Democratic Governors Bev Perdue of North Carolina and Mike Beebe of Arkansas have filed formal waiver petitions requesting that the Environmental Protection Agency (EPA) reduce the amount of ethanol that refiners are required to blend in gasoline in 2012 and 2013 requirements. Additionally, Democratic Governors Martin O’Malley of Maryland and Jack Markell of Delaware sent letters last week asking for a reduction. The four governors’ actions represent a victory for an alliance of livestock and poultry producers, who had been urging state leaders to petition for a reduction. Cattle, hog, chicken and turkey groups are also campaigning to change the ethanol mandate under the Renewable Fuel Standards (RFS).
In her petition, Perdue said the Renewable Fuel Standards mandate “has imposed severe economic harm to my state’s poultry, dairy and cattle producing regions. Altogether, severe economic harm is being experience by the State of North Carolina and many of its agricultural regions, as well as important economic sectors in the state as a direct result of the implementation of the applicable volume requirements of the RFS.”
The governors’ requests come as President Obama is campaigning for a second term and courting the rural vote, particularly in Iowa, a top hog and ethanol-producing state. The president, the first lady and Agriculture Secretary Tom Vilsack, a former Iowa governor, were in the Hawkeye State on Wednesday to tout administration policies, such as its support for the biofuel industry.
Corn growers and the ethanol industry say the livestock industry wants to go back to the days of cheap corn, when government policies kept the crop at artificially low prices. They credit the mandate for boosting a fledgling industry and providing an alternative to imported oil. The ethanol makers also argue that only 16 percent of the corn crop is turned into fuel — not 40 percent — because the process creates useful byproducts and co-products such as animal feed alternatives, corn gluten meal and corn oil.
The Renewable Fuels Association and Growth Energy, major ethanol trade groups, say the drive to reduce the mandate is unnecessary and unwarranted. “A waiver of the RFS will not provide the relief meat and livestock producers seek nor will it make it rain on dry corn fields and pastures,” the Renewable Fuel Association said in a statement issued Tuesday. The group further said reducing the ethanol mandate will “send chilling signals to investors in new biofuel technologies” and contribute to higher gasoline prices.
President Obama announced Monday that the federal government would buy up to $170 million worth of meat and poultry to aid farmers and ranchers struggling with a devastating drought this summer.
The purchase of as much as $100 million of pork, $50 million of chicken and $10 million each of lamb and catfish comes on top of $30 million in assistance announced last week. Additionally, the Department of Defense said it would review its meat purchases to see if they can be accelerated. The agency buys about 94 million pounds of beef, 64 million pounds of pork and 500,000 pounds of lamb annually.
During his announcement, the President repeated his call for Congress to pass a farm bill that includes short-term relief measures for the drought-stricken agriculture industry. Although the drought is a localized issue, there is vulnerability for Republicans in farm states because the GOP-controlled House failed to pass its own farm bill before the August recess.
Bulk government meat purchases are not without precedent. In 2011, the U.S. Department of Agriculture announced plans to buy as much as $40 million of chicken products for federal nutrition programs. In 2009, the government said it would spend about $105 million in supplemental pork purchases partly to help hog producers suffering from a slump in prices caused by outbreaks of the H1N1 virus, known as swine flu.
U.S. corn and soybean harvest are affected by drought, but not wheat, according to an August 10, 2012 U.S. Department of Agriculture (USDA) National Agricultural Statistical Service news release, which advises that, " ... Despite planting the largest number of acres to corn in the past 75 years, growers are forecast to produce 10.8 billion bushels in 2012, down 13 percent from 2011 ... corn yields are expected to average 123.4 bushels per acre, down 23.8 bushels from last year .... This year’s soybean production is forecast at 2.69 billion bushels, down 12 percent from 2011. Soybean yield is expected to average 36.1 bushels per acre, down 5.4 bushels from the 2011 crop. In contrast to corn and soybeans, all wheat production remains largely unaffected by the drought and is forecast at 2.27 billion bushels, up 13 percent from 2011 ... " Click here to review the full USDA news release, titled "U.S. Growers Expect to Produce 13 Percent Less Corn than Last Year."