Impact of U.S. ethanol waiver would arrive year later: think tank

If the Obama administration relaxes the requirement to use corn-based ethanol in gasoline, the benefits would arrive a year later, with more corn available at lower cost for livestock feed and lower ethanol production, said a think tank on Thursday.

The governors of seven states in the U.S. South and Southwest have asked for a one-year waiver of the ethanol mandate on grounds it drives up feed costs and is bankrupting cattle, hog and poultry farmers. The corn harvest, now under way, is forecast to be smallest since 2004 because of drought.

The Environmental Protection Agency is not expected to decide before mid-November.

A waiver would provide little relief in the first year, said the University of Missouri think tank, a conclusion reached by other analysts. It said corn prices could drop by 3 percent in the following year, corn for livestock feed would be up by 2 percent and ethanol output would drop by 7 percent.

“Extra biofuel uses in one year typically can help to meet the next year’s mandate,” said the think tank, the Food and Agricultural Policy Research Institute. It said biofuel makers could apply ethanol production during 2013 toward meeting up to 20 percent of the higher ethanol mandate coming in 2014.

via Impact of U.S. ethanol waiver would arrive year later: think tank | Reuters.

Categories: Energy, Policy, Transportation