Ethanol for Fuel takes 50% of Corn Crop

The U.S. Environmental Protection Agency (EPA) announced on Friday that would not grant a waiver of the Renewable Fuels Standard (RFS) this year. The EPA reported that they performed economic analysis with the U.S. Department of Agriculture (USDA) and U.S. Department of Energy (DOE) that showed waiving the mandate would reduce corn prices by approximately 1%. Economic analyses by DOE, showed that waiving the mandate would not impact household energy costs. As expanded under the Energy Independence and Security Act (EISA) of 2007, the RFS requires the volume of renewable fuel blended into gasoline to increase from 9 billion gallons in 2008 to 36 billion gallons by 2022.

Last year, approximately 40% of the corn crop was used for making ethanol, this year it looks like it will take almost 50% of the corn crop, or 5.05 billion bushels. The USDA has forecast total corn production for 2012 at 10.7 billion bushels, down 13% from 2011. The lowest U.S. production of corn since 2006. Yields are expected to average 122.3 bushels per acre, 24.9 bushels below the 2011 average and the lowest average yield per acre since 1995.

In wet weather and dry weather we are the largest producer of corn in the world, but we have a problem that nature and Congress created together, The Renewable Fuel Standard, RFS, creating a regulatory mandated demand for corn. In 2012 the RFS mandated ethanol consumed 5.05 billion bushels of corn. Much of the Midwest remains in drought conditions, and according to the most recent USDA report could impact the corn crop next year, too.

A significant portion of this year’s corn crop was destroyed by drought added to last year’s flood reduced yield, and lower corn inventories by 12%. The RFS diverts half of the corn crop into fuel leading to diminished supplies for livestock and food. We should not have to import corn to feed our nation either directly or feed livestock while we pay to convert corn into subsidized ethanol.

We are over using our water resources and essentially mining non-renewable water to expand our crops. Somehow the government decided for a slew of reasons that the corn crop needs to be double the demand for food and we should use corn to make ethanol to dilute gasoline. To fulfill this mandate we are using up our water resources and  we might be forced to buy corn, taking food from the mouths of poorer nations. Yes, we can buy more corn if need be. The United States is still a rich country and we will eat meat and the long list of food made from corn products and make lots of ethanol to dilute gasoline, but should we be doing that?

According to Tyler Cowen, professor of Economics at George Mason University, in his book, An Economist Gets Lunch, New Rules for Everyday Foodies, “(To put ethanol into gasoline) costs a lot more money than does traditional gasoline, once the cost of the subsidy is included. Sadly, it does not even make the environment a cleaner place. The energy expended in growing and processing the corn is an environmental cost too…the nitrogen-based fertilizers used for the corn are major polluters. Ethanol subsidies are a lose-lose policy on almost every front, except for corn farmers and some politicians.” “For millions of (people in poor countries) it is literally a matter of life and death and yet we proceed with ethanol for no good reason…(Biofuels) has thrown millions of people around the world back into food poverty.”

Energy Policy Act required EPA to implement a renewable fuels standard to ensure that transportation fuel sold in the United States contains a minimum volume of renewable fuel. Ethanol may not be as renewable as the authors of the Energy Policy Act believed. This is the second time that EPA has denied a RFS waiver. In 2008, the state of Texas was denied a waiver. Both times EPA has concluded that the mandate did not impose severe harm. 

Drought, Ethanol and the World Hunger Games

It is early August and the few acres of clover, weeds and grass that surround my house are once more green and growing. All through the spring and early summer I have kept a close watch on the water level in the U.S. Geological Survey, USGS, groundwater monitoring well up the road and read with anticipation each week Mark Svoboda’s of the National Drought Mitigation Center weekly report. The USGS has been continually monitoring groundwater levels at a nearby well since 1979 and posting the level daily. It has been unusually hot and dry and I watched the water level troughs in April and late June each followed by enough rainfall to bring the water level in the monitoring well (and I assume my drinking water well) to normal levels and increase the depth and flow of the creek in the woods at the bottom of my land. We have managed to avoid drought around here. The Midwest and much of the Great Plains have not been as lucky.

