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Time for Feds to scrap dairy-killing ethanol mandate

POSTED January 9, 2014 3:43 p.m.

Government carries out many essential responsibilities, but dictating what corn should be used for is not one of them. Yet that is what the federal government is doing to the detriment of California’s dairies, many of whom are struggling to survive.

Valley dairies have been hard hit over the past several years due to a variety of factors, including low milk prices. But one major factor is the soaring cost of corn-based feed due to the federal Renewable Fuel Standard. This standard requires that gas consist of up to 15 percent corn ethanol, which is derived from the same corn that farmers use to feed dairy cows.

That is why I authored Assembly Joint Resolution 21, which the State Assembly and Senate approved unanimously last year. The resolution expressed the strong support of Democrat and Republican lawmakers alike for the U.S. Congress to reform the Renewable Fuel Standard by transitioning away from mandating biofuel sources that compete with food production (e.g. corn-based ethanol) and promoting alternatives instead (e.g. algae, cellulosic ethanol, etc...).

While I support the development of renewable fuels, the federal program as currently structured is the wrong way to go about it. The existing program pushes corn producers to increase ethanol supplies to the detriment of basic food production.

The costs are clear. The 2005 average corn price per bushel was $1.96, but it cost an average of $6.51 per bushel for the first ten months of 2013. Higher corn prices have decimated dairy farmers in California, with 387 dairies going out of business since 2007, and more than 100 lost in 2012 alone. Whenever a family dairy closes, others feel the negative ripple effects, including grain dealers, hay brokers, veterinarians, and others who rely on dairies for business.

Closed dairies means lost jobs, lost economic output, and lost tax revenue. This is especially true in an industry where livestock, poultry, and related products accounted for 26 percent, or $12.4 billion, of California’s gross agricultural cash income in 2011.

But perhaps the biggest losers are consumers, given that high corn prices mean higher prices for a variety of foods. The poor typically spend a higher percentage of their incomes on food, so they are especially sensitive to price hikes at supermarkets and restaurants.

Sadly, existing federal government policy ignores these realities. The activist-driven ethanol mandate has made some rich. Even Senator Dianne Feinstein said, “Ethanol is the only industry that benefits from a triple crown of government intervention: its use is mandated by law, it is protected by tariffs, and companies are paid by the federal government to use it.”

California’s state lawmakers are in agreement with Senator Feinstein and others that it is time to end ethanol favoritism. Congress should heed the pleas of a majority of our nation’s original environmentalists – farmers – and reform the Renewable Fuel Standard before more dairies close.

To be clear, I am not opposed to the idea of ethanol use in gasoline. I am opposed to ethanol mandates that pick winners and losers. The federal government should promote research on sustainable, non-food based fuels like cellulosic ethanol rather than mandating their use whether they are cost-effective or not.

The U.S. Environmental Protection Agency is currently holding an open comment period through Jan. 28 on a proposal to ease ethanol requirements. To make your voice heard, I urge you to visit https://federalregister.gov/a/2013-28301 and submit a formal comment. By adding our collective voices, we can help prevent further job losses and reform a federal program that is hurting local dairies and, thereby, our larger economy.

Assemblymember Kristin Olsen, R-Modesto, represents the 12th Assembly District in the California Legislature, which includes portions of Stanislaus and San Joaquin Counties in the Central Valley.

 

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