Would an RFS Waiver Lower the Price of Corn?

With the recent drought-driven rise in corn prices, those who are directly affected have asked the government to waive the renewable fuels standard (RFS) that requires an annual renewable fuel volume increase with the goal of reaching 36 billion gallons (136.3 billion liters) by 2022. The majority of the fuel covered in the RFS is corn-based ethanol, which reportedly uses approximately 40% of the annual U.S. corn crop. The waiver request is coming primarily from livestock and poultry producers who rely primarily on corn for a feedstock. Two university studies published recently, however, suggest that waiving the RFS would have only a negligible effect on prices. The studies, done by researchers at Purdue and Iowa State, show that prices would decrease by 5.6% and 7.4% respectively by the 2013 marketing year. Read more...