“When you find yourself in a hole, you have to quit digging. And we are in a hole.”—Governor Rick Perry (R-TX).
Texas Governor Rick Perry has had enough with ethanol mandates, and he is requesting that the Environmental Protection Agency cut “the ethanol mandate to 4.5 billion gallons, from the 9 billion gallons required this year and the 10.5 billion required in 2009,” according to the NY Times.
The Governor stated in his letter to the EPA on April 25th:
“While the RFS was a well intentioned policy, it has had the unintentional consequence of harming segments of our agriculture industry and contributing to higher food prices. For example, corn prices are up 138 percent globally over the past three years and global food prices have increased 83 percent over the same time period, in part because of the artificial economic forces created by the RFS.”
In other words, thanks to Big Government mandates, Texas, the number one cattle producer in the nation, cannot afford as much cattle feed as it used to. So, the price of beef is going up. The letter explains:
“In 2007, Texas farmers produced 296 million bushels of corn. Through our many animal feeding operations, 900 million bushels of corn are fed in Texas each year. Applying a simple calculation, it is easy to see that a one-cent change in the per-bushel price of corn will negatively affect the Texas livestock industry by $6.04 million.
“This is amplified significantly to the difference in seasonal average corn prices since the implementation of the first RFS mandate. In 2004, before the RFS was implemented, the price of corn was $2.06/bushel. In a conservative estimate, the U.S. Department of Agriculture (USDA) projects the price for the 2007 crop (post-RFS) will have averaged $4.00/bushel. The difference of $1.94/bushel equates to a negative impact on the Texas economy of $1.17 billion since the RFS has come about. And now, with implementation of the new RFS, some estimates peg corn prices at $8.00 for the 2008 crop, which would result in a negative impact to Texas of $3.59 billion.”
In short, the ethanol mandate is a disaster for the agriculture sector of the economy—as well as a catastrophe in the Third World. As food aid budgets are moving up concurrently with the price of food, people will starve if the mandate persists. Unfortunately, the signal from Washington is that the Big Government politicians haven’t quit digging their hole yet.
Enough is enough.
