Stay informed on the laws affecting you
Indiana Corn Growers Association is dedicated to sharing the most relevant issues and current legislative information affecting farmers at the regional, state and national level. Learn more about public policy and potential laws affecting these specific issues below.
Legislative Issues – Ethanol
Ethanol and Indiana Corn Farmers: A Partnership Worth Preserving
Over a decade ago, the Renewable Fuel Standard (RFS) — one of the most successful energy policies enacted in U.S. history — was implemented, requiring ethanol to be blended into gasoline. This mandate created a surge in Indiana’s ethanol industry, increasing jobs, reducing oil imports and cutting down the state’s greenhouse gas emissions (GHGs). To put it simply, Indiana’s economy and environment became stronger, which significantly supported the growth and success of corn farmers.
As ethanol demand in the U.S. and Indiana continues to swell, thanks in large part to the RFS, crop farmers and the businesses within their supply chain will have great potential to increase their profitability. To secure this economic growth and environmental protection, the RFS must be preserved.
The Development of Indiana Ethanol
Indiana’s corn production accounts for much more than the state’s ethanol resources:
- As of June 2, 2017, Indiana produces 1,173 million gallons of ethanol each year — 7.3 percent of the U.S. ethanol industry’s stock
- Indiana is the fifth largest ethanol-producing state
- Nearly ⅓ of the state’s crop is converted into ethanol
- As ethanol production increases, so too does the price of corn
Ethanol and the Indiana’s Economy
In 2014, the Indiana Corn Marketing Council (ICMC) conducted a study to discover the economic impact of ethanol production on the state, measured by Indiana’s gross state product (GSP), household incomes (predominantly rural residents and farmers), permanent employment and local and state taxes. The results showed an array of positive benefits:
- Job creation — Indiana’s ethanol industry produced 526 jobs directly, while an additional 3,620 full-time jobs were created indirectly elsewhere in the state’s economy
- GSP contributions$934 million, not including the economic impact the overall U.S. ethanol industry has had on corn prices, farmers’ income or farmland appreciation
- Increased economic activity — $2,881 million in ethanol, distillers dry grains (DDGS) and corn oil sales, which in turn generates $739 million in additional economic activity across other sectors and households for a combined $3,620 million
- Significant state and local tax contributions — $44 million per year to state and local taxes
- Increased cropland appreciation — Indiana’s cropland prices increased by an average of $52.50 per acre, resulting in an equity increase of $635 million for farmers and rural residents
- Ethanol consumptions and fuel cost savings consumers — Indiana consumed 314 million gallons of ethanol in 2013. Of this, 13.3 million gallons were consumed via 228 retail E85 sales. Lower ethanol prices relative to gasoline at the wholesale level resulted in savings to consumers of $148 million — if price differential passed to retail
Lower cost feed ingredient for livestock — Over 3.2 million tons of DDGS were produced in Indiana at $539.5 million
RFS: Good for Indiana, Good for the U.S.
Indiana’s burgeoning economy would not have seen such significant growth without its ethanol industry — RFS is working.
Compared to gasoline, corn ethanol provides up to a 50 percent reduction in GHGs. Thanks to the 15.3 billion gallons of ethanol produced today, GHGs in the U.S. have been reduced by 43 percent — the equivalent of taking 9.3 million cars off the road for a year.
These numbers, stats and figures matter. They represent the positive change and environmental advancement ethanol production has made for both Indiana and the nation. Continuing this progression means building a stronger, safer economic and environmental atmosphere for future generations.
Legislative Issues – Farm Bill
The 2018 Farm Bill represents an opportunity for Congress to respond to the sharp declines in farm prices by 40 percent and farm income by 46 percent since 2013. While the Average Risk Coverage (ARC), Price Loss Coverage (PLC) and crop insurance programs have provided some protection, it isn’t enough. The resolution of these issues will require more resources than currently available in the Congressional Budget Office baseline.
The years prior to the Agricultural Act of 2014 saw near-record commodity prices and farm income. As a result, agriculture, conservation and nutrition organizations accepted a reduction in the baseline of $23 billion over ten years, including elimination of Direct Payments.
Today, as a result of improvement in the nation’s economy, spending on the Supplemental Nutrition Assistance Program (SNAP) is expected to be down $84 billion over the next decade, and the cost of crop insurance is projected to decline $11 billion from the baseline. These reductions will make addressing funding problems in commodity, conservation, crop insurance, research, energy and export promotion programs even more difficult.
The impact of lower commodity prices is that the safety net protection provided by the 2014 Farm Bill’s Agricultural Risk Coverage is projected to decrease substantially. By fiscal year 2019, the Congressional Budget Office projects Agriculture Risk Coverage, County Option (ARC-CO) assistance for corn, soybeans and wheat to drop by 63 percent, 12 percent, and 7 percent respectively from their 2015 levels. More than 80 percent of the counties with corn, soybeans or wheat base acreage may experience a lower ARC-CO revenue guarantee for the 2018/19 crop year than they are provided this year.
