Proposed RFS Changes Spark Food vs. Fuel Debate

“Anything affecting the cost of producing feed for livestock and poultry, directly impacts the cost of animals to the processor, the cost of meat, milk and eggs to the retailer, and ultimately, the cost of food to the consumer,” said Greene’s testimony.

Other factors may influence food prices

The ethanol industry, however, argues corn ethanol does not significantly impact feed and food prices and believes other factors are to blame, such as food services, food processing and retail trade. Before the hearing in which Greene testified, the American Coalition for Ethanol (ACE) urged the House Agriculture Subcommittee on Livestock, Dairy, and Poultry to consider such other factors.

Brian Jennings, executive vice president of ACE, released a statement pointing out that ethanol byproducts, such as Dried Distillers Grains (DDG), a corn co-product used as a high protein animal feed, may reduce feed costs.

According to Jennings’ statement, “The U.S. ethanol industry will produce 1.7 billion bushels of high-quality animal feed [in 2011] — almost 4.5 million tons of distiller’s grains — at a cost that is currently only 75% to 80% of the cost of corn. Forward-thinking livestock producers have [found] that feed produced at ethanol plants can economically displace more than its weight in corn, actually reducing their feed costs.”

According to a National Corn Growers Association (NCGA) statement, in 2010, distillers grains produced by the ethanol industry displaced the need for 1.2 billion bushels of corn for the livestock industry.

RFS and jobs

The NCGA also points to job creation as another reason to maintain the current RFS levels.

“The U.S. ethanol industry is an integral part of job creation and economic opportunity throughout rural America,” said Garry Niemeyer, president, NCGA, in a statement. “[H.R. 3097] would put progress made by the ethanol industry in jeopardy and we are asking members of Congress to oppose its passage.”

Niemeyer went on to say there is enough U.S. corn to meet all domestic needs. “The American farmer continues to meet the growing demand for corn as food, feed, fuel and fiber even when facing difficult years. The ethanol industry is saving money for American consumers and producing jobs during a difficult financial time.”

In testimony submitted Sept. 22 to the House Ways and Means Committee, the National Biodiesel Board (NBB) noted that in 2010, when there was a one-year lapse in the credits that are expired today, ethanol production dropped dramatically, dozens of plants shuttered and thousands of people lost jobs. But when the credit was re-instated in 2011, ethanol production soared, creating thousands of new jobs.

“[In 2011, biodiesel production was thriving], with plants ramping up production again and hiring new employees. Through July, the industry had produced roughly 475 million gallons compared with 315 million gallons in all of 2010,” the testimony read.

Anne Steckel, NBB vice president of federal affairs, stated that “at least 800 million gallons will support more than 31,000 jobs while generating at least $3 billion in GDP and $628 million in federal, state and local tax revenues, according to a recent economic study conducted by Cardno-Entrix.”

So far, no action has been made regarding H.R. 3097 since it was referred to the Subcommittee on Energy and Power. It is uncertain whether the bill will make it out of committee before the 2012 presidential election, but certainly both sides of the food vs. fuel debate will weigh in until a decision is made.