LAKE MACBRIDE— Taking down the fences and mowing the garden plots brought a sense of closure to this year’s growing season. It’s over, and it was time. The remaining fall task is to plant garlic, and while it is late for that calendar-wise, if the warmth continues, the roots may get a couple of week’s growth before frigid temperatures set in and produce normally. With the variability in our weather, all bets are off about predictability. Why not plant garlic? The worst that could happen is it fails to grow, and we have plenty for winter eating.
Yesterday, the U.S. Environmental Protection Agency (EPA) announced a proposal to reduce the renewable fuel standard for ethanol. This is a first, and within hours, Iowa governor Branstad reacted negatively toward the idea (statement here). The New York Times posted a valuable article on the issue here. The EPA’s proposed 2014 renewable fuel standard program is here. The Wikipedia article on ethanol is here. While widely expected, the EPA announcement kicks off what is expected to be resounding resistance here in corn country.
The world has changed since ethanol was first blended with gasoline, and it is appropriate to re-evaluate the percentage mixed with motor fuels. Following is my take on the matter from a Big Grove perspective.
It is hard to argue with governor Branstad’s statement, “the EPA has turned its back on rural America, and our economy and family farms will suffer as a result. Corn prices have already dropped to the cost of production, and this will likely further squeeze corn producers and negatively impact income growth in rural America. We have more than 50 ethanol and biodiesel plants in Iowa, and these EPA reductions would negatively impact thousands of Iowa jobs.” All of this is true, but what the governor didn’t say is that if anything, Iowa farmers are resilient. Re-directing growing patterns to deal with the over-abundance of corn is possible and should be done.
People seem to forget that the gasoline gallon equivalency of ethanol is 1.5:1. This means it takes one and a half gallons of ethanol to create the energy of one gallon of gasoline. The reason ethanol blended motor fuel costs less at the gasoline pump has little to do with the energy it produces, and everything to do with the current structure of federal government subsidies. Ethanol is not cheap by this standard, or by any reckoning.
This week, U.S. crude oil production exceeded imports for the first time in more than 20 years (USA Today story here). To the extent ethanol use increased in response to domestic oil production declines, that trend appears to have been reversed, precipitating a need to re-evaluate the renewable fuel standards. The bad news is the increase in domestic crude production is due to the environmentally questionable process of hydraulic fracturing. In any case, as a society, we should reduce the amount of fuel we burn to supply energy, so this is a red herring argument. We should divest ourselves of fossil fuels.
Ethanol has provided a market for corn growers, comprising as much as 40 percent of sales. Some argue corn for ethanol has less market share when the value of distillers grain and other by products are considered, but in any case, a lot of the corn crop goes to ethanol production. This market is at the core of governor Branstad’s argument against revising the fuel standards. The thing is, either Republicans want society to suck at the pap of big government, or they don’t. This is the core hypocrisy of a group that seeks favorable treatment on only those issues that effect their segment of society. The EPA rules, once finalized may impact corn markets, and in the end, the markets will set an appropriate price. Farmers, like everyone else, will have to deal with it.
Finally, there is a criticism that the corn crop should be going to food, not fuels. In a self-serving way, industrial farmers tout their ability to feed the world. Freeing up some of the corn crop to serve a growing global population should be a suitable market, right? Have you ever bitten into a kernel of No. 2 field corn? Without processing it’s hardly food for humans. The overall trend for food production will be to produce it locally and sustainably, something that sending vessels full of Iowa grain to Asia and Africa does not accomplish. While a short term market for grain exports may exist, in the end, large scale buyers, will produce the same crops much closer to home.
Anyone who has studied the matter can’t believe corn ethanol production is good for the environment. The EPA is on the right track, and the public comment period enables people who are impacted by the proposed rules to have their say. Not sure what ore we want from our democracy.