NCGA, Texas Governor Tango

The National Corn Growers Association (NCGA) is strongly opposed to Texas Gov. Rick Perry’s request on April 25 for a waiver from the Renewable Fuels Standard (RFS).

"If granted, the waiver request made by Gov. Perry today will hurt — not help — U.S. consumers by increasing fuel costs and sending a signal to farmers to plant less grain," says NCGA President Ron Litterer. "A waiver from the RFS would undoubtedly result in higher gasoline prices and it seems very improbable that grain prices or food prices would be reduced."

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A study by the Center for Agriculture and Rural Development at Iowa State University, released just days before the request, found that "the growth in ethanol production has caused retail gasoline prices to be $0.29 to $0.40 per gallon lower than would otherwise have been the case."

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Given record global demand for corn, a waiver from the RFS would have little or no effect on grain prices for livestock and poultry feeders, Litterer says. Speculative investment in commodity futures markets, record demand for U.S. grain exports, heightened U.S. and global feed demand, and weaker than expected grain crops in Asia and Australia are among the other factors that must also be considered when looking at current grain prices.

In fact, a recent study by Texas A&M University — requested by Gov. Perry’s office — found that "relaxing the RFS does not result in significantly lower corn prices."

The waiver request may actually have the opposite effect on corn prices. "This waiver request could potentially send a signal to the corn market that demand from the ethanol sector is not a sure thing," Litterer says. "The response from farmers could be fewer planted acres of corn and higher corn prices."

The Texas A&M study also finds that "corn prices have had little to do with rising food costs." This finding is corroborated by recent studies by USDA’s Economic Research Service, Kansas City Federal Reserve, and other third parties.

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