Renewable Fuel Standards harming food growers and eaters
With drought conditions forecasted to impact over 70 percent of cattle production across the nation, it is no surprise to New Mexico’s ranchers that the drought from last summer will be felt through the foreseeable future. Like all Americans, they are faced with a difficult economy, but this year’s drought has devastated crops, which has resulted in increased feed prices and extensive pressure on range and pastures headed into next year’s growing season.
Not only is this impacting ranchers in New Mexico and across the nation, but it is driving up food prices for every consumer. As the supply of corn tightens and the drought continues, cattle are being sold driving down that supply.
With corn prices at a record high this summer, it is surprising to many New Mexicans to hear that the U.S. government is aggravating the problem with the Environmental Protection Agency’s (EPA) increasingly demanding Renewable Fuel Standard (RFS) program. Enacted in its current form in 2007, the RFS calls for 13.2 billion gallons of renewable fuels to be used in 2012, and then 13.8 billion gallons in 2013. In terms of agricultural impact, this federal mandate directs about 25 percent of American corn crops toward fuel. But this year, due to the extreme drought in much of the country, some counts have the amount of corn diverted towards fuel at 40 percent, which leaves a tighter supply and much higher prices for the rest of corn users.
In fact, this federal mandate, coupled with the drought, has resulted in corn prices increasing from under $1.80 in September 2000 to a record-high of over $8 in July 2012. According to data compiled by USDA, this represents an increase in price of over 350 percent in just over a decade.
Dairy and range livestock production make up the majority of the agricultural economy in New Mexico, which is why the drought has created such a pressing concern for this and similar states. Livestock producers rely heavily on corn for animal feed, and food producers then use corn in almost everything they make. Ultimately, the end users, consumers, buy those products to feed their families. With an economy that has so many Americans unemployed, high energy prices and already sluggish demand, it is critical that lawmakers take this opportunity to rethink the RFS program.
In fact, a new study performed by the Energy Policy Research Foundation recently concluded that the benefits of the RFS mandate are exaggerated and that its stipulations are now imposing substantial costs on the production of transportation fuels and food. The report states, “a multi-year waiver could free over 18 million acres of existing farm land for the production of crops to meet market needs for food, livestock feed, exports, or fuel.”
It is for this reason that we applaud New Mexico Gov. Susana Martinez who recently joined seven other governors from across the nation to urge EPA Administrator Lisa Jackson to use her existing waiver authority to adjust the corn-ethanol mandate for the RFS. In response, EPA opened the comment period on waiver requests and has 90 days to respond, likely pushing the response back past the November election.
But with corn being so important to the health of our economy, it would be irresponsible for our politicians to avoid this issue. Fortunately for New Mexicans, the current RFS debate is an opportunity for the American public and other politicians to thoughtfully reexamine the RFS mandate. With the stakes so high, now is the time to fix the RFS program to make sure that it is not harming the economy more than it is helping it. It is time to examine the progression of the mandate and to set practical limits that will help make American energy diversity a success for the nation. — Bernarr Treat, Chairman, Tax & Special Issues Committee, New Mexico Cattle Growers’ Association