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Trading Food for Fuel

by 5m Editor
24 December 2007, at 11:26am

US - President Bush signed into law today an energy bill that will double the Renewable Fuel Standard (RFS) from the current 7.5 billion gallons per year to a 15 billion gallon grain ethanol mandate.

The American Meat Institute (AMI) called the signage of the bill counter-productive, noting that it will further drive up food prices as more corn is diverted from animal feed to use as fuel.

“While we fully support efforts to increase U.S. energy security, we should not be trading food security for the elusive goal of energy security. The RFS included in this bill reflects a shortsighted approach that will drive the price of corn even higher than the levels we’ve seen in the last 12 months,” AMI President Patrick Boyle said. “By subsidizing the corn-based ethanol portion of the renewable fuels options, Congress has increased the cost of food to consumers while lessening the economic incentives to develop other biofuel alternatives that might be less reliant on food-based feedstocks.”


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"While we fully support efforts to increase U.S. energy security, we should not be trading food security for the elusive goal of energy security. "
AMI President Patrick Boyle

According to United States Department of Agriculture (USDA), meat, poultry and egg spending comprise 60 percent of the average consumer’s food dollar.

In addition to the grain ethanol mandate, the bill includes three related mandates for biodiesel, advanced biofuels, and cellulosic ethanol and a fuel fee provision should cellulosic not be commercially viable in 2010. The bill mandates the blending of 1 billion gallons biodiesel produced from vegetable oil and animal fats by 2012. It mandates the use of 21 billion gallons of advanced biofuels which biodiesel and cellulosic are a part of by 2022. Advanced biofuels are fuels from biomass that achieve a 50 percent reduction in greenhouse gases compared with traditional fuels.

For cellulosic ethanol, the bill mandates 16 billion gallons of cellulosic ethanol to be incorporated by 2022. If fuel distributors are unable to procure the quota amount for each of the years, they need to pay a fee to the federal government for each of the corresponding gallons. The fee will be 25 cents per gallon or the difference between the wholesale gasoline prices and $3.00, whichever is highest. This fee will be in addition to federal and state fuel taxes.

5m Editor