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Posted on  

November 8, 2001

IL FARM BUREAU STUDY SHOWS RFS WOULD INCREASE FARM INCOME

Implementing an RFS will increase farm income by more than $3 billion annually.

As the debate over energy policy heated up in the U.S. Senate, a newly released study boosts the call for creating a renewable fuel standard (RFS). According to a study commissioned by the Illinois Farm Bureau and conducted by a leading agricultural policy research group, creating a federal RFS would increase prices farmers receive for corn and soybeans, boost net farm income, and reduce farmers' reliance on government payments.

The Food and Agricultural Policy Research Institute (FAPRI) analyzed the impact of an RFS as outlined in S.1006, legislation introduced by Sens. Chuck Hagel (R-NE) and Tim Johnson (D-SD) and H.R. 2423, introduced by Rep. John Thune (R-SD). The bill would require renewable fuels to account for 3% of the nation's motor fuel supply by 2011 and 5% by 2016.

Key findings of the FAPRI study include:

-Increased demand for ethanol will add 28 cents per bushel to the price of corn by 2011.

-Increased demand for biodiesel will add 17 cents per bushel to the price of soybeans by 2011.

-Corn used for ethanol will increase from 600 million bushels per year to 1.78 billion bushels by 2011.

-Soy oil demand will jump for 264 million pounds/year to nearly 2.5 billion pounds by 2011.

-Farm income would increase more than $3 billion annually by 2011.

Government payments to farmers will significantly drop as corn and soybean prices exceed the point at which loan deficiency and counter-cyclical payments would apply.

"We've been saying for years that measures to increase the use of clean burning domestically produced fuels like ethanol and biodiesel would benefit both farmers and taxpayers, said Illinois Farm Bureau President Ron Warfield. "The results of this study bear this out. So, as Congress writes a new national energy policy, this study demonstrates there is a clear role for U.S. agriculture."

"As the country seeks to enhance homeland security by moving toward energy independence, enacting an RFS is clearly a big step in the right direction," said Bob Dinneen, RFA president. "An RFS increases energy security and stimulates rural economies by harnessing America's renewable energy potential. It's high time we fundamentally shift this country's energy policy from relying on imported petroleum-based fuels to growing the role for domestic, renewable fuels."

 

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