Most of the Midwest of the county has experienced above-normal temperatures with July coming in at 5-10 degrees above normal. Five to ten degrees! The region continues to be impacted not only by oppressive heat, but also drought. Not enough rain has left desiccated pastures and widespread crop damages, farmers are culling their livestock and the fire risk is elevated. The drought persists but some rain has fallen sporadically over the region. In The Great Plains drought has continued to expand and the temperatures remained 5 to 10 degrees above normal there, too.  The drought continues to advance across more of eastern Nebraska, southeastern South Dakota, Kansas, Oklahoma and the Texas Panhandle, stressing pastures, crops, livestock/wildlife, and trees. The one cheerful note is southeastern Texas, which has continued to recover from last year’s drought over the past several months. Overall, about 60% or more of the lower 48 states are experiencing some level of drought. Drought is not everywhere, but it is significant.

The National Agricultural Statistics Service (NASS) of the U.S. Department of Agriculture will release the yield and production forecasts for the 2012 U.S. corn and soybean crops on Friday, August 10th .  The U.S. corn crop is the largest in the world.  The USDA has been cutting its U.S. preliminary corn crop forecasts as the drought has progressed. Last word was that 45% of the corn crop is now estimated to be in poor or very poorcondition. Iowa the biggest corn producing state had 37% of their crops listed as in fair condition. This drought follows significant flooding last year in several parts of the county that reduced overall corn crop yields to under 12.5 billion bushels.

Congress has been deadlocked on passing a full farm bill because they don’t have enough support in the Senate for the five-year farm bill that came out of the House.  Instead with potentially half the corn crop  lost to the drought and pressure from cattle producers and other livestock producers who are worried about the cost of buying feed or culling their herds, the U.S. House passed a $383 million emergency relief package for livestock producers affected by the drought. The bill would have allowed payments of up to $100,000 per farm, for cattle and sheep ranchers but not hog and poultry farmers. Row crop farmers have insurance programs available to them, but the livestock programs expired in 2011 and this bill was an attempt to fill the gap. The Senate did not pass the drought measure before their five week recess on Friday and it was tossed into the pile of unfinished business.

In wet weather and dry weather we are the largest producer of corn in the world, but we have a problem that nature and Congress created together, The Renewable Fuel Standard, RFS, creating a regulatory mandated demand for corn. Last year the RFS mandated ethanol consumed 5.05 billion bushels of corn. Almost two thirds of the nation is in drought, and according to the most recent USDA report only 26% of the corn crop is in good or better condition, there are estimates that more than half of the corn crop is gone and still we have to meet the RFS.  The original United States Renewable Fuel Standard required that 7.5 billion gallons of renewable fuel (mostly ethanol made from corn) was to be blended into gasoline by 2012, but the program was expanded under the Energy Independence and Security Act (EISA) of 2007, which increased the volume of renewable fuel required to be blended into gasoline from 9 billion gallons in 2008 to 36 billion gallons by 2022. Last year, approximately 40% of the corn crop was used for making ethanol.

With half of this year’s corn crop potentially destroyed by drought added to last year’s flood reduced yield, and lower corn inventories; the RFS will make the crop situation worse by diverting most of the remaining corn crop into fuel leading to diminished supplies for livestock and food producers.  It is the unrelenting demands of the RFS against the livestock and food producers. We should not have to choose fuel over food or more likely have to import corn to feed our nation while we pay to convert corn into subsidized ethanol.

On Thursday, Bob Goodlatte of Virginia and 155 other member ofcongress sent a letter to Administrator Lisa Jackson of the U.S. EnvironmentalProtection Agency, EPA asking the Administrator to exercise her authority under the Clean Air Act section 211 (o) 7 to reduce the required volume of renewable fuel based on harm to the economy. This is a wonderful opportunity to actually live in harmony with nature and prevent the cost of food from rising even more and prevent us from taking food from the mouths of poorer nations. Yes, we can buy more corn if need be. The United States is a rich country and we will eat meat and the long list of food made from corn products. According to Tyler Cowen, professor of Economics at George Mason University, in his book, An Economist Gets Lunch, New Rules for Everyday Foodies, “(To put ethanol into gasoline) costs a lot more money than does traditional gasoline, once the cost of the subsidy is included. Sadly, it does not even make the environment a cleaner place. The energy expended in growing and processing the corn is an environmental cost too…the nitrogen-based fertilizers used for the corn are major polluters. Ethanol subsidies are a lose-lose policy on almost every front, except for corn farmers and some politicians.” “For millions of (people in poor countries) it is literally a matter of life and death and yet we proceed with ethanol for no good reason…(Biofuels) has thrown millions of people around the world back into food poverty.” Is it our goal to be the people of the Capital of Panem and have tributes from poorer nations play the Hunger Games?