One federal policy that has a profound impact on the agriculture industry isn’t controlled by the House Agriculture Committee. The renewable-fuel standard, which was established in 2005 and strengthened in 2007, requires increasingly large amounts of biofuels to be blended with gasoline. The House Energy and Commerce Committee has primary jurisdiction over the standard, and that panel’s leaders are crafting legislation this fall to reform — but not repeal — the policy.
Where farmers come in is that oil companies meet this standard primarily by blending corn-produced ethanol with gasoline, as opposed to using more-advanced kinds of biofuels that don’t come from food crops.
Corn’s dominance helps the corn growers by creating demand, but virtually all livestock producers maintain the policy is causing disproportionately high corn prices, which are in turn creating high feedstock prices. Grocery stores and fast-food companies, in turn, say those high feedstock prices are causing higher food prices for consumers.
The fuel standard’s original purpose was to wean the nation off foreign oil, and Republican President George W. Bush signed the legislation into law. But the mandate, which is administered by the Environmental Protection Agency, has come under intense scrutiny from both Republicans and Democrats in the wake of the record-setting drought during the summer of 2012, which sent corn prices soaring.
Although the Energy Committee has made it clear it’s taking the lead on reform legislation, certain members on the Agriculture panel, including Vice Chairman Bob Goodlatte, R-Va., will be key in negotiations outside of the Energy Committee and garnering support for reform in the House. Goodlatte has introduced two separate pieces of legislation that reform and repeal the mandate. His reform proposal could likely factor into Energy Committee negotiations.
Like any major policy reform, the effort has a long, difficult journey ahead of it to pass the House, let alone become law. It is not likely to pass this Congress, but the groundwork being done now is crucial.
House Agriculture Committee Chairman Frank Lucas, R-Okla., noted in an interview that his district includes both corn producers who want to keep the RFS and livestock producers who want it changed — and that his views on the matter are “academic from a committee jurisdictional perspective.”
Lucas maintains that it’s important to make sure there will be enough corn for everyone who wants to buy it. The 2013 corn crop looks like it will be good, and prices have gone down, but Lucas said, “You can’t price the consumer out. I tell my corn friends you need a good crop. If we have disease or pestilence “¦ and corn prices explode again, there would be tremendous pressure on Energy and Commerce to change the RFS.”
The Agriculture Committee does have jurisdiction over policies that are indirectly affected by the mandate. The 2008 farm bill provided money for the Agriculture Department to help back the construction of renewable fuels plants, particularly for those using cellulose rather than corn. Some of these plants have worked out very well, however, and there has been a debate in Congress over how much money should go into those programs in the future.
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