Baking Management:
How might the government's Renewable Fuel Standards (RFS) program inadvertently impact food safety?

Lee Sanders:
It is disconcerting that the United States continues to lose acreage from traditional agricultural food crops for ethanol. We could become dependent on foreign sources for food commodities; this potentially includes wheat. Such supply shifts could put the United States in a dangerous position with regard to food defense/security. In the process to become more “independent,” could we actually swap positions from dependency on foreign fuel to dependency on foreign commodity sources? I think that is a much more dangerous position for us to be in.

BM:
How has the government responded to bakers' lobbying efforts during the current economic crisis?

Sanders:
ABA has held numerous meetings with the USDA, The White House and members of Congress regarding the current commodity and food crisis. On March 12, ABA organized the Band of Bakers March, an event that gathered more than 80 bakers from across the country in Washington, D.C. to visit with key policy makers and urge them to adopt the ABA Three Point Plan to address the crisis. ABA's action plan focused on three key policy areas — opening non-environmentally sensitive land within the USDA Conservation Reserve Program (CRP); reducing U.S. dependency on corn-based ethanol and ensuring that consumers and the domestic food industry are protected against the effects of low commodity stocks. To date, Congress has reacted as follows:

• Congress has decreased the total acreage allowed in the CRP, from 39.2 million acres to 32 million acres (starting in 2010). Congress did not include early out-of-contract provisions within the farm bill — but ABA will continue to work with Congress and the USDA to implement early-out provisions moving forward.

• Congress has held multiple hearings on the impact of high food prices on the U.S. economy, with a focus on corn-based ethanol. ABA was called on to testify in two of those hearings through the Joint Economic Committee and the House Small Business Committee. These were great opportunities to offer our Three Point Plan as a way to move toward resolution and provide the first-hand accounts of how the ‘Perfect Storm’ is impacting the bottom line for bakers as well as for consumers on a daily basis.

• Thus far, the state of Texas has petitioned for a waiver of the RFS, Senator Hutchison (R-TX) has introduced legislation aimed at cutting RFS requirements, and most recently, Senator Feinstein (D-CA) has also drafted legislation, which would reduce the ethanol import tariff down to 45 cents. None of these actions are the complete solution to this problem, but they are definitely steps in the right direction.

• Using regulatory tools provided in the Energy Policy Act of 2005 and the Energy Independence & Security Act of 2007, Texas Governor Rick Perry (R) has requested that the Environmental Protection Agency (EPA) temporarily waive the requirement to increase the amount of renewable fuels for motor vehicles in Texas. EPA is taking public comment on this waiver request until June 23. Under the Clean Air Act, EPA has 90 days to decide whether to grant the waiver. ABA will be weighing in with comments.

BM:
Ideally, what should the government do to assist the baking industry and help curb food inflation?

Sanders:
Ironically, it is not so much what the government should do to curb food inflation, but it is about what government should not do. Government should not mandate the price of commodities and determine their source (a good example of this is sugar, where the price of U.S. sugar is artificially inflated above the world market value due to the USDA Sugar Subsidy, which has now become even more egregious under the new Farm Bill.) Government also should not mandate another ethanol requirement (excess sugar for ethanol, mandated within the 2008 Farm Bill); the market cannot handle it.

Additionally, government should not drive up the price of commodities by creating false demand, specifically through the corn-based ethanol program. The demand for corn has skyrocketed in recent years, mainly due to the government ethanol mandates passed in the 2005 and 2007 energy bills.

While ABA agrees that government should protect environmentally sensitive lands, such as buffer zones and marshes, and should not pay farmers to not produce crops (through the CRP) on land that is perfectly sustainable. Experts agree at least one-third of the land in the CRP is not environmentally sensitive. Recently, USDA allowed some of the CRP land to be used for grazing. While this does not directly impact bakers, it does signify that USDA is moving toward greater flexibility — we see this as a very positive first step.