Energy

Here’s How Ethanol COSTS Farmers At Least $57 BILLION

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Andrew Follett Energy and Science Reporter

A federal ethanol mandate has cost American farmers at least $57 billion dollars through increased corn prices, according to calculations by the National Chicken Council.

The Renewable Fuel Standard (RFS) requires refiners to blend a certain amount of ethanol into fuel and has caused corn prices to rise dramatically. Corn has cost the U.S. chicken industry $57 billion since 2005, according to calculations using U.S. Department of Agriculture data.

Chicken companies have struggled to pay these high costs. “During the RFS era, at least a dozen chicken companies have ceased operations – filing for bankruptcy, being acquired by another company, or closing their doors altogether, ” Tom Super, vice president of communications at The National Chicken Council, told The Daily Caller News Foundation.

Other industries that use large amounts of corn have also suffered, and ethanol production may have even caused food riots and shortages in developing nations.

Roughly 45 percent of American corn is now used to produce biofuels, like ethanol, due to enormous levels of taxpayer support. This support has arisen from a need to reduce America’s dependence on foreign oil and to slow global warming, according to the Congressional Budget Office. But research demonstrates that ethanol hasn’t helped the U.S. meet either goal.

“The problem with the RFS is that it mandates the use of corn for ethanol, regardless of what makes economic sense, regardless of who is hurt and regardless of what it costs,” Super said. “Currently, almost four out of every 10 rows of corn grown in the U.S. is diverted to our gas tanks in the form of ethanol. ”

When America became the world’s largest producer of ethanol in 2005, the country imported 60.3 percent of its oil, but today the U.S. only imports 24.2 percent of its oil. The enormous increase in U.S. oil production is roughly five times the output of all ethanol distilleries in the country. This increase is mostly due to new technologies like hydraulic fracturing, fracking, and horizontal drilling.

“President Jimmy Carter and Congress first started subsidizing ethanol back in 1978, under the ‘infant industry’ theory of economics,” Super continued. “That theory contends that certain industries need government support to get up and running on their own. That’s been the same argument used for ethanol ever since, whether it is for tax exemptions, tariffs, air emissions regulatory preferences or the RFS mandate. It’s time to get the 40 year-old kid out of Uncle Sam’s basement.”

Various U.S. ethanol subsidies and mandates cost motorists $10 billion annually in additional fuel costs and production is still increasing, according to a study published in March 2015 by the Manhattan Institute. The amount of ethanol and other biofuels used in America increased from 4.2 billion gallons in 2005 to 14.6 billion gallons in 2013.

“These recent trends demonstrate that (the chicken industry) has seen the greatest decrease in growth in more than forty years during the implementation of the RFS, when it has seen demand for one of its primary inputs drastically and artificially increased,” Super said. “Because of the importance of corn in so many aspects of food production, the entire food industry—and ultimately, the consumer—are suffering because of the RFS.”

Ethanol may actually have a negative impact on the environment too. The U.S. National Academy of Science is extremely skeptical of the environmental benefits of American biofuel production and has found that the programs “may be an ineffective policy for reducing global [greenhouse gas] emissions.” Additional research by the University of Minnesota found that America’s ethanol mandates were actually killing people because it deteriorates air quality, and other studies have shown ethanol can actually damage car engines.

The U.S. Environmental Protection Agency was heavily criticized in August by a government watchdog for not updating the environmental impacts of ethanol. The watchdog found that the Obama administration failed to do a legally necessary study examining the impact of mandating ethanol in gasoline, and that Obama’s regulations actually did far more environmental harm than good. Research sponsored by the government of Finland also found that regulations intended to fight global warming with biofuels were almost certainly increasing CO2 emissions.

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