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Karl Guenther Column: Don't favor the waiver

by
Karl Guenther
Karl's Comments
Karl Guenther Karl's Comments

The time set aside for Public Comment to the Environmental Protection Agency regarding a proposed waiver of the Renewable Fuel Standard has virtually elapsed by now, although we’ve not heard of any decision one way or the other.

That consideration - - that proposal to relax the demand for the specified percentage of non-petroleum fuel in this nation’s gasoline tanks has come primarily from Agricultural interests.  What worries me is,  the rationale for the proposed waiver, flies in the face of all published data, including science.  Agriculture has long complained of overseas tariffs and other market impediments, based on, as we say, pseudo-science.  Some overseas policies are in fact, in response to political pressures from foreign constituencies, without regard to facts and figures.

But, it seems to me, that is also the basis for the proposed RFS waiver.  According to Reuters news agency at the time of the proposals, “Hard-hit livestock and poultry producers petitioned the government to reduce or cancel the required use of ethanol in gasoline for a year, asking for ‘a little help’ to ride out the worst drought in 56 years.”’.  Some, maybe all the concern came from Arkansas, the Carolinas, Texas and Nebraska.  Crops indeed are a little short this year compared with recent record years, and with what might have been anticipated this year, without the long drought.

But, according to the Renewable Fuels Association, and several of its allies and associates, waiving a part, or even all of the Renewable Fuels Standard, would not make enough difference in corn prices, or crop availability.

Here is what the waiver proponents are ignoring, or maybe they just don’t believe the new studies conducted just for this dilemma.  Cardno-ENTRIX, a Florida-based consulting firm specializing in matters environmental, has said that a 2013 waiver of Renewable Fuel Standards could actually result in HIGHER net feeding costs for livestock and poultry producers.  That study found that if a waiver did reduce biofuel output, trivial corn price reductions would be partially - - even fully - - offset by increased prices for other feedstuff like Distillers Dry Grains, corn gluten feed and corn gluten meal which are byproducts of ethanol production, and are fed to livestock and poultry all across the country.

Should the waiver be ordered, September this year to September 2013, corn used for ethanol would fall 1.3%; we’d have a mere ten million extra bushels for export.  Corn prices would fall from $7.87 a bushel to $7.83.  Retail pork prices would fall by a penny a pound.  Retail beef prices would not change.

Seems to me, there’s just no point in favor of waiver.

Karl Guenther is a retired farm broadcaster at WKZO and can be reached at khguenther@charter.net. He is a member of Michigan Farm Bureau and an emeritus member of the National Association of Farm Broadcasting.

 

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