I’m pretty sure that even if the skies opened up today and we were blessed with a warm, gentle, steady rain for three or four days, corn growers would benefit only from release from the necessity of expensive irrigation. To say it another way, it was too hot and too dry for too long, for there to be any hope of a good corn harvest in much of the corn-growing part of the U.S.
All the quotable experts I can find are pretty well agreed on an interesting development out of the virtually certain corn harvest shortage. These experts seem to agree that relaxing the production requirements of the ethanol industry – speaking here of the Renewable Fuel Standards – would actually have little effect on available corn this year.
One of those experts is at the Center for Agriculture and Rural Development, at Iowa State University. Professor Bruce Babcock analyzed 500 scenarios, assuming varying levels of corn yield this year. He’s concluded a total waiver of the Renewable Fuel Standard would reduce corn prices by less than 5%, and bring about less than 5% reduction in Ethanol production.
These modest results, says Professor Babcock, result from flexibilities in complying with Renewable Fuels Standard in 2012 and 2013. Specifically, he notes an estimated 2.4 billion excess Renewable Identification Numbers can be used in place of physical gallons to demonstrate RFS compliance. I have to assume that Renewable Identification Numbers won’t propel your vehicle, but they say it will satisfy the Environmental Protection Agency, custodian of the Renewable Fuel Standard.
I had to look up the definition of RIN, or Renewable Identification Numbers, and here it is: It’s a renewable fuel credit – a serial number assigned to each gallon of renewablefuel as it is introduced into U.S. commerce. RINs are tracked all through the supply chain until the biofuel is blended with petroleum products. Once the renewable fuel is in the blended fuel, the RIN is separated and becomes available as an environmental credit. So Help Me, that’s the verbatim definition.
All of this is to say, of course, that ethanol production is not about to make a bad situation worse for, for example, livestock production. Bob Dineen, CEO of Renewable Fuels Association says, “Strong supplies of ethanol in storage and an abundance of RINs combine to make the Renewable Fuel Standard a workable program in 2012 and 2013” . He goes on to say, “ The ethanol industry, like any other end user of corn, understands {the weather-related concerns} and the industry has significantly reduced its corn consumption in recent weeks. There will be corn available this fall, and the market will ration its use.”
I think right about here is the point at which we try to remember that Renewable Fuel is intended to wean us from petroleum produced other than in North America. And there are costs associated with that – - including escalating prices on a weather-ravaged crop.
Karl Guenther is a retired farm broadcaster at WKZO and can be reached at khguenther@att.net. He is a member of Michigan Farm Bureau and an emeritus member of the National Association of Farm Broadcasting.
You can view the originally published article, here.
