Adding to concerns about more corn supply than corn demand are the tariff disputes that have reduced the export demand for U.S. crops. Currently there is stable demand for ethanol, although ethanol prices have also fallen. While farmers are hoping for increased demand for commodity grains, the only promising sector with increased need for corn is the livestock industry, which is also producing record amounts of products and needs additional corn and soybeans for feed. Meat exports have also been affected by the tariff disputes causing concern that the increased demand may be temporary.

Another headline topic for crop production has been the expansion of availability of E15 gasoline. E15 gasoline, which contains 15 percent ethanol, is currently available in 29 states at more 1,300 retail fueling stations. There are an estimated 150,000 retail stations in the United States. E15 currently is EPA-approved for use in model year 2001 and newer cars, light-duty trucks, medium duty passenger vehicles (SUVs) and all flex fuel vehicles. Retail sales are currently limited to seasons in which evaporation is within allowable limits (as measured by Reid Vapor Pressure) to minimize ozone pollution. Removing the seasonal restriction may help increase demand for ethanol, although the effect on corn supplies will be limited.

While most of the rhetoric today has focused on the demand side, little attention has been paid to the role that cropland set-aside programs play in reducing production when commodity supplies greatly exceed demand. Both Senate and House versions of the Farm Bill call for a modest increase in CRP although changes in other Farm Bill programs make calculation of net change in set-aside acres difficult. Additionally, proposed limits on the amount of money available for these programs are likely to result in insufficient funding for an expanded set-aside program.

While the conservation and environmental communities have called for even more set-aside acres than in current versions of the Farm Bill, the traditional agricultural groups have generally opposed any increase in set-aside acres and related payments. As farmers look at their financial balance sheets this fall, perhaps they will recognize that a more robust conservation title will benefit both agriculture and wildlife.

EPA recently published an evaluation of the environmental impacts of the Renewable Fuel Standard. A separate report on the evolution of agriculture and the impacts of the Renewable Fuel Standard is available from Wildlife Management Institute. Contact Bill Moritz for a free copy.