EPA Told Changes to RFS Could Affect Ag Prices

US - Comments submitted on Friday (25 September) to the Environmental Protection Agency (EPA) by the American Meat Institute (AMI), National Turkey Federation, National Chicken Council and FarmEcon LLC sharply criticised EPA’s proposed changes to the Renewable Fuel Standard (RFS), citing inadequate analysis of the proposed rule’s impact on agricultural commodity prices.
calendar icon 28 September 2009
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The groups noted that EPA’s proposed regulations have not considered the risks associated with variability of grain crop or other biomass production, which would have serious consequences on food and fuel production costs in years of reduced crop production.

"Increasing the level of biofuel production in the current RFS has already resulted in a strong link between energy prices and agriculture prices," the comments noted. "Energy prices are highly volatile, and the link between that volatility and increased volatility of agriculture commodity prices has become a major issue facing commodity producers and users."

The comments note that volatility has very real consequences for food producers that go beyond the increased cost levels already seen. Furthermore, they explain that until EPA performs a risk assessment that takes into account not only average prices, but also variations around average prices, the real costs of the RFS are unknown.

AMI’s President and CEO J. Patrick Boyle noted that increasing the RFS would divert even more animal feed into this nation’s fuel tanks and put continued upward pressure on corn prices. "Further increasing the RFS will have a direct impact on the ability of livestock and poultry producers to effectively predict future annual budgets and costs due to volatility in the markets because feed is the largest single input cost associated with raising food producing animals," said Mr Boyle. "The net result is further disruption in the meat and poultry business and higher food prices for consumers," he added.

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