Is it fair to say to that the United States of America is in a slump? By slump, I mean the lack of progress our country has experienced after all of the clean energy debates and legislation in the past year. The EPA has delayed a move to E 15 in non-flex fuel vehicles twice, we have witnessed the worst oil spill ever and our development of futuristic biofuels is not any closer to commercial production.

Monday, the American Coalition for Ethanol, National Corn Growers Association and the Renewable Fuels Association sent a letter urging, Lisa Jackson of the EPA to approve a temporary move to E 12 in non-flex fuel vehicles while they continue to study the effects, or lack of effects E 15 has on vehicles. This makes sense on so many levels as it would benefit the U.S. economy and environment, but I don’t recommend holding one’s breathe.

A move to E 12 would increase domestic ethanol production pushing the industry past the “blend wall” and would stimulate rural economies through job growth and the purchase of additional bushels of corn. The additional production and use of American ethanol moves us closer to a clean-energy economy and further lessens our dependence on foreign oil.

Most importantly, America’s ethanol industry and farmers are more than capable to move our country well past the E 10 wall with bountiful crops due to increasing yields. Farmer’s are continuing to produce more with less providing plenty of corn to meet the demands for food, feed, fiber and fuel.

With plenty of discussion over VEETC (the ethanol blenders credit) in Washington DC and rest of the nation, Iowa State University released a study showing results that downplayed the negative effects of VEETC expiring. The study was funded by UNICA, otherwise known as Brazilian Sugarcane Ethanol who has been lobbying for the removal of America’s ethanol tariff.

The study claims that losing VEETC and the ethanol tariff would result in the loss of 300 jobs compared to an earlier study by ENTRIX which showed jobs losses of 112,000.

The Iowa State study went on to claim a minimal decline in corn prices and that the import of Brazilian ethanol would only rise modestly to 740 billion gallons. This accounting is incomplete, as it does not contain the tax, gas price, national security, and other economic benefits from the ethanol industry.

Other accounting errors in the study include leaving the corn price and acreage stagnant through 2014 and not accounting for trigger payments from lower commodity prices. The Study also leaves gas prices at $2.30/gallon while they are expected to rise 19% over that time.

According to ENTRIX, United States ethanol production would be cut by 37.7% and the industry would purchase $6.6 billion less in grain and other raw materials. Corn prices would drop 8%. The elimination of tax revenues would equal $2.7 billion on the local and state tax level and $2.4 billion on the national level.

Brazilian Ethanol has everything to gain from VEETC expiring. Losing the 54 cent/gallon tariff will do nothing but hurt farmers, ethanol producers and the overall American economy. One of the reasons for domestically producing a fuel is to become less dependent on other nations; this would in turn defeat that purpose.

To close, attached is a comment from, Joel Velasco, Chief Representative for North America for UNICA, defending the Iowa State study.

“The results are still significant because they show that letting the VEETC and tariff expire would not have the dramatic, adverse effect U.S. ethanol producers have subjected all of us to for decades.”

“Our aim was to provide a realistic analysis of the various scenarios Congress is actually debating – regardless of whether they benefit us. This has not been the case with countless studies paid for and cited by the corn ethanol industry.”

Joel Velasco
UNICA

Good one Joel, you’re just looking out for the American people, right?

Corn farmers from all across this great land will assemble this week in Washington D.C. for Corn Congress 2010 to discuss policy and meet with our nation’s leaders. Corn Congress not only allows the delegates to meet with representatives, but also delegates/farmers from other states that may share similar concerns.

“Coming to Washington is always an exciting time,” said, SDCGA President and Oldham, SD farmer, Gary Duffy. “There’s no better place to develop policy and talk about the issues and the legislation that affect corn growers back on the farm.”

A number of important topics including Farm Bill, CARB lawsuit and agriculture transportation will be discussed at Corn Congress, but the number one priority to be voiced by the South Dakota delegates will be ethanol. The ethanol industry has a number of concerns including the need for higher blends like E 15, mandatory flex-fuel vehicles and VEETC, which expires at the end of the year.

“You can sense the enthusiasm from our delegates, they understand the importance of the issues faced by farmers and know what needs to be done,” said Duffy. “Our delegates take pride in representing our states’ producers and appreciate the opportunity to spend time talking about their concerns directly with members of congress.”

11 Board directors from both the South Dakota Corn Growers Association and South Dakota Corn Utilization Council will be on Capitol Hill this week including Keith Alverson, Chad Blindauer, Jim Burg, Bill Chase, David Gillen, Brian Smith, Jim Thyen, Walt Bones, David Fremark, Mark Gross and Darrin Ihnen.

All of the South Dakota delegates will meet personally with Rep. Herseth-Sandlin, Sen. John Thune and Sen. Tim Johnson.

“South Dakota is blessed to have a close connection with their representatives,” said Duffy.  “They want to hear from farmers personally.”