA says that the Renewable Fuel Standard must be enforced and conditions are not present to qualify for the waiver.
Governor Mike Beebe (D-AK) had sent a letter to EPA in August calling for the waiver due to a "terrible toll" on animal agriculture in Arkansas and that consumers would be paying higher food prices because of it. Beebe was joined by governors from North Carolina, New Mexico, Georgia, Texas, Virginia, Maryland, Delaware, Utah and Wyoming.
The EPA said that the agency had studied the effects of waiving the requirement and determined it would have had little impact on corn prices. The EPA recognized this year's drought has created hardship in several sectors including livestock producers. However, extensive data analysis made clear to the agency that Congressional requirements for a waiver had not been met and that following the requirements of the Renewable Fuel Standard will have little, if any, impact on corn prices. Most of corn ethanol is blended into gasoline and makes up 10 percent of what comes out of the pump in the US, and this level will be increasing to E15, or 15 percent ethanol, in some areas.
It is tough to get a waiver. The EPA can grant one if it determines that the set ethanol production volume would "severely harm" the economy of a state, region or the entire country. The RFS requires that 13.2 billion gallons of ethanol be produced by this year, and 15 billion gallons by 2015.
A coalition of livestock, poultry and dairy organizations were upset with the ruling. "We are extremely frustrated and discouraged that EPA chose to ignore the clear economic argument from tens of thousands of family farmers and livestock and poultry producers," the coalition said in a statement. The farmers and governors had been joined by environmental groups in opposition to increased ethanol production. Environmentalists see increased production tearing up the land.