Purdue ag economist Hurt to testify on biofuels policy

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Purdue University agricultural economist Chris Hurt will testify Wednesday, July 24, in Washington before a congressional panel considering whether law requiring production of biofuels should be altered to meet changing conditions.

Hurt will explain how the Energy Independence and Security Act of 2007 has been a boon to crop producers, such as corn growers, but also has helped to drive prices for animal feed and food for people higher by requiring a significant portion of the crops go to the production of ethanol. 

"This law has had some pretty large impacts on the demand for grains," Hurt said. "In this case, it was a very rapid increase in demand mandated by law."

Hurt will give his testimony to a panel of the House Energy and Commerce Committee that is assessing the effectiveness of the Renewable Fuel Standard. The public hearing of the Energy and Power Subcommittee will be at 1:30 p.m. in Room 2123 of the Rayburn House Office Building.

The subcommittee also is hearing testimony from representatives of various industries both supporting and opposing the law.

The Renewable Fuel Standard, a 2005 provision of the Energy Policy Act, sets targets and timetables for certain biofuels to be added to the nation's transportation fuel supply. It was expanded under the Energy Independence and Security Act two years later, setting requirements that 16.55 billion gallons of biofuels be produced in 2013 and 36 billion by 2022. Hurt estimates that 38 percent of the 2013 corn crop will go toward ethanol production.

To meet the federally mandated production levels, U.S. agriculture put more acreage into growing corn, and the biofuels industry built the necessary production plants to process it into ethanol, he said.

"That was not done without some costs," Hurt said. Shifting large amounts of acreage into corn at a time between 2005 and 2010 when the Chinese were also drastically increasing their purchases of soybeans meant less acreage for crops other than corn or beans.

"If the Congress saw what was developing with the Chinese back then, it might not have ramped up the Renewable Fuel Standard requirements so rapidly," he said.

Among the congressional subcommittee's considerations must be how agriculture will meet mandated production levels of ethanol in view of the slow pace in the development of cellulosic biofuels, such as those from miscanthus or crop and forest residue, Hurt said. He noted that a requirement for 1 billion gallons of cellulosic biofuels to be produced this year has been lowered to only 14 million gallons, in line with actual production. Still, a requirement of 16 billion gallons of cellulosic biofuels by 2022 remains in the RFS mandate. 

"That is not likely to happen," Hurt said.

"The Renewable Fuel Standard is one of the most important laws that has been driving U.S. agriculture. Thus, any changes to that law could have large impacts on the future of the sector."

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