Friday, August 17, 2012

Corn farmers, meat producers and biofuel makers argue over ethanol quota amid drought

A Kansas ethanol plant reecieves corn.
(NYT photo by Steve Hebert)
Three big agribusiness interests -- corn farmers, meat producers, and biofuel refineries -- are in a political fight to protect their interests amid the ravaging drought. At issue, reports John H. Cushman Jr. of The New York Times, "is whether to suspend a five-year-old federal mandate requiring more ethanol in gasoline each year, a policy that has diverted almost half of the domestic corn supply from animal feedlots to ethanol refineries, driven up corn prices and plantings and created a desperate competition for corn as drought grips the nation’s farm belt."

Meat producers, writes Cushman, "are demanding that the Obama administration waive the ethanol quota to ease rising feed prices. But ethanol producers worry that the loss of the quota will undermine the ethanol industry and do little for corn farmers but drive down the price of their stunted harvest. The meat industry, backed by several governors, lawmakers and even international food agencies, argues that the quota has distorted grain markets by sucking up corn when ranchers can least afford it. But the ethanol industry says that its corn consumption is down 12 percent since the start of the summer and that weekly ethanol production is at a two-year low. As corn prices have risen, refineries have scaled back production, idled dozens of plants and sold ethanol inventories. As a result, the industry may consume 10 percent less of this summer’s crop than last year’s, government and industry officials said." (Read more)

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