Study: RFS Waiver Would Have Limited Effect on Corn Prices

Study: RFS Waiver Would Have Limited Effect on Corn Prices

FAPRI study finds potential for a larger impact in 2013-14 marketing year.

Corn prices will see a limited negative effect if a Renewable Fuels Standard Waiver is granted, according to a new study released by the University of Missouri Food and Agricultural Policy Research Institute.

The study found that a 2012-13 waiver could potentially have less impact on this year's corn prices than it would on 2013-14 corn prices, according to the group's baseline models. But, for this marketing year, the report projected prices to fall 0.5%. The study also found corn ethanol production might slip by 1.3%.

FAPRI study finds potential for a larger impact in 2013-14 marketing year.

Bob Dinneen, Renewable Fuels Association president, said the analysis showed the waiver impacts as suggested by livestock producers and grocery manufacturers won't come to fruition.

"The suggestion that an RFS waiver would significantly bring down feed prices and reduce retail meat prices is absolutely absurd," Dinneen said. "The only real impacts of a waiver would be to discourage farmers from planting corn next spring and to interrupt and delay important investments in new feedstocks and advanced biofuels technologies."

The study estimated that 0.6% more corn will be available to livestock producers if a waiver is granted. Supplies of animal feed co-products generated by the biofuels industry, such as distillers grains, would fall marginally with a waiver and prices would rise. The report says lower corn prices would lead to lower feed costs for livestock producers "unless offset by slightly higher soybean meal and distillers grain prices."

Similar studies released this summer from Purdue University and Iowa State University are consistent with the findings of the new study. Purdue's study estimated that conditions would need to be ideal for an RFS waiver to work for the livestock industry, and a key factor will be RINs, or renewable fuel "credits."

The FAPRI study noted that difficulty meeting the credit mandate could be the reason for higher corn prices in the year following the mandate.

The RFS has been a debated topic throughout much of the summer in light of drought conditions and increasing corn prices. A group of state governors, legislators and farm groups petitioned the Environmental Protection Agency for a waiver of the RFS earlier this year to decrease demand and lower corn prices. Public comments to the EPA regarding the waiver will close Oct. 11 and a decision is expected next month.

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