What is in this article?:
- Report: Corn ethanol waiver's effect on corn prices uncertain
- Scenario with, without waiver
• The report, "Potential Impacts of a Partial Waiver of the Ethanol Blending Rules," suggests that corn prices could fall under some scenarios should the U.S. Environmental Protection Agency grant a partial waiver of the Renewable Fuel Standard's corn ethanol provision — but only under certain market conditions.
Corn prices pushed higher by the worst U.S. drought in half a century would not necessarily moderate if the federal government's corn ethanol mandate were temporarily suspended, according to a report by Purdue University agricultural economists.
The report, "Potential Impacts of a Partial Waiver of the Ethanol Blending Rules," suggests that corn prices could fall under some scenarios should the U.S. Environmental Protection Agency grant a partial waiver of the Renewable Fuel Standard's corn ethanol provision — but only under certain market conditions.
The EPA received a request by a consortium of livestock industry organizations to waive part of the mandate that effectively requires corn ethanol be blended with gasoline.
The Purdue report is available on the Farm Foundation website at http://www.farmfoundation.org/.
Farm Foundation NFP is an Oak Brook, Ill.-based not-for-profit organization conducting public policy education for food, agriculture and rural communities.
A waiver could, under certain conditions, reduce the demand for corn and, thus, corn prices for livestock producers and other non-ethanol corn buyers.
Under its normal schedule the EPA has until October to gather information on the extent of any economic harm done by the original Renewable Fuel Standard level and to decide if it will issue a waiver. For consumers, the decision could affect what they pay for fuel and food.
"The range of impact of an RFS waiver goes from zero to $1.30 per bushel for corn," said Wally Tyner, an energy policy specialist and the report's lead author.
With corn crops shriveling in the field and yield projections dropping almost weekly, corn prices have jumped 60 percent since June 15. A bushel of corn has topped $8.
The prospect of a diminished crop and even higher corn prices has livestock producers worried that corn might not be available or will be too expensive to buy. Corn is a feed mainstay for most livestock operations.
This year the RFS mandates oil companies blend 13.2 billion gallons of ethanol with the gasoline they produce. The mandate increases to 13.8 billion gallons in 2013. Because oil companies blended 2.6 billion gallons of ethanol with gasoline above what was required in previous years, they have built up blending credits —known as renewable identification numbers, or RINs — allowing them to count those gallons toward blending totals in this or future years.