Livestock Industry Seeks Waiver of Ethanol Mandate to Maintain Corn Supply in Drought

A coalition of livestock producers on Monday sent a petition to Environmental Protection Agency Administrator Lisa Jackson, asking that her agency waive the federal mandate for production of corn ethanol for one year in light of drought conditions that could affect the price of corn and, consequently, their businesses.

The renewable-fuels standard requires that refiners use 13.2 billion gallons of ethanol this year and 13.8 billion in 2013. The livestock industry says that the mandate has "directly affected the cost of feed in major agricultural sectors of this country," causing economic harm that they say justifies an ethanol-production waiver.

With the mandate requiring 4.7 billion bushels of corn this year and 4.9 billion bushels next year, and with drought conditions affecting yield, the waiver is necessary, the groups say. "Relief from the renewable-fuels standard is extremely urgent," said Michael Welch, president and CEO of Harrison Poultry in Bethlehem, Ga. "This very short corn crop will undoubtedly prove to be devastating to the animal agriculture industry, food manufacturers, food-service providers, and consumers."

The coalition of groups argues that the RFS gives the ethanol industry an unfair advantage. "We're more than willing to compete "¦ but on a level playing field," said J.D. Alexander, a Nebraska cattleman and president of the National Cattlemen's Beef Association.

"I don't have a mandate that says when you leave the grocery store, you have to throw a whole bird in your cart," added John Burkel, a Minnesota turkey grower and vice chairman of the National Turkey Federation. "My infrastructure's at risk."

Despite the industry's pleas, EPA is not expected to grant the waiver.

Just last month, Margo Oge, director of the agency's Office of Transportation and Air Quality, testified that EPA is "absolutely not" considering a waiver of the ethanol mandate. Oge said that EPA has been in talks with the Agriculture Department about this issue and noted that while USDA has projected that corn production might not be as high as expected this year, it is still estimated to exceed that of last year and be the "third highest" yield on record.

In 2008, during another drought, Texas Gov. Rick Perry asked that EPA waive half of the mandate that year. But that effort proved unsuccessful, as the agency turned down the request and argued that the potential economic harm was not severe enough for such an action.

This time, however, conditions and their consequences could be worse, according to the coalition of livestock producers pushing for the waiver. "I've never experienced anything like this before," Alexander said.

"There would be more of our members still in business had this been properly reacted to in 2008," Welch added. "We can only imagine the outcome from this episode if it is left unmanaged."

However, the president of the National Corn Growers Association, Garry Niemeyer, says, "It is premature for a waiver of the RFS provisions at this point."

"With the crop still in the field, it is too early to determine this year's final corn supply," Niemeyer said. "In addition, the ethanol industry now has a significant surplus of ethanol and RFS credits that can greatly offset ethanol's impact on the corn supply."

Niemeyer said his group sympathizes with the severe impact of the drought and believes that the current mandate does have enough flexibility to accommodate the needs of farmers and their customers.

Ethanol producers, who agree that they have enough of a surplus to meet the mandate at this point, also say that they don't foresee the EPA granting a waiver. And the petitioners know it too, said Matt Hartwig, spokesman for the Renewable Fuels Association. The petition is "little more than political theater," he told National Journal. "It's more about grandstanding than actually achieving a result."

Hartwig suggested that the livestock industry is actually aiming to dismantle the mandate entirely and is simply using the waiver petition process to get the ball rolling. "The livestock groups have never liked the renewable fuels standard," he said. "They're seeking to capitalize on the drought and concerns that people have regarding the drought."