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Our Views

Our Views Columns

Date: 12/13/2012

Title: Costa Calls on Congress to Reform RFS

By Rep. Jim Costa (D-Calif.)

My grandparents scratched out a living in the dairy business when they first came here from the Azores and my parents carried on that tradition. But today in my home state and nationwide, cattlemen, dairymen and livestock producers are facing the perfect storm of shrinking corn supplies and soaring feed prices.

One of the toughest droughts in over 50 years has stricken the heart of our country and scorched this year’s corn and wheat crops. These challenges are only compounded by a misguided policy to divert food into our gas tanks.
Since June 2012, feed prices have jumped over 60 percent nationwide adding pressure to producers already struggling to stay afloat. The Renewable Fuel Standard (RFS) is not the only factor causing the increase in feed prices, but it is a factor.

This rapid increase in feed prices has had a dramatic effect on livestock producers in my home state and nationwide. Because of this an estimated 100 dairies in California may shutter their operations by the end of the year due to sales or bankruptcy. When I talk to my local cattle, dairy and livestock producers, they resoundingly point to higher feed prices as one of their greatest challenges to staying in the black.

Currently, about 45 percent of the nation’s corn supply goes to the production of ethanol in order to fulfill the RFS. In 2011, we as a nation put more corn into our fuel supply than we used to feed livestock and poultry for the first time ever. Our continued reliance on corn-based ethanol to fulfill the RFS means that the demands on our corn supply will continue to increase as we move toward the full implementation of the RFS in 2022. With corn prices hovering around $7.80 per bushel, we can no longer ignore the added pressure that diverting corn supplies to fulfill the RFS has placed on our food supply.

What many in Washington fail to see is that this isn’t just about providing relief to cattlemen, dairy and livestock producers. The RFS has become a de facto tax on every family’s grocery budget.
Inflated corn prices create higher feed prices that are then passed along to American families’ already stretched-thin grocery budget. It is estimated that food prices could climb as much as 4 percent next year according to the U.S. Department of Agriculture (USDA). Stabilizing food prices starts with removing artificial pressure to our food supply.

According to the National Council of Chain Restaurants, the RFS costs chain restaurants up to $3.2 billion annually, which in turn is passed onto customers. Quick-service restaurants specifically have seen upwards of $2.5 billion in additional costs due to the RFS while full-service restaurants have faced increases upward of $691 million. This is simply unsustainable.

Last month, the Environmental Protection Agency (EPA) announced that they refused multiple requests to waive the RFS from governors, 156 Members of Congress and various agriculture groups. Citing that evidence of a “significant economic harm” was insufficient, the administration choose to ignore the calls from producers who are struggling to make ends meet.

Now more than ever, it has become apparent that the RFS is in dire need of reform. That is why I intend to reintroduce the Renewable Fuel Flexibility Act next Congress with Rep. Bob Goodlatte (R-Va.). This legislation would create a relief valve for producers when corn supplies are tight by triggering an automatic reduction in the RFS. Had this legislation been in place already, producers would have seen automatic relief without putting them at the mercy of EPA.

The RFS as it currently stands is a broken policy. The government cannot control the weather or this drought, but it can free our food supply from the unintended consequences of our ill-conceived ethanol policy. It is time for Congress to revisit the debate over the RFS. We need commonsense solutions that give the flexibility needed to protect agriculture and provide price stability in our nation’s food supply.