Farmers concerned about EPA rule that would impact ethanol use

Corn producers in Maryland are urging farmers to speak out against the U.S. Environmental Protection Agency's proposed plan to reduce the amount of corn ethanol required to be mixed with gasoline.

Under its Renewable Fuel Standard, the EPA is proposing a reduction in the total amount of renewable fuels required to be mixed with gasoline; this would include reducing the amount of corn ethanol required to 13 billion gallons from 14.4 billion gallons that was expected this year. This would be less than the 13.8 billion gallons of corn ethanol that was required in 2013.

The proposed requirements - currently under a comment period until Tuesday - are being cheered on by an unusual assortment of allies: environmental groups, the oil industry and car manufacturers. Environmentalists question the benefits of ethanol and claim the production of it may be worse for the environment. Oil producers are tired of mixing ethanol with their products, and car manufactures say a larger percentage of gas mixed with ethanol can cause problems for vehicles.

But farmers are strongly opposed to EPA's plan. In a year with a record corn harvest nationally - about 14 billion bushels - farmers are worried that markets for corn will be severely affected if the amount of ethanol required in gasoline drops.

The Maryland Grain Producers Association placed on their website last week a link to an opposition letter developed by the National Corn Growers Association; farmers can sign their name to the letter and send it to the EPA.

Just as the rest of the nation's producers, Maryland farmers harvested a lot of corn in 2013 - 420,000 acres, according to U.S. Department of Agriculture estimates - said Lynne Hoot, executive director of the Maryland Grain Producers Association.

Although no Maryland farmers sell corn to be converted into ethanol, Hoot said, farmers in the state would still be affected by the EPA's plan. The price per bushel of corn is set by the Chicago Board of Trade, and the price can drop quickly when major events occur, Hoot said.

With the price of corn already lower than in previous years - selling at $4.29 per bushel for March futures when the market closed Friday - farmers are wary of changes that could make the price fall further."We are adamant - we are sending out the message to our members," Hoot said. "It is important that we keep this [ethanol] market, or else we are going to have corn at $4 and it's hard to pay our bills at $4"

With the EPA's change, Hoot said she is worried that farmers in the Midwest would start to sell to markets that Maryland farmers typically utilize.

"If the Midwest corn does not go into ethanol, it comes here to the poultry industry, or we have to drop our prices so that they use [our corn] instead of theirs," Hoot said.

Melvin Baile, a grain farmer in New Windsor, noted that ethanol is only one factor that determines the price of corn. Other factors, such as the supply of corn nationally and internationally, bad weather and political events also determine the price.

"The ethanol market is just one piece of the puzzle," Baile said, who is also a board member for the Maryland Grain Producers Association.

Still, Baile said there is cause for concern among grain producers, because the price of corn can be sensitive to large changes.

"You cut out bushels in ethanol, that is going to be huge," said Baile, who plans to grow about 300 acres of corn in the upcoming season. "That is not only going to affect the price of corn, but the price direction of corn in the future, because market direction is all due to perception."

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