The Federal Environmental Protection Agency is considering making changes in the Renewable Fuels Standard and the President of the Indiana Farm Bureau is encouraging farmers to fight those changes. That standard was put in place in 2007 and requires oil companies to use ethanol and soy diesel in the fuel supply.
"There are currently a number of challenges facing farmers," said Indiana Farm Bureau President Don Villwock at the organization's annual convention. "One of the most recent and important is a proposal to lower the Renewable Fuels Standard."
Those standards have had a big impact on the fuel in vehicles and the price that farmers receive for their crops. "Ethanol is now in almost every gallon of gasoline sold in the country," said Villwock. "I'm extremely proud to announce the United States has greatly reduced its dependence on imported oil thanks to ethanol. Our environment is cleaner, consumers pay 80 cents less for every gallon of gasoline and rural America has added jobs and experienced a rebirth of economic activity."
Before the ethanol requirements went into place corn was selling around $2 per bushel. Since then corn prices have risen to more than three times that amount. "Since the news of the proposed rule was leaked on Oct. 10 in the press corn prices have dropped more than 5 percent," said Villwock. "This one event could be the tipping point to once again send corn prices below the cost of production."
"The price has dropped just because of the talk," added Daviess County farmer Mike Sprinkle. "It's hitting us. The markets have reacted to it. I would say the 5 percent drop is very conservative."
The falling price of corn could have an even bigger impact on the greater economy of Daviess County. Agriculture experts say 100,000 acres of corn was planted in the county. "The price drop translates into about $45 an acre. Do the math on that with the number of acres and that's a pretty significant amount of money," said Sprinkle.
The math puts the impact of the proposed rule change on Daviess County at $4.5 million and counting. "That's less money farmers have to spend," explained Sprinkle. "Retailers and farm implement dealers will feel that impact."
The rule changes may not be 100 percent of the reason for the lower corn prices. This year the nation has a large corn crop and the markets are expecting some carry-over corn to next year and there is additional expectation that farmers could have a big crop next year. The combination means some things need to change to bring the price back up. "This will last until we have another short crop like we did last year when we had a drought," said Sprinkle.
Villwock has an additional suggestion. "All of this recent economic success is now in jeopardy," he said. "We do have a chance to stop this proposed reduction (in the renewable fuels standard), but it will take all of us."
Villwock says farmers need to write to the EPA and explain what the improved crop prices have meant to their families, farms and communities.
"We really do need to get to the federal decision makers and members of congress to get this stopped," said Sprinkle. "We are really fortunate around here. We have end users like GPC, Perdue and now Farbest in our area, but if there is any reduction on the markets that will lower the price."
"We were personally blessed with a really good crop this year but the prices now are one half of what we saw the year before when we had the drought," he added. "With increase in the cost of putting in a crop, farmers will be working their pencils this winter to see if corn will continue to be the crop they want to plant this spring."