Austin, Texas – The governor of Texas has asked the U.S. government for a 50 per cent waiver from the federal renewable fuel standard (RFS) mandate, which requires a percentage of ethanol be added to petroleum. Governor Rick Perry said the request is in response to rapidly rising food costs.
“We appreciate the good intentions behind the push for renewable fuels,” Perry said. “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. 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.”
Perry said that corn prices rose 138 per cent globally over the last three years, with global food prices increasing 83 per cent over the same time period. With the implementation of the new RFS mandate, estimates predict that corn will rise to US$8 per bushel for the 2008 crop, resulting in a negative impact of US$3.59 billion to the state. The RFS mandates the levels of renewable fuel usage regardless of market signals.
Texas is the country’s largest beef producer and ranks in the top ten states for poultry, egg and dairy production, all of which rely heavily on corn-based products for feed. The U.S. Department of Agriculture reports that 25 per cent of the U.S. corn crop was diverted to produce ethanol in 2007, and projects that 30 to 35 per cent will be diverted in 2008, with increasing percentages through 2015. The RFS program was established by the U.S. government in 2005 and was amended and increased in 2007.