A coalition of seven groups, including the American Meat Institute, the American Sheep Industry Association, the National Cattlemen’s Beef Association, the National Pork Producers Council, the National Turkey Federation and the North American Meat Association, contributed to the submission to the House Energy and Commerce Committee review.
In the comments, the coalition stated that the RFS had been a “major driver” in diverting corn to ethanol production, causing prices to soar and corn stocks to reach “crisis levels”.
Responding to claims by the biofuels industry that market forces, not the RFS, have been the key driver behind the rapid development of corn-based ethanol production, the coalition pointed out that the US RFS is the “most ambitious biofuel mandate in the world” and the US has seen the most rapid increase in ethanol production.
“If biofuels were a marketplace phenomenon, driven by business people who see market-based opportunities, we would see biofuel investments without mandates and subsidies. We do not see those free market investments happening on any significant scale. The RFS is the primary driving force behind US ethanol production, and the RFS debate is of vital importance,” it said.
Price distortion
Commenting on the effect of the RFS on corn prices, the coalition said that the mandate had distorted market prices and caused corn price volatility to double. “The RFS has driven corn use growth faster than production. The result is stocks chronically depleted to minimum levels, causing market prices for corn and other agricultural commodities to swing wildly on the whims of the weather,” it said, adding that other farm commodity prices and by-product feed prices had also been affected.
On the effect that the RFS had on agricultural output and jobs, the coalition claimed that the jobs and job creation opportunities lost in the meat production and processing sectors outweighed the jobs created by the ethanol industry. “Far more direct jobs, existing and potential, were destroyed in meat and poultry processing than were created by ethanol producers,” it said.
The coalition claimed that the US Environmental Protection Agency (EPA) should have granted the 2012 waiver request made by agricultural producers, and called on the government to remove the EPA’s power to be a sole judge of waiver requests.
“Record-high corn prices, distress in the food sector, corn exports that declined by 50%, the closing of numerous ethanol plants, and skyrocketing D6 ethanol RIN values are all symptoms of severe economic distortions caused by the RFS. Market forces should have been allowed to allocate the limited corn supply,” it said.