Farmers, ranchers, farming associations and politicians are joining a chorus
calling on the Environmental Protection Agency to waive part or all of this
year's production requirements for corn-based ethanol.
Advocates say the waiver is needed to keep the price of corn from skyrocketing, which would hurt livestock producers, food processors and, eventually, consumers.
Even a partial waiver by the EPA "would have a significant impact on corn prices," said Matt Roberts, an agricultural economist at the Ohio State University Extension.
A waiver "would free up corn for the market, bringing down corn prices significantly," Roberts said. It also would signal the market that corn-ethanol demand is no longer untouchable, he said. Forty percent of the U.S. corn crop is used for making fuel ethanol.
The worst nationwide drought in half a century has cut the estimate for this year's corn crop by 24 percent. That would be the lowest average yield since 1995, the U.S. Department of Agriculture says.
Added to diminished supplies, the lower yield estimates are pushing up corn prices to multiyear highs, making it more costly for farmers and ranchers to feed their cattle, pigs and chickens.
Eventually, consumers would pay slightly more for their cornflakes, and even more for their pork ribs and chicken breasts.
"The price of corn has jumped significantly in last six to eight weeks," said John Grimes, an OSU Extension beef coordinator and an associate professor. "Ohio livestock producers have got some challenges."
Cattle producers can feed their animals grain or forage, Grimes said. But hog and poultry producers have to feed grain to their animals.
Some livestock producers could send more of their animals to market, rather than pay higher prices for grain. That would help consumers with lower prices in the short run, but harm them with higher prices as supplies fall.
In addition, farming families' incomes would fall in future years. "If you sell the factory, you can't make production," Grimes said.
Livestock producers are vying with ethanol makers for a dwindling corn supply.
The EPA is charged with enforcing the Renewable Fuel Standard, which requires a maximum production of 13.2 billion gallons of ethanol from corn this year.
The intent of the fuel standard is to lower greenhouse-gas emissions, which are blamed for climate change, as well as to reduce U.S. dependence on foreign oil.
The EPA must balance its ethanol-producing requirement with other needs for corn.
"We are in close contact with USDA, as they and we keep an eye on crop yield estimates, and we will review any data or information submitted by stakeholders, industry and states relating to the (fuel standard) program," said EPA spokeswoman Alisha Johnson.
On the other side of the argument, the Ohio Corn & Wheat Growers Association, like several other crop growers associations nationwide, is urging the EPA to hold off on waiving its ethanol requirement.
"Ohio corn and wheat growers have been staunch supporters of renewable fuel from the beginning," said Tadd Nicholson, executive director of the association.
"We believe that the waiver that's being proposed is premature. We would be messing with sound and forward-thinking energy policy in the United States in reaction to a one-year drought."
The market already is doing its job, he said.
"There's no question that all corn customers this year are hurting," he said. That hurt already is reducing livestock and ethanol production, as well as exports.
Information from Reuters was included in this story.
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