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Agricultural News

Clock Begins Ticking On EPA Decision Regarding Waivers of the Renewable Fuel Standard

Tue, 21 Aug 2012 13:21:36 CDT

Clock Begins Ticking On EPA Decision Regarding Waivers of the Renewable Fuel Standard
Ethanol industry advocates say the clock requiring the EPA to consider requests for a waiver of the Renewable Fuel Standard will begin ticking today. The Renewable Fuels Association said the EPA has acknowledged the receipt of petitions from governors in Arkansas and North Carolina. Once that acknowledgement is published in the Federal Register, which could happen as early as today, the EPA has 90 days in which to rule on the request.

The Renewable Fuels Association maintains the RFS program is working and no waiver is needed. The association says about 2.5 billion RFS credits have accumulated of the past two years as a result of ethanol blending above RFS requirements to provide extraordinary flexibility for oil refiners to meet RFS targets. Together with ample ethanol supplies and slower than expected gasoline consumption, these credits make the RFS workable through the 2012/2013 corn marketing year according to the RFA.

While the drought has reduced the size of this year's national corn crop, USDA says it will still be the eighth-largest in U.S. history. Moreover, the corn market is global; this year's world corn crop will be the second-largest ever, trailing only last year's record. The ethanol industry also produces animal feed; one-third of every bushel used by an ethanol plant is returned to the feed market as high-protein feed. Ignoring this exaggerates the impact of ethanol on corn supplies, the RFA says.

As for food pricing in grocery stores, the impact of the RFS is almost imperceptible, according to the RFA. That's because 86 cents of every dollar spent on food pays for energy, transportation, packaging, and other supply chain costs. Only 14 cents pays for the agricultural ingredients, of which corn is only one. Thus, fluctuations in commodity prices are largely muted at retail. Food prices are expected to rise just 3% this year and 3.5% next year, compared to an average of 2.9% over the last decade. Globally, corn is much less important to the diet. Wheat and rice, both of which are in ample supply, are much more essential in places like Africa and Asia.

The RFA says that, globally, food security isn't simply about the amount of food available - it's about the ability to get the food to those in need. For instance, the U.N. reports one-third of food produced for human consumption is lost or wasted. That amounts to about 1.3 billion tons per year, which is akin to taking the record 2011 global coarse grain crop and dumping it in the ocean.

Much of this information is available in a webinar presented by the Geoff Cooper. That webinar replay is available by clicking here..



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