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EPA Offers Taxpayers No Relief from High Prices During the Holidays


Nan Swift
November 19, 2012

On top of all the other bad economic news taxpayers got last week (a gloomy stock market, the end of Twinkies, need we say more?) and just as consumers get ready to kick off a season of spending  on food, travel, and gifts, the Environmental Protection Agency (EPA) dismissed the opportunity to give hurting Americans some relief.  TheHill.com reports:

The Environmental Protection Agency is rejecting requests from states and meat industry groups to waive regulations that require the blending of ethanol into gasoline.

EPA rejected petitions from nearly a dozen states, including Texas, Virginia, and Maryland, for waivers of the federal Renewable Fuel Standard (RFS).  

A temporary waiver would have immediately freed up already tight corn stocks, easing feed prices for livestock growers and dairy producers who are struggling to survive, thanks to a double whammy of a corn ethanol mandate and drought that have depleted the corn supply and sent prices soaring. NTU has written previously about how the Renewable Fuel Standard (RFS) has hurt livestock producers in general, and threatens the future of bacon specifically, here.

Based on the EPA’s rejection of commonsense and thousands of well-thought out comments, including over 800 from NTU members, what we wrote back in September still holds true:

While the government can’t make it rain, the EPA can waive costly ethanol mandates that require fuel producers to blend corn ethanol into the gasoline supply, thus diverting much-needed food to our fuel tanks. NTU is working with a broad coalition of groups ranging from livestock producers, anti-hunger organizations, and environmental advocates to urge the EPA to waive the ethanol mandate, relieving the pressure on corn markets.  Unfortunately, right now it looks like more not less corn will be going into our cars in the near future.

Rather than letting the market determine our fuel needs –it’s clear that the EPA is willing to continue to plow forward with their ethanol schemes regardless of the outcome.

Taxpayers are currently facing a perfect storm of economic challenges. Unless Congress takes action during the current lame duck session, taxpayers will see the 2001 and 2003 tax cuts expire. Millions of middle class taxpayers could find themselves suddenly hit with thousands of dollars in higher taxes without an AMT patch. The death tax is on the brink of shooting back up to 55% putting thousands of small businesses and jobs on the line.  A slew of ObamaCare taxes also goes into effect in 2013 – to say nothing of the looming debt limit increase, the continued high unemployment, and struggling economy.

In sum, things are not so great. Not for consumers, not for taxpayers, not for the food producers, the environment, and the world’s poor - who have all been detrimentally impacted by the broken RFS policy.

The EPA’s rejection of even a temporary waiver adds insult to injury for taxpayers at a time when they can least absorb the costly consequences of the corn ethanol mandate

The upcoming Thanksgiving festivities are probably more on the minds of taxpayers this week then the latest EPA outrage, but when consumers head to the store to stock up for Thursday’s feast, they can thank Washington for the higher food prices that are expected to only keep rising as the repercussions of the corn ethanol policy continue to ripple through the livestock industry.

The all-important turkey is facing serious challenges due to the high price of feed.  Though many grocery stores are choosing not to charge the higher prices on turkey this year, with even higher costs expected next year, it’s unknown how long stores can continue to subsidize customer’s turkey-dinners. Today.com reports on the struggles facing turkey growers:

"I used to feed a turkey for 22 cents a lb, now it costs 45-50 cents," Burkel said. "When you go to the bank and say, 'I need a line of credit that's twice what I typically have,' they look at you and say, 'Are you out of your mind? How are you getting that back?'"

Industrywide, farmers and processors say they have scaled back their flocks, and further production cuts are expected as grain prices remain high. September's egg set placements fell 6 percent from a year earlier, according to USDA data.

A step up the “food chain” from the livestock producers, food product companies are also feeling the squeeze from increasing food and ingredient costs attributable to the RFS. The Grocery Manufacturer’s Association issued their reaction to the EPA’s decision stating:

The EPA’s rejection of requests to waive the Renewable Fuels Standard requirement for 2012-2013 is both disappointing and unfortunate for consumers. 

GMA, as well as numerous policymakers, NGO groups and other associations, sought the waiver to provide temporary relief to consumers who have seen food prices rise steadily since the implementation of the Renewable Fuels Standard (RFS), which diverts nearly 40 percent of the corn crop away from livestock feed and food production.  The RFS has and will continue to disrupt commodity markets and exacerbate the impact of last summer’s devastating drought on food prices at a time when Americans can least afford it.

The high cost of corn have also hit dairy producers particularly hard as the Environmental Working Group reports:

There is little hope in sight. U.S. corn futures remain well over $7 a bushel, prices boosted by a shrinking corn harvest, dried-up pastureland and a misguided mandate for greater use of corn ethanol in the U.S. fuel supply.

Dairy farmers across the country are taking extreme measures to stay afloat. Milk cows are being culled at the fastest rate in more than 25 years, with more than 2 million slaughtered nationwide in the first eight months of this year. In California, farmers are supplementing corn feed with local commodities like almonds and apples, but neither alternative provides animals with enough nutrients.

For an increasing number of dairymen, last-ditch efforts just simply aren’t enough to survive. Unable to pay bills or make loan payments, some families have been forced to sell off homes and dairies inherited from parents and grandparents.

The entire article is well worth your time.

As you can well imagine, egg producers have also been hit hard by high corn prices. In fact, apart from the ethanol industry, it’s hard to think of anyone who isn’t hurt by keeping the mandate in place. Michal Rosenoer of Friends of the Earth summed up the situation this way:

 “If the worst U.S. drought in more than 50 years and skyrocketing food prices are not enough to make EPA act, it falls to Congress to provide relief from our senseless federal support for corn ethanol.  The RFS is a broken policy — rather than giving  us clean energy, it’s incentivizing biofuels like corn ethanol that are exacerbating our economic and environmental problems.”

 And corn ethanol hasn’t helped with  the high cost of gasoline at the pump, especially when the lower energy content forces consumers to fill up their tanks more often.  That means the EPA and RFS in particular have made not just this year’s turkey and pumpkin pie cost more, but also the trip over the river and through the woods.  If there’s one bright spot to be had it’s that the EPA has still left some traditions unscathed. But give them time and they’ll definitely find away to regulate the fun out of football and board games.

 


 

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