Tuesday, April 06, 2010

Food interests fight to kill ethanol tax credits

Ethanol's run of government support may be in jeopardy, as a coalition fights to end the extension of biofuel tax credits set to expire at the end of the year. The opponents, who mobilized after congressional representatives from Illinois and Missouri began an effort to extend the credits, include the Grocery Manufacturers of America, the American Meat Institute, the National Council of Chain Restaurants, environmental organizations and pro-taxpayer groups, Bill Lambrecht of the St. Louis Post-Dispatch reports. The groups say their chances of ending ethanol's government support have improved from previous failed attempts because of new spending rules in Congress designed to limit government giveaways. They say ethanol makes food more expensive; studies have shown it plays a relatively small role -- less, for example, than energy prices.

"It's their Achilles heel," Steve Ellis, vice president of the nonprofit Taxpayers for Common Sense, said of ethanol's dependence on government support. "Normally, if you mandate something, that takes care of it. Or you subsidize it, and that takes care of it. Or you block imports to protect it, and that takes care of it. With ethanol, we've done all three." The 45-cent-per-gallon credit for blending the corn-made fuel with gasoline actually goes to the oil industry and not the ethanol producers, but industry advocates say oil will look to foreign ethanol markets if Congress removes the credit.

Gary Clark, director of market development for the Missouri Corn Growers Association, told Lambrecht the tax credit has a significant impact on prices that both ethanol producers and corn farmers are paid, and if it is allowed to expire the per-bushel corn price could drop 15 to 25 cents. "If they were to lose that much, it would put many, many growers at or below the cost of production," he said. The ethanol industry is planning a national ad campaign when Congress returns from the Easter break. "If you believe in renewable fuels and you believe it reduces our dependence on imported crude oil and you believe that it helps jobs and the economy, you do not want this to expire," Republican Missouri Rep. John Shimkus told Lambrecht. (Read more)

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