Global bank: Fed ethanol cut could hammer corn prices
Coon Rapids POET manager says Iowans must challenge EPA
January 8, 2014
A key player in the Iowa ethanol industry, POET in Coon Rapids employs 43 people. General manager Bill Howell said a potential reduction in the federal ethanol mandate would hit area farmers hard.
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The general manager of the POET ethanol plant in Coon Rapids, citing international banking estimates, warned Tuesday of plummeting corn prices this year should an Environmental Protection Agency proposal to weaken the Renewable Fuel Standard become official federal policy.
Bill Howell, general manager of POET, urged members of the Carroll Area Development Corp. to press legislators and federal officials for a continuation of the planned 14.4 billion gallon ethanol mandate this year. The EPA listed issues with blending of the renewable fuel with traditional petroleum, and the availability of pumps, as reasons for the proposed change.
The effect, Howell said, referencing a recent study from the German global firm Deutsche Bank, could be a 20 to 25 percent hit to the price of corn, which would send a ripple not only through operations like POET, but across rural America's Main Streets as well.
Bottom line, Howell said, corn prices could fall by 80 cents to $1 per bushel as a result of the lower Renewable Fuel Standard alone.
"The last place we expected to get blindsided was with the EPA," Howell said during a noon luncheon presentation at the Carrollton Centre.
Howell said the rule is a brazen transfer of wealth from America's farmers to the oil industry.
The ethanol industry, and by extension, Iowa's farmers, shouldn't have to pay the price for the oil industry's failure to construct adequate infrastructure (blend pumps), Howell said.
"They (oil companies) only make, depending on the company, $10 billion to $20 billion per quarter for profit," Howell said.
POET Biorefining, located just outside of Coon Rapids, is a 54-million-gallon-per-year producer of fuel-grade ethanol, according to the company's website. The Coon Rapids facility began operations in August 2002. POET employs 43 people full time in Coon Rapids.
Iowa's state and federal elected officials have joined in efforts to oppose the lowering of the ethanol mandate.
Howell stressed a national-security angle in making his case.
"We want to reduce our dependence on foreign oil," Howell said.
Toward that end, the largest progressive group of veterans in America, with over 360,000 supporters, VoteVets.org, this week launched new television ad in Iowa, aimed at protecting the bipartisan Renewable Fuel Standard (RFS). The ad buy is nearly $110,000 for one week of time in the Des Moines market as well as in Washington, D.C., where it will be seen by decision-makers on the issue. The group, according to a news release, promised more ads will be coming in the next few weeks.
The first ad features an Iraq War veteran, Michael Connolly, making the case that gutting the Renewable Fuel Standard would allow for a greater flow of oil dollars to America's enemies. Connolly, who served in Iraq from 2007 to 2008, lived in Glenwood, Iowa, from 2010 to 2012, and now lives just across the border, in Nebraska.
"War is dangerous. I know. I was there. Now, people ask me all the time how they can support the troops." Holding a yellow ribbon, Connolly says, "By putting one of these on your car? Sure..." And then in front of an ethanol gas pump, "By putting this in your tank? Even better... More renewable fuels, like the kind grown here in Iowa, means we use less foreign oil. And that means less money for our enemies. But the oil companies are trying to kill renewable fuels."
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