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Calls rain in to lighten ethanol rule

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As a historic drought worsens across much of the nation, pressure is building on the Obama administration to alter federal mandates that could claim as much as 40 percent of this year's plummeting corn crop for ethanol production.

But some, including the National Corn Growers Association and Republican Sen. Chuck Grassley of Iowa, the nation's top corn-producing state, say calls for a temporary suspension of the Renewable Fuel Standard (RFS) are ill-advised.

"I would suggest that those claiming the sky is falling withhold their call for waiving or repealing the Renewable Fuel Standard," Mr. Grassley said Wednesday on the Senate floor. "It's a premature action that will not produce the desired result."

Instituted during the George W. Bush administration, the RFS mandates blending billions of gallons of corn ethanol with gasoline each year.

In 2012, the law calls for 13.2 billion gallons of ethanol to be combined with gasoline, requiring about 4.7 billion bushels of corn.

Initial estimates put this year's expected corn crop at nearly 14 billion bushels, but the projections have dropped dramatically as the drought has continued to blanket much of the country.

The Agriculture Department on Wednesday designated another 218 counties in 12 states as disaster areas, adding to what already has become one of the widest, worst dry spells in decades.

It's led many analysts to reduce corn crop expectations below 12 billion bushels. Subsequently, corn prices have shot up by more than 50 percent over the past two months as growers fear much of their crops will be lost.

In response to the growing concerns, a coalition of cattle ranchers, dairy farmers and others sent a letter on Monday to the Agriculture Department and Environmental Protection Agency, stressing that using such a large amount of the nation's corn for ethanol could lead to livestock food shortages and even more price spikes for consumers.

"Livestock and poultry producers will be forced to reduce the size of their herds and flocks, causing some to go out business and jobs to be lost," reads a portion of the letter, signed by the National Cattlemen's Beef Association, the National Pork Producers Council, the National Chicken Council and more than a dozen other groups that depend on cheap, available corn.

"This drought-induced harm exists now, will continue into the latter part of 2012 and 2013, and could continue to be felt in 2014 depending on the policy choices made now," the petition continues.

The coalition was joined in its criticism Wednesday by Thomas Pyle, president of the American Energy Alliance, who said the Obama administration will have only itself to blame if food prices rise higher.

"Congress should take steps to eliminate the ethanol mandate permanently, so that Americans do not find themselves in a similar crisis during the next dry spell," he said in a statement.

The EPA has promised to continue to review crop-projection data and consult with the Agriculture Department on appropriate steps, though the agency would not specifically say Wednesday whether the RFS could be suspended or adjusted.

Supporters of the standard point out that it has given corn producers a level of assurance in recent years because federal law guarantees that billions of bushels of their product will be bought and used by ethanol producers.

They're also arguing that it's simply too soon to know just how great an effect the dry conditions will have on corn supplies and that any action on the RFS should wait.

"With the crop still in the field, it is too early to determine this year's final corn supply," said Garry Niemeyer, president of the National Corn Growers Association, said in a statement.

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