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Last Updated on Monday, 11 August 2008 08:15

Written by Christy Hemken

    Because Midwest cornfields look more like lakes than farms this month, the National Corn Growers Association (NCGA) may support a waiver to the ethanol mandate as outlined in the Energy Policy Act.
    On April 25 Texas Governor Rick Perry requested the Environmental Protection Agency waive a portion of the Energy Policy Act containing the Renewable Fuel Standard (RFS), which mandates production of ethanol derived from grain. Perry called for a 50 percent waiver of the RFS.
    NCGA President Ron Litterer of Greene, Iowa says if severe economic impact results from a short supply of corn this year, then farmers would support a temporary waiver to the RFS. However, he still sees potential in this year’s crop and NCGA does not support the Texas waiver request, which EPA must rule on by July 25.
    Biofuels opponents have not gained much ground with Congress and the EPA. A change to the RFS would be granted in concurrence with the Department of Energy and the Department of Agriculture (USDA), and so far the Department of Energy has expressed unwavering support for the RFS.
    On June 12 Iowa Secretary of Agriculture Bill Northey said initial estimates from the Farm Service Administration indicate nine percent of Iowa’s corn crop has been lost to either prevented plantings or flooding. Twenty percent of soybeans were lost, although there’s still time to replant that crop.
    Allendale Inc. broker/analyst John Kleist of McHenry, Ill. says producers still have a window of opportunity for soybeans if wet weather subsides and farmers can get back in the fields.
    Iowa experienced a 100-year flood in 1993, and this spring’s flooding compares. “In 1993 record rainfall reached well into the summer months and severely affected the crop that year,” says Litterer, adding that is not the long-term forecast for 2008. “There’s still a lot of the growing season left, so we are hopeful the final results will not be as devastating as 15 years ago.”
    He says the USDA recently projected the third-largest crop ever at more than 11.7 billion bushels. “We know the final number depends on how the weather holds,” he says.
    USDA has lowered its expected yield by five bushels per acre to 148.9, which is a significant reduction from earlier this spring.
    American Farm Bureau Federation Energy Specialist Anne Steckel says the situation would have to be extremely short to grant the waiver under current law. “For them to initiate that waiver, they would have to prove severe economic harm to the economy or the environment. Or, obviously if we don’t have the domestic supply to meet the requirement.”
    University of Illinois ag economist Darrel Good says it’s not clear how much rationing will be required during the 2008-2009 marketing year. “Historically, much of the reduced consumption in years of tight supplies and high prices came in the domestic feed and residual category,” he says, comparing the next marketing years to 1980, 1983, 1993, 1995, 2002 and 2006 – years in which feed and residual use declined by an average of 11 percent from use throughout the previous marketing year.
    Good says the current USDA projections for consumption of U.S. corn next year are consistent with historical patterns. “Feed and residual use are projected to decline by 16.3 percent, while exports are expected to decline by 21.2 percent,” he says.
    According to Good, domestic consumption of corn for ethanol is expected to increase by one billion bushels (33 percent) while corn use for all other food and industrial uses is expected to equal the current marketing year.
    Good says a fair amount of crop loss and demand rationing are already priced into the corn market with Dec. 2008 futures approaching eight dollars. “The worst of the crop stress may have passed and more favorable growing conditions are forecast,” he says. “Corn prices may now moderate somewhat, at least until more is known about crop size.”
    “Thanks to a large surplus of beginning stocks from the record 2007 harvest, we came in with a good supply,” notes Litterer of this year’s corn reserves. “We’re watching the skies at home and tracking the updates from Washington while working hard doing what we do best – growing corn to help feed and fuel the world.”
    EPA continues to accept comments on the Texas waiver request; for more information visit www.epa.gov/fedrgstr/EPA-AIR/2008/May/Day-22/a11486.htm. Article compiled by Christy Hemken for the Wyoming Livestock Roundup from press releases and federal agency information.