New University Studies Show Little Impact of RFS Waiver

Two new reports reinforce the findings of a recent analysis by University of Illinois economists. Analyses released by Iowa State University and Purdue University conclude that waiving the Renewable Fuel Standard would not result in meaningfully lower corn prices. According to the Purdue University analysis – the flexibility built into the RFS serves to reduce the corn price without need for a waiver. If the EPA did waive the RFS – the Purdue economists found corn prices might decrease further by approximately 5.6-percent in 2013. Iowa State’s analysis – which updates an earlier report – found that fully waiving the RFS would result in just a 7.4-percent reduction in corn price in the 2012-13 marketing year. The flexibility enabled by surplus RIN credits was a significant factor in both analyses.

Iowa State Professor Bruce Babcock says the desire by livestock groups to see additional flexibility on ethanol mandates may not result in as large a drop in feed costs as they hope. He says the flexibility built into the RFS allowing obligated parties to carry over blending credits from previous years significantly lowers the economic impacts of a short crop because it introduces flexibility into the mandate. The authors of the Purdue study made similar comments – stating that a partial waiver is not a stroke of the pen solution to record high corn prices. According to a Purdue University press release – corn prices pushed higher by the worst U.S. drought in half a century would not necessarily moderate if the federal government’s corn ethanol mandate were temporarily suspended.

Renewable Fuels Association President and CEO Bob Dinneen says the EPA will likely rely on the type of information contained in these studies when considering the recent waiver request from the governors of North Carolina and Arkansas. He says the analyses compellingly show that waiving the RFS is unnecessary and would be ineffective in meaningfully reducing corn prices. Dinneen also notes that an EPA analysis in response to a 2008 RFS waiver request found that a five-percent reduction in corn price – similar to impacts found in the Purdue and Iowa State studies – resulted in just a .28-percent change in food prices. is dedicated to serving the agricultural industry in the Carolinas and Virginia with the latest ag news, exclusive regional weather station readings, and key crop market information. The website is a companion of the Southern Farm Network, provider of daily agricultural radio programming to the Carolinas since 1974. presents radio programs, interviews and news relevant to crop and livestock production and research throughout the mid-Atlantic agricultural community.