My four-year-old daughter and I were playing a game of cards the other day. The goal of the game was to get a matching set of 8 cards, or so I thought. I had just gotten the final card for victory when my daughter announced that she had changed the rules slightly and that I
was not the winner. The new rules, however, fit her set of cards perfectly.
“Sorry, daddy,” she said. “I won again.”
This story is funny when playing cards with a four-year-old, but is no laughing matter when dealing with billions of dollars and a nation’s energy security. But, it seems that some folks feel they need to change the rules in the middle of the game for the outcome they want when it comes to the heated debate surrounding the Renewable Fuels Standard (RFS).
This is why the National Corn Growers Association and the Renewable Fuels Association have drawn a line in the sand regarding the RFS. In fact, protecting the RFS is the top (not a top, THE top) national priority for both organizations.
Meanwhile, poultry and national livestock groups continue to challenge the RFS and disparage ethanol. Late last year, in a letter to the Senate Environment and Public Works Committee, a coalition of U.S. livestock and poultry industry associations requested a hearing to discuss the impact of the RFS on the economy. The groups cited ongoing pressure on domestic feed grain supplies and a discovery of $9 million in fraudulent renewable identification numbers as justifications for a hearing.
“In light of the ongoing pressures that the RFS is placing on the domestic feed grain supplies, something must be done to protect livestock and poultry producers from excessively high corn prices because of the rigid RFS compliance system,” the groups told Committee Chair Barbara Boxer (D. Calif.) and Ranking Member James Inhofe (R-Okla.). “Therefore, we request that the Senate hold a hearing to examine the continued pressure on grain supplies and the impact that it is having on the bottom line of livestock and poultry producers.”
To further fuel the fire, the National Chicken Council boldly blasts ethanol on its website under the headline, “How the Ethanol Program is Driving Up Food Prices.” The battle between the feed users and the feed growers continues to escalate at the national level on this divisive issue. But the reality of the situation is that, even with a continued RFS, most economists have a very bearish outlook for the near future of corn prices. In fact, after a couple of years of yields below the trend line, many economists feel that we are only one “normal” crop away from significantly lower crop prices. In addition, while the RFS is a federal mandate, the current economics of the situation favor the use of more ethanol anyway, even without the VEETC ethanol tax credit that expired with 2011.
With a biofuel mandate, investors can feel confident in the future of energy sustainability in the U.S. They planned and invested based on the RFS. In many cases, farmers’ dollars have been invested into biofuel production that can set the stage for continued innovation and efficiency improvements in the future. Ethanol reduces our dependence on foreign energy, creates domestic jobs, boosts the economy, and, yes, keeps the price of corn at profitable levels for farmers to make money to reinvest in their operations.
With or without an RFS, higher corn prices will not last forever. Anyone who has watched the markets knows that. Without an RFS, we will undermine the entrepreneurship and investments of Americans seeking to make a profit while improving the environment and creating jobs. It is also important to note that the increased use of ethanol saves consumers an average of 90-cents per gallon of gasoline, according to an Iowa State University study.
There have certainly been tough times for the livestock and poultry sectors as a result of high feed prices, but as a whole, adjustments have been made to start to return to profitability. Apparently livestock producers have forgotten about the not-so-long-ago tough times for corn, soybean and wheat growers. High prices and low prices will always be a supply and demand game between crop and livestock producers. Let’s not let this age-old battle endanger the many positives associated with the RFS by changing it. Because, unless you’re a kid playing cards, it really is not fair to change the rules in the middle of the game.