Process Management

News 269 views last update:6 Aug 2012

AFIA in favour of biofuel policy change

Federal regulators in the US should temporarily waive the Renewable Fuels Standard (RFS) and lower the current national RFS mandate to the 2007 level of 4.02% through 2009, according to the American Feed Industry Association (AFIA). This year's RFS mandate is 7.76%.

AFIA expressed its support for changes to the country's biofuels policy in a letter filed with the Environmental Protection Agency (EPA) this week.

The letter to Stephen Johnson, EPA administrator, was timed to coincide with the agency's consideration of a request by the governor of Texas to reduce the 2008 RFS mandate in that state by 50%.

Federal energy law allows a state or territory to petition the EPA administrator to ask for changes to the RFS; the EPA then has no more than 90 days to respond. When the EPA published the Texas governor's request, it said there would be a 30-day comment period.

The governor's request for a 50% rollback of the RFS applies only to his state, and it was filed before the Midwest floods.

Some industry observers believe several additional governors also will file requests for relief from the RFS.

Allowing time to adapt
Reforming the biofuels policy enacted last year "would allow time for the marketplace to adapt to the rapid increase in commodity and feed prices, magnified by the recent floods in the Corn Belt, and will permit the market to determine the degree to which corn stocks should be divided amongst the producers and consumers of food, livestock feed, exports and ethanol," according to the AFIA letter.

Ensuring adequate supplies of food for humans and feed for livestock is at least equally as important as energy security, AFIA President and CEO Joel G. Newman wrote.

"US livestock producers and the feed industry have taken the brunt of the increase in corn, soybean and grain prices over a relatively short time frame," he said in the letter, but the livestock sector "is not an industry that can transition easily or quickly in times of higher costs."

Unique business
The "unique nature of the business means livestock producers have a difficult time reacting to sudden changes in the marketplace, and they cannot decide to reduce or close operations similar to the way a typical manufacturing business can," Newman wrote.

"This explains why AFIA supports temporarily freezing the RFS mandate at the 2007 level through 2009.

"A temporary freeze would give livestock producers time to adjust herd sizes and find new nutrition options during this difficult time of transition."

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