Lawmakers urge US to cut mandate for fuel ethanol

Thu Aug 2, 2012 2:48am IST

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* Lawmakers write EPA in favor of lower mandate to use biofuels

* Letter by 30 pct of US House does not suggest amount of cut

* Iowa senator: Waiver would hit corn farmers' wallets

WASHINGTON, Aug 1 (Reuters) - Nearly one-third of U.S. representatives want the government to reduce the requirement to use corn-based ethanol in gasoline to help alleviate tight corn supplies and rising prices in the face of the worst drought in more than half a century.

Lawmakers will hold a news conference on Thursday to criticize the so-called Renewable Fuels Standard, or RFS, which they blame for driving up corn prices. One hundred thirty-six of the 435 House members signed the letter, said a staff worker.

The letter, without being specific, calls for a "meaningful nationwide adjustment" in the mandate. This year gasoline refiners will use some 13.2 billion gallons of ethanol, which will consume some 40 percent of the corn crop.

"We urge you to adjust the RFS mandate for 2012 to account for the anticipated severe shortage in corn," says the letter.

Legislation to adjust or eliminate the mandate is stalled in election-year gridlock in Congress.

A coalition of cattle, hog and poultry groups petitioned the Environmental Protection Agency on Monday to waive the mandate "in whole or in substantial part" for the rest of this year and part of 2013.

Iowa Sen Charles Grassley said food processors want to obtain cheap ingredients for their products by cheating corn farmers out of a fair price for their crop. Grassley said critics overstate the impact of ethanol on food prices, forecast to rise by 3.5 percent this year and next.

Two pro ethanol lobby groups also planned a news conference for Thursday to argue that a waiver would drive up fuel prices and eliminate rural jobs.

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