Concerned about steep increases in commodity prices, on July 18, Sens. Jim Webb (D-VA) and John Warner (R-VA) sent a letter to the Environmental Protection Agency (EPA) in support of a temporary waiver of the federal ethanol mandate. This waiver is intended to help Virginia’s agricultural community, including poultry, dairy and livestock producers, and consumers who have been hit hard by a dramatic rise in feed costs as a result of increased usage of corn-based ethanol.

In addition to the EPA letter, Webb has pushed a number of legislative initiatives aimed at reducing rising energy prices for Virginia farmers and consumers. These legislative initiatives include re-asserting controls over oil speculation market that has artificially driven up the cost of gas, lowering the tariff on imported ethanol to help meet the ethanol-fuel mandate, and allowing exploration for additional natural energy resources 50 miles off the coast of Virginia.

“After hearing from a number of Virginians concerned about higher feed prices, Senator Warner and I wrote to the Environmental Protection Agency to request a temporary retraction of the ethanol mandate,” says Webb. “These increasing costs have affected the livelihoods of many in Virginia’s key agricultural sectors and could lead to job losses.

“I am also concerned about the adverse effects the mandate is having on consumers. It is my hope that by temporarily lifting the ethanol mandate, our poultry, dairy and livestock producers will benefit from reduced feed prices and will pass those savings on to consumers.

“It is important that we diversify our sources of ethanol and expedite the development of advanced biofuels, like switchgrass, which do not compete with food and feed sources, like corn. According to recent commodity price reports, since February 2006, the price of corn, wheat, and soybeans has grown more than 416 percent.

“We can help all Virginia farmers struggling with higher fuel and fertilizer costs by adopting a comprehensive energy policy that takes full advantage of our domestic energy assets. In order to address our nation’s energy crisis, all options need to be on the table.”

Below is the text of the EPA letter sent by Sens. Webb and Warner:

July 18, 2008

The Honorable Stephen L. Johnson
Administrator
Environmental Protection Agency
1200 Pennsylvania Avenue, NW
Washington, DC 20460-0001

Dear Administrator Johnson:

We write in support of efforts to waive portions of the Renewable Fuel Standard consistent with the Federal Clean Air Act and the Energy Independence and Security Act of 2007. While the rising costs of food and commodity prices are the result of many factors, it is clear that the RFS has played a role in the dramatic increase in commodity prices. We defer to EPA to determine the most suitable level of reduction in the RFS mandate.

The goals of the RFS are meritorious and we believe in the need for greater energy independence. However, it appears that the RFS policy is having unintended consequences, which requires renewed emphasis on the need to diversify ethanol feedstocks that do not compete with global food supplies.

We have heard from Virginia local communities and producers who are extremely concerned about the effect the federal RFS is having on their respective economies and businesses. In Virginia, agriculture is our largest and oldest economic sector. Some of the largest contributors to Virginia’s agriculture economy come from poultry and livestock producers, which have been hit especially hard by rising feed prices. In a recent study conducted by agricultural economist Dr. Thomas Elam, the increased cost of feed attributable to the federal RFS for the Virginia poultry sector is estimated at $270 million. When adding in the livestock sector, the total additional cost attributable to the RFS to Virginia animal agriculture raised for food is estimated at $412 million.

As farmers shift into higher levels of corn production to meet the RFS mandate, additional pressures have been brought to bear on the prices of wheat, soybeans, rice and other food commodities. These market shifts coupled with rising energy prices and poor weather conditions have had a ripple effect on global food prices that is being felt by all. However, the rising costs of food have been felt especially by low-income individuals and persons living on fixed incomes.

These costs are substantial. In light of these costs and the potential to do even greater harm to our economy, both nationally and in Virginia, it is our strong belief that a temporary waiver to the RFS is both needed and appropriate.

We encourage the EPA to give all favorable consideration to proposals that would provide temporary relief to the RFS and allow time for commodity prices to stabilize.

Sincerely,

John Warner
Jim Webb