A new Food and Agricultural Policy Research Institute (FAPRI) analysis finds allowing year-round E15 sales would modestly boost ethanol demand and corn prices, but proposed changes to Small Refinery Exemptions (SREs) in the House bill could cut into overall farm income. FAPRI Director Seth Meyer says the central result is that E15 alone is mainly a tradeoff between crops, while SRE reallocations turn that tradeoff into a broader negative for the sector. 13% blend rate is the study’s projected average ethanol blend by 2035 under its adoption path, making the shift gradual rather than immediate. The modeling looks at near- and long-term market effects rather than short, disruptive swings in a single year.
FAPRI ran three scenarios tied to HR 1346: expanding E15 on its own, E15 with a 600-million-gallon reduction in redistributed SRE volume, and E15 with a 900-million-gallon reduction. The model assumes E15 adoption grows about 0.25 percentage points per year, which pushes the average ethanol blend to roughly 13% by 2035 and raises domestic ethanol use by about 2 billion gallons in the mid-2030s. Under the clean E15 scenario, corn demand and acreage rise with only limited disruption to overall farm income.
Where the analysis diverges is how waived refinery obligations are handled. Meyer and the report find that reducing the portion of waived obligations that get reallocated effectively lowers Renewable Fuel Standard (RFS) volumes, which reduces demand for biofuel feedstocks and raises government outlays. In the SRE reduction scenarios, that decline in effective mandates is the primary driver of lower crop receipts and higher federal costs. FAPRI emphasizes uncertainty around the eventual size of any SRE reallocation cuts, so it presents both the 600- and 900-million-gallon cases to show a range of outcomes.
SRE reductions drive losses
On corn, expanded E15 increases feedstock demand and pulls acreage toward corn over time. FAPRI projects roughly 2 billion gallons of additional ethanol use by the mid-2030s under its adoption path, and corn prices are modeled to rise about $0.14 per bushel by 2035 versus the baseline. Those gains are concentrated in the corn balance sheet as ethanol displaces some other marginal gallons previously met by biodiesel under the current RFS structure.
Soybean and biodiesel markets see the opposite effect: biomass-based diesel demand weakens under lower effective mandates, exerting downward pressure on soybean oil and soybean prices. FAPRI projects soybean prices could fall between $0.38 and $0.43 per bushel by 2035 across the SRE scenarios, and soybean acreage trends lower as some acres shift to corn. soybeans down $0.40/bu represents the middle of the range FAPRI reports for soybean price impacts by 2035.
Net farm income falls in the early years under the SRE scenarios before recovering later in the outlook. In the larger 900-million-gallon SRE case, FAPRI shows net farm income declining by as much as $1 billion annually during the early 2030s, with higher government outlays as commodity price declines trigger additional program support. The report also notes livestock feeding costs could rise because tighter soybean meal supplies and higher corn demand push feed prices higher, a cost that eventually affects animal producers and consumer meat prices.
Market uncertainties
The analysis has drawn pushback from the National Corn Growers Association, which argues FAPRI underestimates recent biodiesel RVO volumes and assumes slower E15 adoption than industry projections. NCGA says its own modeling shows year-round E15 strengthens corn demand and improves farm income for many growers. FAPRI stresses three key unknowns that shape outcomes: the actual pace of E15 adoption, whether EPA or future policy raises the conventional ethanol cap above 15 billion gallons, and the true volume of refinery exemptions that would result from legislation. FAPRI’s analysis assumes the conventional ethanol portion of the RFS remains near 15 billion gallons.
Photo - assets.farmjournal.com
