Global Renewable Fuels Association Responds to UN Comments on Ethanol

Responding to the UN’s Jose Graziano da Silva’s comments for an easing of U.S. ethanol mandates, Bliss Baker of the Global Renewable Fuels Alliance issued the following statement:

“While the current drought in the US Midwest has placed tremendous pressure on farmers, any action to reduce or eliminate the RFS would be premature and have immediate consequences in lost jobs and an increased reliance on crude oil imports.

The flexibility of the RFS and the market are the most effective way of reducing demand for corn during these difficult times. Already we have seen US ethanol production curtailed by 14% this year while refiners are sitting on 2.6 billion RFS credits that can be used to meet their compliance obligations. This market flexibility combined with large ethanol stocks makes the waiver of the U.S. RFS unnecessary.

Globally, total grain output is expected to drop by 2.9% this year, but this global production is still expected to be the second largest in history with grain ending stocks 4% above the 10 year average. It is also worth noting that the U.S. ethanol industry will use only 2.9% (net) of the world grain supply. In short, any calls for the indiscriminate waiver of the U.S. RFS this year is unjustified.”

The US is poised to divert around 40 per cent of its corn into ethanol because of the Congress-enacted mandate despite “huge damage” to the crop because of the worst drought in at least half a century, José Graziano da Silva, director-general of the UN’s Food and Agriculture Organisation, warned.

The United Nations called for a suspension of U.S. government-mandated ethanol output amid surging corn prices.

“An immediate, temporary suspension of that [ethanol] mandate would give some respite to the market and allow more of the crop to be channelled towards food and feed uses,” Graziano da Silva is quoted as saying.

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