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Corn Farmers Receive Satisfaction Over RFS and Waivers

10/13/2019

The concerns expressed by leaders of 23 State corn-growers associations were relieved by the Administration decision on the 2020 RFS and future policy on Small Refinery Waivers. A letter addressed to the President requested that the Administration cease issuing waivers to small refineries. They claim that 85 waivers during the current Administration removed demand for four billion gallons of ethanol to be blended into gasoline. At present, ethanol plants in seven states have been mothballed resulting in the loss of jobs in rural areas and decreased demand for 300 million bushels of corn.

The plight of the ethanol industry has less to do with waivers than it has with overcapacity. The RFS was established with assumptions that have been proven to be unrealistic The ethanol industry expanded injudiciously to supply an exaggerated but mandated potential market. Exports have not compensated for the disparity between production and domestic demand. Even with mandates and government support, market forces are in effect setting volumes and prices.

Corn-based ethanol is neither sustainable nor beneficial to the environment and inclusion (dilution?) in gasoline reduces mileage. Given the relative independence of the U.S. based on shale oil and gas, the entire question of diverting food to fuel should be reconsidered either by this or a subsequent Administration. Corn farmers have benefited from the biofuels program at the expense of livestock producers and consumers.

Unfortunately the RFS has is now regarded as an established right for corn growers and ethanol producers. The political considerations regarding the RFS have become a “third rail” with successive administrations disinclined to impose restrictions. Ultimately conomic forces will prevail and the recent decision on the RFS suggests that the gravy train is slowing down and may even end up in the terminus.