Tallying Economic Effects of the RFS Decade

Source: By Todd Neeley, DTN/Progressive Farmer • Posted: Wednesday, December 20, 2017

Look no further than how falling commodity prices have affected rural America in recent years, and you’ll get a feel for what the Renewable Fuel Standard has meant to the countryside.

Back in 2005 when the first RFS was signed into law, it was challenging just to keep up on the seemingly endless number of announced plans to build corn ethanol plants. Investor groups made public announcements, followed by local, small-town meetings attended largely by farmers and community investors curious about ethanol’s economic potential.

Today, the farm economy continues on a decline as input costs have remained higher while corn remains priced in the $3 to $4 range. Imagine the state of things without the corn market created by ethanol.

Prior to the first RFS from 1997 to 2004, average corn prices nationally averaged between $1.86 and $2.60 per bushel, according to farmdoc at the University of Illinois. From 2006 to 2016, farmdoc said the average annual corn price ranged from $1.96 to $6.67. That meant more money was injected into rural economies following the passage of the second RFS.

Do the math: take away the ethanol market and rural America’s challenges may be far more difficult.

A nine-page analysis by the Renewable Fuels Association released this week provides a look at the numbers.

Here are the highlights of the report:

-U.S. ethanol industry jobs grew by about 42% from 238,541 in 2007, to 339,176. According to the RFA, the value of industry output increased by 74% from $17.8 billion in 2007 to $31 billion in 2017.-The production of advanced and cellulosic biofuel increased by 469% from 490 million gallons in 2007 to 2.79 billion gallons in 2017.

-U.S. corn production grew by about 12% from 13 billion bushels in 2007, to 14.6 billion bushels in 2017. Despite concerns from industry critics that expanded ethanol production would lead to expanded acreage planted to corn, actual corn acres planted fell by 3% from 93.5 million acres in 2007 to 90.4 million acres in 2017. Average corn yields increased by 16% from 150.7 bushels per acre in 2007 to 175.4 bushels per acre in 2017.

-The number of retailers that sell E85 increased by 238% from 1,208 in 2007 to 4,077 in 2017. The number of flexible-fuel vehicles on the road grew from 6.7 million in 2007 to 24.5 million in 2017, or a 266% increase.

-The RFA said greenhouse gas emissions avoided from using ethanol has increased by 291% from 12.7 million tons in 2007 to 49.6 million tons in 2017.

According to the RFA, U.S. cropland area fell by 7% from 402 million acres in 2007 to 376 million acres in 2017. Despite concerns about expanded corn acres on grasslands, U.S. grassland area increased by about 5% from about 1.3 million square miles to 1.4 million square miles.

The RFA report said the deforestation rate in the Amazon fell by 43% from 4,498 square miles in 2007, to 2,558 square miles in 2017. GHG emissions from agricultural soil management, urea fertilization and liming fell 7% from 278.7 million metric tons of carbon in 2007, to 260.1 million metric tons in 2017. Food inflation was 4% in 2007, but 1% in 2017, according to the RFA.

The prices for red meat, poultry, fish, cereals, bakery items and dairy were unchanged in 2017 from the previous year, compared to a 3.8% increase in 2007.

World grain supplies for coarse grains, wheat and rice increased by about 31% to 3.23 billion metric tons in 2017, compared to 2.46 billion metric tons in 2007.

Read the RFA analysis here: http://bit.ly/…