In what will likely become an increasingly common plea, Texas Governor Rick Perry has asked the federal government for a 50 percent waiver from the federal renewable fuel standard mandate for ethanol.
Perry claims that artificial demand for grain-derived ethanol is devastating the livestock industry in Texas and needlessly creating a negative impact on the state’s economy while driving up food prices around the world. With the implementation of the new RFS mandate, some estimates predict corn prices will rise to $8-per-bushel for the 2008 crop, resulting in a negative impact of $3.59 billion to the state.
Texas is the nation’s largest beef producer and also ranks in the top 10 states in poultry and dairy production, which rely heavily on corn-based products for feed. "We appreciate the good intentions behind the push for renewable fuels. In fact we’re diversifying our state’s energy portfolio at a rapid rate, but this misguided mandate is significantly affecting Texans’ family food bill," said Perry. "There are multiple factors contributing to our skyrocketing grocery prices, but a waiver of RFS levels is the best, quickest way to reduce those costs before permanent damage is done."
In 2007, 25 percent of the U.S. corn crop was diverted to produce ethanol, according to the USDA, which projects that 30 percent to 35 percent will be diverted in 2008. With ever increasing mandates of corn crop diversion to ethanol production through 2015, the impact on food prices globally is expected to worsen.