Ethanol most important value-added market for grain producers

This was written in a letter by Bob Dinneen, president and CEO, Renewable Fuels Association (RFA), to the House Committee on Energy and Commerce.

The ethanol industry, Dinneen pointed out, has transformed the grain sector “from a stagnating, surplus-driven marketplace to one that is vibrant, high-tech, and demand-driven.” He added, “As a result, the net impacts of the Renewable Fuel Standard (RFS) and ethanol production on the agriculture sector have been decidedly positive, and U.S. meat output and retail food prices have not been adversely affected.”

Dinneen also wrote that it would be counterproductive for the House Committee to examine only the potential impacts of a single transportation energy option like renewable fuels in isolation from other energy options, such as unconventional petroleum. “Petroleum demand and prices also have important effects on U.S. agricultural and food markets. Every step of the food supply chain is reliant on petroleum products - from the use of diesel fuel in farm machinery, to the use of natural gas in food processing plants, to the use of plastics in food packaging, to the use of gasoline and diesel fuel to transport food to the grocery store or restaurant.

Dineen added, “There is no credible evidence whatsoever to support the notion that the RFS is adversely affecting consumer food prices. Indeed, food price inflation has been falling since the RFS was enacted, and Americans are spending less on food than any time in history.”

The RFA included a chart indicating that there is no correlation between rising ethanol production and food prices.

Soruce: Lynn Grooms, 3 May 2013, Farm Industry News Blog.