As the Illinois economy continues to lag and the state’s unemployment rate sits more than two percentage points higher than the national average, it’s time for wise policy remedies to ensure better, more secure opportunities for Illinoisans and their businesses. A great place to start would be a reset of the nation’s Renewable Fuel Standard (RFS), which prioritizes fuel over food and feed; creates distorted market competition; and forces consumers to unnecessarily dole out hard earned savings from the pump to the grocery store.
Since 2006, the RFS has required annually increasing amounts of biofuels (mostly in the form of corn-based ethanol) to be blended into the U.S. gasoline supply. Despite its good intentions, this policy now guarantees that more than 45 percent of the nation’s corn crop is diverted to the production of fuel – not food – while driving up the price of this key commodity by an astounding 275 percent. What’s even more alarming is that this policy has made corn-for-fuel operations so lucrative that Wall Street is now buying up swaths of land in the Corn Belt, driving up the price of farmland, and making it nearly impossible for small to midsize farmers to compete let alone survive.
Illinois’ pork producers and food manufacturers – two of the state’s top industries and providers of hundreds of thousands of jobs – are directly harmed by this policy as they are forced to pay more for the corn that serves as a key input to their businesses. As corn comprises nearly 70 percent of the feed given to animals, rising prices directly affect farmers' bottom lines that point to animal feed as their single largest operating cost. Illinois’ 2,900 hog farmers continue to compete with the biofuels industry for this staple, and in this tussle have been forced to pay millions in higher feed costs on account of the RFS. The financial burden of feed price volatility has closed countless farms across the country and put many hard working Americans out of a job. Similarly, the 940 food manufacturing companies operating across Illinois rely on affordable corn to produce the more than 4,000 food items containing the commodity in a typical grocery store (and that number doesn’t include all the products like milk, eggs, meat and poultry that come from corn-fed animals). Unfortunately, the buck doesn’t stop on the farm or in the factory as higher prices are being carried over to consumers as this policy endures.
Since the RFS’ aggressive expansion in 2007, chicken costs 35 percent more while beef, pork, egg and fish prices have collectively increased 79 percent as corn prices increase. In 2012, the average U.S. family of four faced a $2,000 increase in food costs due to higher corn prices brought on largely by the RFS. What’s more: as ethanol contains 33 percent less energy than regular gasoline, consumers must also return to the pump more frequently and at greater cost as fuel mileage decreases.
All this economic harm, and for what? Multiple studies have shown that ethanol is not an environmentally friendly fuel as promised by the RFS. According to the Environmental Working Group, the corn ethanol mandate has contributed to plowing up more than 23 million acres of U.S. wetlands and grasslands in order to plant crops – an area the size of Indiana. In addition, more than five million acres of land set aside for conservation have been plowed due to the ethanol mandate since 2007. In Illinois, more than 43,000 acres of conversation land have been lost to ethanol production, a landmass bigger than St. Louis. According to study findings published in the journal Science, plowing over conservation land releases so much greenhouse gas that it takes 48 years before new plants can break even and start reducing carbon dioxide. The Environmental Protection Agency’s (EPA) own analysis the shows that the cumulative lifecycle emissions from corn ethanol are 28 percent higher than those from gasoline. So much for “renewable fuel.”
Fortunately, the administration has begun to realize the economic and environmental harm caused by the RFS in its current form. The EPA recently proposed to reduce 2014 biofuel blending requirements, which would provide some much-needed respite in the short term to the countless industries affected by this policy boondoggle. That said, several key policymakers have promised to take a deeper look at the RFS in the 2014 Congressional session to prevent the harmful impacts of corn ethanol in the long term. Members of the Illinois’ federal delegation would be wise to join their colleagues in Washington in reforming the RFS to better protect the countless local businesses and farm operations affected by volatile corn prices.
Marc Voegele is owner of Express Employment Professionals in Glen Carbon.