The ethanol industry argues that the Agriculture Department's estimate that ethanol consumes a 40 percent share of the corn market is misleading because about a third of the ethanol corn is refined into a high-value animal feed called dried distiller grain. Buis said ethanol's actual share of the corn crop as a fuel is closer to 16 percent.
Renewable Fuels Association CEP Bob Dinneen also pointed out that there is flexibility built into the system. For example, ethanol produced one year but not used can be carried over to the next year. He said ethanol production has always been above what was required and that this year, with supplies down and prices up, producers are already slowing production.
Agriculture Secretary Tom Vilsack echoed that at a White House briefing last month, saying: "There's no need to go to the EPA at this point in time. Based on the quantity of ethanol that's currently in storage, there's no problem in that area at this point in time."
He also pointed out that despite the drought, the corn crop could still be one of the larger ones in history because farmers, enticed by high prices, planted so many acres this spring.
The EPA also turned down a request by Texas Gov. Rick Perry in 2008 to waive the mandate because of drought in his state.
C. Larry Pope, president and CEO of Smithfield Foods Inc., the world's largest pork producer, said in a July 26 Wall Street Journal opinion piece that Congress should pass a House proposal that would tie the Renewable Fuel Standard percentage to free-market supply and demand. He said that with the ethanol mandate and the high price of corn, "Smithfield was forced to take the unfortunate but absolutely necessary step of buying corn from Brazil."
That brought a quick retort from Sen. Charles Grassley, R-Iowa, who went to the Senate floor to compare Pope to Henny Penny, the character from the children's story "Chicken Little" who warned everyone that the sky was falling.
"Why did farmers plant 96 million acres of corn this year? Why have seed producers spent millions to develop better yielding and drought resistant traits?" Grassley asked. "The answer is simple: ethanol."
EPA's Renewable Fuel Standard site: http://www.epa.gov/otaq/fuels/renewablefuels/index.htm
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