My Voice: Renewable Fuel Standard boosted state economy

For most of my life, making a living as a farmer meant trying to make ends meet knowing that commodity prices almost always were going to be relatively flat, while production costs rose yearly. The price of a bushel of corn was stuck in the $2 range for so long that it almost seemed like it had been etched in stone and would never move.

But things for farmers — and rural America in general — dramatically changed for the better in 2007 when Congress passed the Renewable Fuel Standard, a law that mandated that 36 billion gallons of ethanol be blended into the U.S. gasoline supply by 2022.

The RFS was passed primarily with the idea of ending this nation’s long and sad overdependence on foreign oil by replacing it with increasing amounts of homegrown, environmentally friendly ethanol, made primarily from corn. The RFS, in essence, created a new domestic market for corn, almost instantly increasing demand by one-third.

As the RFS kicked in and large sums of corn began being purchased by the ethanol industry, corn prices responded in kind, doubling between 2008 and 2012. As corn prices rose, the prices of other major commodities rose, and it was suddenly springtime in rural America.

This economic shot of adrenaline into the rural economy couldn’t have come at a better time, since during this same period, the U.S. economy was largely collapsing, fueled primarily by the real estate market. Rural America’s red-hot economy — driven by the RFS — was the one shining spot during the long economic downturn.

These events did not unfold unnoticed when a report from the Federal Reserve Bank of Kansas City noted, “In 2010, rural America was at the forefront of the economic recovery.” All told, the RFS is projected to add more than $1.7 trillion to our gross domestic product between 2008 and 2022, according to the U.S. Environmental Protection Agency.

The money that once went overseas to purchase oil from nations who don’t like us now was being spent domestically. And it’s worth noting that not a drop of American blood has ever been shed in an overseas war making sure that our nation has a steady supply of ethanol.

The appearance of ethanol plants across rural America was another incredible positive spinoff of the RFS. My community of Groton probably would be in rough shape today if it wasn’t for the local ethanol plant. That plant not only brought needed jobs to the area but also has added to the tax base, raising revenues for new and better schools while offering farmers another option to market their grain.

Of course, there were those who objected to the dislodging of corn prices, saying that it would increase the cost of producing meat and other foods. I grow corn and soybeans, but I also raise cattle, and I can tell you firsthand that we responded to those rising corn prices by becoming more efficient in what and how we fed our cattle. Yes, corn prices rose, but we still managed to make money on cattle.

As corn prices rise, food companies made sure that consumers knew that food prices would rise, as well. Curiously, now that corn prices have tanked, I haven’t noticed the slightest movement south in food prices. In fact, corn flakes cost more today than they did six months ago, when corn prices were much higher. Let’s be real here: It’s not about input costs, it’s about greed.

The biggest obstacle to the future of cleaner fuel and energy independence is what is known as the blend wall, which is an amount set by the government that mandates the amount of ethanol that can be blended into the fuel supply. The EPA even has proposed lowering the renewable fuel requirement for 2014 by roughly 1.3 billion gallons and slashing the overall RFS by roughly 3 billion gallons, a move that would have dire consequences for both farmers and the ethanol industry.

This country should be moving in the opposite direction with the RFS. We should be increasing the amount of ethanol being blended into our nation’s gasoline supply. Consumers should have more choices than 10 percent ethanol, with levels of 15 percent to 30 percent blends being available. Ethanol is environmentally friendly, renewable, good for the economy and better for our health since it doesn’t contain cancer-causing carcinogens like unleaded gasoline does.

We need to stay the course and, eventually, expand the RFS.

MY VOICE

Doug Sombke, Groton, is president of South Dakota Farmers Union.

My Voice columns should be 500 to 700 words. Submissions should include a portrait-type photograph of the author. Authors also should include their full name, age, occupation and relevant organizational memberships.

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