Biden Administration Studying whether Biofuel Waiver Could Ease Food Inflation -Sources

by Jarrett Renshaw (Reuters) U.S. President Joe Biden's administration is studying whether waiving biofuel blending mandates could help offset a surge in prices for key food ingredients like corn and soy oil following Russia's invasion of Ukraine, two sources familiar with the matter said.

But prices of corn, soy and wheat have jumped sharply since the invasion of Ukraine, a major grains producer, raising worries at the White House about consumer food inflation.

Corn and soy are common food ingredients and also widely used as feed for livestock.

The sources said the administration was looking at whether waiving the RFS requirements could help fend off food inflation by making more corn and soy available for food and meat production. There was no indication, however, that the White House was close to a decision.

Asked for comment, an administration official told Reuters that "there is no serious consideration of this by the White House right now." READ MORE

Excerpt from AgWeb: National Sorghum Producers CEO Tim Lust thinks the way to reduce fuel prices today is to incorporate more ethanol into the nation's fuel supply. He says by allowing the use of E15 year-round, it would help reduce the price consumers pay at the pump.

Tim Lust, CEO of National Sorghum Producers (NSP), says ethanol is not a food vs. fuel debate, and thinks the conversation may be misdirected.

"When you look at the difference between food inflation and fuel inflation, fuel inflation is rising at a much faster pace," says Lust. "When we look at all of the oil that is coming in from Russia and what that looks like, this discussion over the years has often turned to food versus fuel. This is not a food versus fuel discussion. This is a discussion of domestic energy independence and domestic energy use, versus us continuing to rely on Russia to supply oil for this country for our fuel."...

Instead, Lust thinks the way to reduce fuel prices today is to incorporate more ethanol into the nation's fuel supply. He says by allowing the use of E15 year-round, it would help reduce the price consumers pay at the pump.

In a letter to the White House, six farm and biofuel groups including American Farm Bureau Federation, (AFBF), Growth Energy, National Corn Growers Association (NCGA), National Farmers Union (NFU), National Sorghum Producers (NSP), and the Renewable Fuels Association (RFA), urged the administration to allow for the year-round sale of E15. The groups explained that an immediate move to restore year-round sales of E15 can ease the impact of oil market disruptions and surging gas prices caused by Russia’s invasion of Ukraine.

"Ethanol is part of the solution," Lust adds. "Today, when we look at the U.S. stocks that we have look at the price of ethanol versus the price of gasoline, we are a part of the immediate solution. And if we could get a few political barriers out of the way, that is something that we could deliver tangible results to lower fuel costs to U.S. consumers in weeks, not months, not years, but in weeks, and that's just good for the U.S. from a national security standpoint, as well as an inflation standpoint."

Currently, Lust says about one-third of the nation's sorghum is used to produce ethanol.

Excerpt from Western Producer: If the war in Ukraine causes food prices to further spike, the push to build up biodiesel capacity in countries such as the United States is likely to face growing scrutiny, two American experts told the Farm Foundation Forum.

“We had a big food-fuel debate in 2007-08 and I think that’s going to come back,” said Joseph Glauber, a former U.S. Department of Agriculture chief economist and a researcher at the International Food Policy Research Institute.

In 2007-08, food crop prices soared far beyond the ability of many people in poor countries to pay. Widespread hunger across North Africa and the Middle East sparked the “Arab Spring” uprisings that toppled multiple governments.

Prices have shot higher again from already elevated levels due to multiple crop challenges in major exporters and the likelihood that the Russian invasion of Ukraine will restrict exports from the Black Sea and hurt crop productivity in 2022-23.

Biofuel production, long touted by American farm interests to drive crop prices higher during the low-price era that preceded 2007, came under harsh criticism for causing a large portion of the U.S. corn crop to be consumed by ethanol production. In the years since, ethanol production has peaked and matured, but biodiesel production using vegetable oils like soybeans and canola is just now experiencing major expansion of capacity.

Dan Basse, operator of analytical firm AgResource Company, said he can see the food-fuel debate reigniting.

Ethanol, however, is unlikely to be the focus this time, Glauber said. That fuel plays an important role in gasoline blends that would need to be replaced with another additive if ethanol was removed.

“I don’t think (reducing ethanol support) would bring much relief, mainly because fuel suppliers depend on ethanol as an octane enhancer,” said Glauber.