(ARC-CO) uses the product of county average crop yields and national marketing year average prices, i.e. revenue per acre, to determine safety net assistance levels.
Protecting the Future of Farms
The 2018 Farm Bill is based on the clear need for a stronger farm safety net and more resources for other key priorities. Agriculture was the only sector willing to contribute to deficit reduction when the farm economy was healthy. Now, it’s looking to Congress to find resources from outside the farm bill that will help agriculture through this difficult period.
Legislative Issues – Sustaining trade
Exports and international trade are among the top concerns for Indiana corn farmers. In 2013, 117 million bushels of Indiana corn were exported from the state and the nation, proving that strong international markets are of utmost importance to sustain.
In fact, corn and its by products accounted for half of Indiana’s agricultural exports in 2010, totaling $1.7 billion. These exports helped create a ripple of effect of economic triumphs, generating an estimated $1.1 billion and 17,700 jobs throughout the state.
The National Corn Growers Association (NCGA), USDA Trade and International Marketing Resources and the USDA Foreign Ag Service (FAS) work to ensure trade channels remain open, resources and information are readily available and funding, programming, research and education on trade is open to buyers and sellers.
E15: A Powerful Fuel
Ethanol has been around for a while, but E15 is a newer product, offering traditional E10 gasoline blended with an additional 5 percent of ethanol, creating a 15 percent blend. Although E15 has only hit the fuel market recently after overcoming a few initial regulatory setbacks, it has grown rapidly, directly benefiting Indiana corn farmers as it increases consumer demand for ethanol.
E15 is considered the most tested fuel in history, undergoing extensive examination to become EPA approved. Part of the approval process began with a study conducted by Argon National Labs, where their team drove 86 new cars fueled only with E15 a total of 6 million miles. The study found zero performance or engine problems attributed to the fuel.
Because of this study, E15 has been approved by the EPA for all vehicle makes and models year 2001 and newer. This approval means that over 84% of all vehicles on U.S. roads can safely choose E15 at the pump. [cite full study or reference in footnote?]
In addition to being safe for vehicles, E15 also improves fuel power. Because ethanol is the lowest cost fuel additive per octane unit, adding the additional 5 percent to create E15 allows the fuel to be both higher octane (88.4 vs 87 for E10 or E0) and lower cost (typically 5 – 10 cents cheaper per gallon). Considering E15 is powerful and cheap, it’s popularity has increased rapidly. In fact, it drives 25-50 percent of station sales when available — and that’s the catch.
S.517 and H.R. 1311: Working to Propel E15
Although E15 has been EPA approved, tested and widely accepted by the public, it still has a drawback: it’s unable to be sold during summer months in most Indiana markets. This is because E15 is currently caught in the red tape of a regulatory loophole regarding the fuel’s Reid Vapor Pressure (RVP).
To break it down, RVP is the amount of pressure caused by the evaporative emissions of a fuel. Under the Clean Air Act, all fuels in the U.S. are required to remain within a nine pound per square inch (psi) cap for the maximum amount of evaporative emissions.
However, because fuel becomes slightly more volatile when mixed with smaller quantities of ethanol, all fuels with a 0-10 percent ethanol blend were given a one pound waiver to this limit in the early 1990s. The waiver has never been extended to fuels with greater than 10% ethanol blends, even though E10 creates the highest potential RVP for ethanol blended fuels, and RVP values drop as ethanol blend percentages increase.
Throughout the year, E15 remains within the 9-psi threshold, just like most other fuels. However, during the “summer ozone season,” which runs from June 1 to September 15 each year, the gas from evaporation expands more and can cause the RVP of the fuel to become greater than 9-psis. This possible rise in psi prohibits E15 from being sold in summer months, which can make it difficult for consumers to build trust and recognition for the product, and limit retailers from making necessary infrastructure upgrades.
Despite these setbacks, the positives surrounding E15 have helped it grow since its EPA approval in 2012. Today, the fuel has over 800 stations in 24 states with 1,200 more expected to hit the market by the end of this year.
Getting Over the Hurdle
The final major obstacle for the fuel is to extend the waiver currently given to E10 to all ethanol blended fuels. The bipartisan Consumer and Fuel Retailer Choice Act (S. 517, H.R. 1311) clarifies that blends greater than 10%, such as E15, should receive the same RVP treatment as E10, eliminating this annual consumer confusion at the pump. Enacting this legislation would lead more retailers to offer E15, give consumers a choice that saves money, enhance vehicle performance and improve the environment.