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DAVID KRUSE

By Staff | Jul 23, 2013

It has really been no surprise that the petroleum industry would say anything, disregarding the truth, to damage the ethanol industry, but I have been a little surprised at the willingness of livestock groups like the NCC, NPCC and NCBA to alter facts to make their case against the Renewable Fuels Standard.

Remember when they said that their only problem with ethanol was the blender’s credit subsidy and ethanol tariff and if we made them go away then that would satisfy their offended sense of free markets?

I said then that was all subterfuge and the subsidy barely expired when their focus turned to killing the RFS.

They were hoping that the ethanol industry really couldn’t be viable without the subsidy, but when they found out that was wrong they came immediately after the RFS. NCBA Federation of State Beef Councils Chairman Craig Uden testified on behalf of cattlemens’ organizations against the RFS.

Ironically from his testimony published in Drovers, he never mentioned the worst drought since the 1950s or 30s as a reason for high corn prices despite the attempts by corn farmers to expand acres.

He also claimed that the ethanol industry used almost 5 billion bushel of corn in 2012, almost half the crop.

I doubt that Craig has been lost in the barn long enough not to know that a third or more of the corn used in the ethanol process comes back to his industry as distiller’s dried grain, high-quality feed, but he failed to mention that. Instead he bashed DDG feed value which feedlot nutritionists do not concur with.

He talked about the good old days of $3 corn. I thought the good old days according to NCBA was $2 corn as the burdensome supply was sustained by government payments keeping corn farmers in business for years that helped build the commercial livestock industries with those indirect subsidies.

Some think that those good old days will be back this fall with a record corn crop when harvested. The farm subsidies won’t be there.

Isn’t it amazing that they never complained a word about those subsidies distorting the free market, while they allowed them to buy corn below the cost of production as a result of them?

They have selective aversion to government subsidies that make their criticism of ethanol subsidies and the RFS really hypocritical.

Uden belittled the 10 percent contribution ethanol makes to the motor fuel supply and suggested E-15 was a mandate when it is not.

There will be RINs and likely a supply of significantly cheaper corn if USDA forecasts are to be believed, that will allow the corn-based RFS to be achieved with no disruption to the market.

I have long warned that the problems with the RFS lie in the cellulosic portion of which the NCBA could probably care less one way or the other about, unless cellulosic plants use hay and compete with livestock producers for corn stocks.

The NCBA appears to believe that they have a birthright which gives them exclusive dibs on buying corn and the competition from ethanol has been unfair. Frankly, the horse is out of the barn and opposition to ethanol from livestock industries is pretty much just spite by now.

Uden claims that cattlemen do not oppose ethanol and that is probably the biggest lie that he told. You have to really hate ethanol to give the testimony presented on behalf of NCBA at this point.

There is probably not a heck of a lot any special interest group can do to change the RFS at this point. Congress couldn’t find a consensus on how to tie shoes given the partisan divide, rendering the legislative process dysfunctional.

The courts have ruled for the RFS and E-15 making the legal expenditures of the ethanol opposition fruitless.

The Obama administration promotes renewable fuels. Lower corn prices would deflate the ardor of livestock industries over-ending the RFS.

Without a farm program the RFS will be the cornerstone of the corn price safety net.

The ethanol industry has had a negligible impact on food prices and has reduced consumer fuel prices to produce net savings. When we go to war with Iran our ethanol plants will be out of the line of fire.

The petroleum industry has much more at stake in defeating the RFS, but it is not the corn-based RFS, but the cellulosic portion more than doubling the amount of ethanol being produced in the future that is the dire threat to their motor fuel market share.

The corn-based ethanol industry needs a piece of E-15 market access, overwhelmingly affirmed as the law of the land by the U.S. Supreme Court, but the cellulosic ethanol industry needs it all to have the market access for RFS mandated cellulosic production.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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