By Paul Brennan | Iowa Watchdog
DES MOINES, Iowa — Anyone willing to brave subzero weather Thursday in Des Moines had a choice of two big events featuring pork.
There was the Iowa Pork Congress, “the nation’s largest winter swine tradeshow and conference.” People there were in good spirits. Pork prices hit a 30-year high in 2013 and a study by Purdue University predicts profits will rise even higher in 2014.
At “Hearing in the Heartland,” a chilly 10-minute walk from the congress, things were not as cheerful. The politicians in attendance, from all across the Corn Belt and the political spectrum, gathered in support of a threatened Renewable Fuel Standard, a political pork program propping up the state’s ethanol industry.
This is a major issue in Iowa, the country’s leading producer of pork and ethanol, and the impact of the latter on Iowa’s economy has been dramatic.
Ethanol boosted Iowa’s corn revenue by more than $1 billion from 2006 to 2011, according to a 2012 study conducted by economists from Iowa State University. During this period when the price of farmland boomed “22-39 percent of the increase in Iowa farmland values is related to ethanol,” the study’s authors concluded.
But unlike the profits from pork products, driven by a worldwide love of bacon and other pig-related goodness, the profits from ethanol exist because of intervention from the federal government.
Iowa politicians defend both big slabs of pork as necessary.
TWO KINDS OF PORK: 2014 is looking great for Iowa pork products, as the state’s politicians fight to make sure government support continues propping up ethanol.
Congressman Steve King, a Republican who represents western Iowa where most of the state’s ethanol production is located, told the audience at Hearing in the Heartland it took government to give Iowa entry to the fuel marketplace.
“The petroleum industry didn’t want to have a competition within their 100 percent defacto petroleum mandate that they had going into liquid burning fuels on the roads in America, so they wanted to lock ethanol out,” King said.
But government didn’t just let ethanol into the marketplace, it has mandated its presence, using the Renewable Fuel Standards program as a kind of billy club — a club Iowa Gov. Terry Branstad convened Hearing the Heartland to support.
The fuel standards program was created by Congress in 2005 and expanded in 2007. It requires a certain number of gallons of biofuel — the most prominent of which is corn-based ethanol — be blended into the gasoline sold in the United States. The required amount for 2013 was 16.55 billion gallons and it’s set to increase every year until it reaches 36 billion gallons by 2022.
In November, the Environmental Protection Agency proposed reducing the 2014 mandate to only 15.2 billion gallons. The EPA is concerned that since gasoline consumption has declined since 2007, forcing more biofuels into the supply will cause the blend sold at gas pumps to go above the mixture of 10 percent that is considered safe for all cars.
Since the EPA made its proposal, Iowa politicians have demanded the agency not change the current RFS program. A 2010 Congressional Budget Office study concluded the program will prove even more beneficial to the ethanol industry than previous government subsidies.
Maintaining the current RFS requirements has taken on greater urgency in Iowa since the price of corn began to decline in 2012. This is, however, a decline after corn increased in price 117 percent from 2006 to 2011.
Now more corn is being planted in the state to meet ethanol industry demands. Planting is now taking place on marginal land, leading to increased soil erosion.
The increase in corn planting has caused other environmental problems as well. In the summer of 2013, pollution caused by fertilizer runoff threatened the drinking water supply of the entire Des Moines metropolitan area.
Problems like that aren’t unexpected. A number of studies over the last decade have concluded the way ethanol is produced may actually make it worse for the environment than fossil fuels. That’s why environmental groups find themselves allied with big oil in supporting the EPA’s proposed RFS reduction.
But even if ethanol has lost the greens, Iowa politicians remain true blue.
To the extent the costs associated with ethanol production were discussed at Hearing in the Heartland, speakers quickly dismissed all concerns, environmental or otherwise.
Branstad stated with confidence, “There’s virtually no connection between the price of corn and the price of food.”
Food prices didn’t decline when corn prices did, he told the audience. “We know that and we know that the false information about this food versus fuel thing is just that — it is absolutely wrong, misinformation.”
Branstad’s assertion would have been greeted more skeptically at the Pork Congress. As the price of corn rose over the past decade, hog farmers decreased the amount of corn they fed their animals and replaced it with cheaper foodstuffs to remain competitive in the marketplace.
After all, there is no federal mandate requiring the purchase of genuine pork.
The Pork Congress and Hearing in the Heartland were held less than a half mile apart in the same town. One could be forgiven for thinking they were held in two different universes.
Contact Paul Brennan at email@example.com