A new economic analysis by the Center for Agricultural and Rural Development (CARD) at Iowa State University backs up what corn farmers have been telling the Administration — that manipulating the RIN market mechanism would reduce ethanol blending and impact corn prices. A drop of 25 cents per bushel in corn prices, as CARD economists project from a RIN price cap, would devastate farmers and stagger rural communities.
This spring farmers will begin planting knowing they face their fifth growing season with corn prices hovering at or below the cost of production. According to the Federal Reserve Bank, we lost 12,000 farms in 2016. This decline must be stopped. The CARD analysis clearly shows an artificial cap on Renewable Identification Number (RIN) prices in exchange for an RVP waiver allowing year-round sales of E15 would be a bad deal for rural America and the nation’s consumers.
Providing regulatory parity for E15 and higher blends helps address concerns about RIN values. Allowing the RIN market to operate freely with year-round sales of E15 would increase the production and consumption of renewable fuels, increase the supply of RINs available for compliance and lower RIN values. Combining RVP parity with a RIN price cap is counterproductive and would lower ethanol blending.
At the Commodity Classic, corn farmer delegates in the National Association of Corn Growers Corn Congress unanimously passed a resolution urging President Trump to retain the current RIN market mechanism without change. This analysis supports our resolution.