Sununu, Colleagues: Diversion of Corn into Ethanol Production has Raised Food Prices

Press Release

SUNUNU, COLLEAGUES: DIVERSION OF CORN INTO ETHANOL PRODUCTION HAS RAISED FOOD PRICES

Group asks EPA to consider ethanol waiver

United States Senator John Sununu (R-NH) recently joined 23 other Senators in asking the Environmental Protection Agency (EPA) to consider waiving a 2007 mandate requiring fuel refiners to blend corn-based ethanol into America's fuel supply. In a letter to EPA administrator Stephen Johnson, the Senators expressed their concern that the diversion of corn supplies into fuel has contributed to higher food prices in the U.S. and around the world.

"New Hampshire families, food pantries, and small businesses have been hit hard by rising food prices, and ethanol is a big part of the problem. Today, 25% of our corn harvest is going to ethanol production, causing prices to rise even further," said Sununu. "Simply put, using food for fuel is a recipe for disaster. Ethanol is a bad deal for New Hampshire because it is expensive to ship and the subsidy costs billions. I have joined Senator John McCain and others in calling on the EPA Administrator to use authority Congress provided to waive the renewable fuel mandate in light of high food prices. This waiver was intended to address just this type of problem. It should be used immediately."

The Energy Independence and Security Act (EISA) of 2007 increased the ethanol mandate to 15 billion gallons of corn and 1 billion gallons of bio-diesel by 2015 and 36 billion gallons by 2022. For just this type of circumstance, Congress gave the EPA the authority to waive the mandates or structure them differently if the mandates resulted in adverse unintended effects.

Also signing the letter were Senators Wayne Allard (R-CO), John Barrasso (R-WY), Robert Bennett (R-UT), Richard Burr (R-NC), Susan Collins (R-ME), Bob Corker (R-TN), John Cornyn (R-TX), Mike Crapo (R-ID), Jim DeMint (R-SC), Elizabeth Dole (R-NC), John Ensign (R-NV), Mike Enzi (R-WY), Lindsey Graham (R-SC), Orrin Hatch (R-UT), Kay Bailey Hutchison (R-TX), James Inhofe (R-OK), Johnny Isakson (R-GA), Lisa Murkowski (R-AK), Richard Shelby (R-AL), Ted Stevens (R-AK), David Vitter (R-LA), and Roger Wicker (R-MS).

The text of the Senators' letter to EPA Administrator Johnson reads:

"We are writing to convey the frustrations of consumers and animal agriculture producers about the consequences of food-to-fuel mandates that the U.S. Environmental Protection Agency (EPA) is currently implementing and to inquire about the pending rule-making process for the Energy Independence and Security Act of 2007 (EISA).

"EISA essentially requires fuel marketers to blend 15 billion gallons of corn ethanol and directs 1 billion gallons of bio-diesel into the nation's fuel supplies by 2015. To meet this requirement, 30 percent of our corn crop and our vegetable oils will have to be diverted into our fuel supplies, severely impacting food and feed prices. Congress gave the EPA authority to waive all or portions of these mandates, as well as authority to structure the mandates for the benefit of all Americans. We believe the EPA should begin the process of examining alternatives that ease the severe economic and emerging environmental consequences that are developing in America as a result of the mandate.

"We are very concerned that food-to-fuel mandates and subsidies have contributed to higher domestic and global food prices. According to USDA, 25 percent of America's corn crop was diverted to produce ethanol in 2007, and 30 to 35 percent of our corn will be diverted in 2008. This problem will only be compounded as we move towards 2015 with ever increasing mandates. Further, farmers are supplanting other grains with corn, thereby, decreasing supply and increasing prices of numerous agriculture products. Although many factors may contribute to high food costs, food-to-fuel mandates are the only factors that can be reconsidered in light of changing circumstances.

"American families are feeling the financial strain of these food-to-fuel mandates in the grocery aisle and are growing concerned about the emerging environmental concerns of growing corn-based ethanol. It is essential for the EPA to respond quickly to the consequences of these mandates. Congress made the mandates in the EISA different from existing mandates to provide flexibility and to encourage innovation in advanced and cellulosic fuels. We believe today's circumstances merit the use of this flexibility.

"The Bureau of Labor Statistics reports that food inflation is rising by 4.9 percent and other studies predict that food inflation could increase by 7 to 8 percent in the next few years. We are concerned that inflationary pressure on food will only escalate in the coming months and could be further complicated by severe weather. We urge you to take the forgoing into consideration as part of your current rule making process and ask that you provide us with a status report at your earliest convenience."

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