U.S. Senator Pat Toomey (R-Pa.) has asked the U.S. Environmental Protection Agency to temporarily suspend increasing the corn-based ethanol mandate in response to the severe drought sweeping much of the nation's corn-growing states.
Since 2008, the renewable fuel standard has mandated the use of corn-based ethanol in the United States. These standards require the use of 13.2 billion gallons of that ethanol in 2012 and 13.8 billion gallons in 2013.
In a letter to EPA Administrator Lisa Jackson, Sen. Toomey and six other senators ask that the EPA not increase the renewable fuel standard in 2013 and keep it at the 2012 level, in response to the widespread drought.
This renewable fuel standard is diverting more and more corn from our food supply to be used for fuel. In 2007, 25 percent of domestically-produced corn was used for ethanol, compared to 40 percent in the most recent crop year. Meanwhile, corn prices have risen steadily for the past decade, from $2 a bushel in 2005 to $8.24 in June.
"Ethanol mandates disproportionately hurt states like Pennsylvania. From our dairy and chicken farms to our refineries, this ill-advised policy hurts all Americans every day, costing consumers more at the grocery store and damaging our economy. It's time for Congress to put an end to ethanol mandates, but until then, the EPA can reduce the mandates to help lower Americans' food costs," Sen. Toomey said.
The letter was also signed by Sens. John Barrasso (R-Wyo.), John Cornyn (R-Texas), Kay Bailey Hutchison (R-Texas), James Inhofe (R-Okla.), Olympia Snowe (R-Maine), and David Vitter (R-La.).
Livestock producers and food companies are concerned about the increasing amount of U.S. corn stock that is diverted toward fuel production as it raises the price of animal feed and food products. The recent drought that has hit many corn-producing states is increasing concerns that corn prices may continue to rise dramatically in the next few months.
Pennsylvania farmers and food producers thanked Sen. Toomey for his work on this issue.
"The ethanol mandate is an ill-advised policy that raises the cost of groceries for American families. Sen. Toomey understands that, and he has shown great leadership on this issue," said Tom Dempsey, president of Utz Quality Foods in Hanover.
"Our costs at Herr's have risen dramatically over the past two years. Pennsylvania employs thousands of people in the snack food industry, and these jobs are put at risk by increasing prices caused by the ethanol mandate. We're thankful Sen. Toomey is focused on the unintended consequences of this policy," said J.M. Herr, chairman and chief executive officer of Herr's in Nottingham.
"As cattle producers in the retail beef business, we're losing the battle against artificially inflated corn prices and limited supplies of corn. These factors are the result of an ethanol industry that has forced us to reduce our herd by half. It is time to remove the renewable fuel standard, which will return the ethanol industry to the free market and give American consumers the freedom to decide if corn should be burned in gas tanks or used for food production," said John Port, owner of Clarion Farms in Clarion.
"I thank Sen. Toomey for his leadership on this issue. Raw material costs at our facility in Berks County have risen 39 percent, and I can attribute that entire increase to the feed costs of the cattle, which is in turn is directly related to ethanol subsidies and mandates. These policies are putting severe constraints on our ability to expand and hire," said Sergei Szortyka, president of Quaker Maid Meats in Reading.
"Our family has been in the food business for 117 years. Federal ethanol policy makes food more expensive for everyone, especially hurting those with low incomes. With the current drought our country is experiencing, not only will food prices go up, but so will fuel prices because of the rising cost of corn. If this drought continues, we may not have enough American-grown grain to feed our animals. I appreciate Sen. Toomey's stand to seek a change in the renewable fuel standards," said Phil Clemens, chairman and chief executive officer of The Clemens Family Corporation in Hatfield.
"I would like to thank Sen. Toomey for working to reverse the ethanol mandate. The ethanol mandate is hurting all of us by taking more money out of hardworking Americans' pockets with rising food prices, and it is costing our economy jobs," said Richard Pongratz, sales manager at WL Port-Land Systems in Pittsburgh.
The full text of the letter is below.
Aug. 2, 2012
The Honorable Lisa Jackson
United States Environmental Protection Agency
1200 Pennsylvania Ave. N.W.
Washington, D.C. 20460
Dear Administrator Jackson,
As you determine the 2013 volumetric requirements for the Renewable Fuel Standard (RFS2) program, we urge you to take into consideration the impact of recent droughts, which are putting a strain on corn crops across the country. More specifically, we are requesting that you issue a partial waiver to keep corn starch-based renewable fuel volumetric requirements for the RFS2 at the 2012 level in order to protect American families from a rising corn-to-fuel mandate that would inevitably lead to higher energy and food prices.
Current RFS2 requirements mandate that fuel marketers blend about 13 billion gallons of corn ethanol into the nation's gasoline supplies this year. This requirement is scheduled to increase to 15 billion gallons by 2015. To meet this requirement, a substantial volume of our corn crop will have to be diverted into our fuel supplies, severely impacting food and feed prices. According to the USDA, 25 percent of America's corn crop was diverted to produce ethanol in 2007 and today this figure has grown to about 40 percent. This sharp increase in the use of corn for fuel production has contributed to food costs outpacing the rate of inflation. A recent report by FarmEcon LLC confirmed this impact, stating that "following the late 2007 increase in the RFS, food price inflation relative to all other goods and services accelerated sharply to twice its 2005-2007 rate."
Some of us requested a waiver based on similar food vs. fuel impacts in a May 2, 2008, letter to then-Administrator Stephen Johnson. This request was based on authority that Congress gave EPA to waive all or portions of RFS2 through rulemaking if there is inadequate domestic supply to meet its requirements or if "implementation of the requirement would severely harm the economy or environment of a State, a region, or the United States."
Today, more than ever, EPA needs to utilize its authority under the Clean Air Act to relieve pressure from the skyrocketing price of corn that is strongly correlated with the RFS2 mandate for corn ethanol.
We're concerned that inflationary pressure on food prices will be exacerbated by current drought conditions. For all these reasons, we hope you will grant a partial waiver and set the 2013 Renewable Volume Obligation (RVO) for corn starch-based renewable fuel at the current 2012 level. Additionally, we request that you provide us with a status report detailing your work to determine the 2013 volumetric requirements for the RFS2 as soon as possible.
Sen. James Inhofe
Sen. Kay Bailey Hutchison
Sen. David Vitter
Sen. Pat Toomey
Sen. Olympia Snowe
Sen. John Barrasso
Sen. John Cornyn