Guest Post: Farmers Pay the Price for Fuel Mandate Failures

March 8, 2018

Across America, many farmers are struggling to keep their farms in operation. USDA’s February 2018 Farm Income Forecast shows this trend is only going to get worse, with net farm income predicted to fall $4.3 billion this year to the lowest income level recorded since 2006. Certainly contributing to this decline is the growing corn and soybean glut.

Thanks to massive corn production increases over the last 12 years—incentivized by the Renewable Fuel Standard (RFS)—our nation has an oversupply of corn. As basic economics teach, too much supply leads to cheaper prices, and those cheaper prices are putting the stretch on farm incomes. What’s worse for farmers is that while incomes are declining, operation costs and production expenses are projected to go up—increasing by $3.5 billion in 2018.

Over the last decade, the RFS created an artificial demand for corn and soybeans, in the process spurring the conversion of about 16 million acres of wheat, sorghum and other crops to corn and soybean production. But, due to a lack of sufficient domestic and export demand for corn and soybeans, the RFS pushed production to levels that eventually led declining crop prices. The RFS created only an illusion of market demand. All the while, we’re losing crop diversity and are shifting toward monoculture.

While ethanol supporters argue the solution to this RFS-inspired glut is continued upping of RFS volumes, consumer demand for biofuels—not arbitrary government mandates—should determine corn and soy production. Mandates are no substitute for actual market demand and will only succeed in compounding our problems.

Congress has put off RFS reform for long enough. Thanks in part to the RFS mandate and its enormous price distortions, local farmers are facing burdensome economic conditions, and our heartland is being transformed. It is time to demand real change on behalf of our nation’s farmers—the individuals the RFS promised, yet failed, to support. In fact, the only economic winners are the biofuels companies that are now buying the cheap corn that the RFS they lobbied for made possible. One suspects that this is the end game they had in mind when they went to Congress and obtained the RFS.

Guest Post: Dr. Tom Elam, President, FarmEcon LLC


Don’t waste your money on the government’s failed policy. Tell Congress today that we need to change this policy.