By Zack Colman - 08/10/12 12:51 PM EDT
“The situation reminds us that even the most advanced agricultural systems are subject to the vagaries of the weather, leading to volatility in supplies and prices, not just on domestic markets, but also internationally,” he said.
Whether the U.N.’s weight will have any effect is unclear, though lawmakers and livestock producers who have used the same logic that da Silva espoused to cut back on corn biofuel will likely seize on the comments.
Lawmakers and their rancher allies have tried in recent weeks to get the Environmental Protection Agency (EPA) to waive corn ethanol production requirements as a form of drought relief. They say preserving the quota is driving up corn prices by locking up supplies that could go to livestock feed.
The EPA can waive all or part of the renewable fuel standard (RFS), which requires refiners to blend 13.2 billion gallons of corn ethanol into transportation fuel this year. The RFS must be shown to cause severe economic or environmental harm to satisfy the waiver conditions, but meeting those metrics has proven difficult in the past.
But the biofuels industry claims the RFS has little impact on corn prices, even with the drought. They said ethanol producers already have curtailed production in response to high corn prices. They also contend enough corn ethanol stockpiles and credits, used instead of purchasing actual gallons of corn ethanol, exist to mitigate the supply issues.
Additionally, the biofuels industry noted the EPA can only waive the RFS if refiners have trouble meeting their production targets. Industry says that will not happen this year.
—This post was updated at 10:05 a.m.
Ben Geman contributed