Renewable fuels waiver would not help corn market – ethanol groups

26 July 2012 16:13  [Source: ICIS news]

SANTO DOMINGO, Dominican Republic (ICIS)--An ethanol trade association and a research group said on Thursday that waiving or reducing US Renewable Fuel Standard (RFS) requirements would not alleviate corn prices.

The industry reaction came on the heels of a bill introduced this week by US Senator Ben Cardin (Democrat-Maryland), which he says would link the country’s corn ethanol fuel mandate to the amount of US corn supplies.

“Now is not the time to implement knee-jerk reactions that arbitrarily reduce RFS requirements based on historically variable corn supply estimates or waive portions of the RFS,” said RFA spokesperson Matt Hartwig. “Such actions would likely do more to disrupt the fuel market than alleviate concerns over high corn prices.”

Hartwig added that given a chance to work, the RFS will demonstrate itself to be a thoughtful energy initiative with the kind of flexibility to absorb situations, like the current market where corn prices have been driven higher by US drought conditions, and still achieve its goals.

Meanwhile, the Center for Agriculture and Rural Development (CARD) at Iowa State University suggested in a new analysis that adjustments to the RFS would have a minimal impact.

“The desire by livestock groups to see additional flexibility in ethanol mandates may not result in as large a drop in feed costs as hoped,” wrote Iowa State Professor Bruce Babcock, author of the study.

Babcock analysed 500 different scenarios assuming varying levels of corn yield this year.  Babcock analysis found that a total waiver of the RFS would reduce corn prices less than 5% and cause less than a 5% reduction in ethanol production.

By: Brian Balboa
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