The mainstream media may have been focused in April on the budget battles in Washington, D.C., and a potential government shutdown, but those who looked beyond the front page could see that the battle over the future of corn-based ethanol was heating up.
On April 14, National Turkey Federation, along with 15 other groups, hosted a policy forum at the U.S. Capitol to provide insight into the impact of corn ethanol on energy independence, food security and stability in developing nations, fiscal responsibility and environmental stewardship. The forum, “Corn Ethanol Policy in the 112th Congress,” included five U.S. congressmen and a panel of experts that discussed the history of ethanol subsidies and the impact of those subsidies on jobs in rural America and on the federal budget.
Grain reserves drained
Tom Elam, president of FarmEcon LLC, presented his economic research that showed how the U.S. ethanol policy has drained the world’s grain reserves. Elam said, “Ethanol policy has added little, if anything, to the U.S. economy and has significantly raised the cost of U.S. and global food production.” Elam added that there has been no real growth in the gross domestic product and no measurable increase in employment as a result of the increase in ethanol production.
The day before, NTF also spoke at a congressional hearing about the need to create a meaningful safety net to prevent ethanol mandates from crippling the livestock and poultry industry. Paul Hill, chairman of West Liberty Foods and past chairman of NTF, on April 13, told the Agriculture Subcommittee on Livestock, Dairy and Poultry that turkey production won’t increase significantly until Congress creates a safety net that makes feed costs less volatile.
“Congress should implement a safety net to protect against the vitality in commodity markets, forcing all industries to pay higher prices for input costs due to the fluctuations in the corn market,” Hill said. Hill also shared with the subcommittee that increased corn prices cost the turkey industry more than $1 billion in 2007 and 2008, and that the current situation is almost as bad.
Anti-ethanol amendments
NTF also submitted testimony to a Senate Environment and Public Works Committee hearing on ethanol that was conducted earlier the same day. The policy forum and Hill’s testimony came on the heels of significant anti-ethanol activity in Congress.
The House of Representatives in February added two key anti-ethanol amendments to its Fiscal Year 2011 continuing spending bill. One amendment barred the Environmental Protection Agency from using funds to implement its rule of increasing the allowable ethanol content in most gasoline to 15 percent, E15. A second amendment eliminated EPA funding for certain infrastructure programs for ethanol, including the construction of ethanol pumps and storage facilities.
The amendments ultimately were not part of the final spending bill that was signed into law, but the House votes represented a significant shift in Congress’ attitude toward ethanol.
‘Let blenders credit expire’
NTF also worked with a coalition of 90 groups representing hunger, environment, budget and agricultural organizations to send a letter to congressional leadership urging Congress to let the refundable Volumetric Ethanol Excise Tax Credit, or blender’s credit, expire and encouraging them to resist calls for future spending on infrastructure for conventional biofuels. These efforts were instrumental in getting Sens. Tom Coburn, R-Okla., and Ben Cardin, D-Md., to introduce a bill (S.520, the Volumetric Ethanol Excise Tax Credit Repeal Act) that would eliminate the blender’s tax credit.
Two identical pieces of legislation to the Coburn and Cardin bill have been introduced in the House. Rep. Steve Womack, R-Ark., introduced H.R. 1075 (also the Volumetric Ethanol Excise Tax Credit Repeal Act), and Rep. Leonard Lance, R-N.J., introduced H.R. 1188, the Repeal Ethanol Subsidies Today Act of 2011.
A second Senate bill, which specifically targets corn-based ethanol subsidies, was introduced by Sens. Dianne Feinstein, D-Calif., and Jim Webb, D-Va. The bill would repeal the 45-cent-per-gallon ethanol tax credit for corn-based ethanol and lower the 54-cent-per-gallon ethanol import tariff to match the tax credit.
