Rahm Emanuel, chief of staff to President Obama, is famous for his observation that every crisis should be used for political purposes. “You never want a serious crisis to go to waste,” he said. “And what I mean by that is an opportunity to do things you think you could not do before.”
The ethanol industry couldn’t agree more. Its leaders are jumping on the oil leak in the Gulf of Mexico to promote their self-serving position that the Environmental Protection Agency (EPA) should allow them to push even more ethanol into the nation’s supply of motor fuel.
RFA pushes for full waiver
“EPA should grant a full waiver for the use of 15% ethanol blends as soon as the Department of Energy testing on catalytic converters is completed,” President Obama was told in a letter from Bob Dineen, president of the Renewable Fuels Association (RFA), the principal ethanol makers’ group. He urged the president to use the Gulf disaster as “teaching moment” that can help “take this country in a new direction.”
Unfortunately, RFA’s direction is full speed down a blind alley. In addition to trying to cram more ethanol into our motor fuel, the ethanol industry and its allies in Congress are pushing a bill to retain the expensive, ill-considered ethanol program just the way it is now, to the ultimate detriment of agriculture and American consumers.
Corn Belt sponsors
Congressman Earl Pomeroy, Democrat of North Dakota, is the lead sponsor in the House. He has rounded up 42 co-sponsors, most of them from the Corn Belt. In the Senate, Charles Grassley, Republican of Iowa, has eight mostly Midwestern co-sponsors.
The bill would extend for five years the Volumetric Ethanol Excise Tax Credit (VEETC) at the current level of 45 cents per gallon. It would also keep the existing Small Ethanol Producers Tax Credit and the hefty tariff on imported ethanol of 54 cents per gallon. The tax break for cellulosic ethanol would be extended to align with the VEETC.
Congress keeping ethanol afloat
The tax breaks are on top of the federal mandate requiring fuel blenders to add a certain amount of ethanol in gasoline each year. Currently, it’s 12 billion gallons and will rise to 15 billion in the year 2015 – a guaranteed market for ethanol.
If Congress goes along, the taxpayers will continue to keep the ethanol industry afloat with the combined mandate, tax breaks and protection from foreign competition.
The ethanol industry should learn to compete in the marketplace. If the stuff were as good as they say it is, they would have no problem selling it. In fact, they can get rid of only the mandate amount, which speaks volumes about the desirability of ethanol in gasoline.
USDA ‘workshop’ on competition unbalanced
In other Washington news, the federal government apparently thinks that meatpackers and poultry processors, among other companies in agribusiness, have too much market power. USDA and the Department of Justice are conducting a series of “workshops” on competition in agriculture in which the industries have been the target of much criticism.
A workshop held at Alabama A&M University in Huntsville was devoted to the broiler industry. Some participants spoke up for the system of vertical integration. Bennie Bishop, president of Peco Foods in Tuscaloosa, Ala., did an excellent job explaining some of the facts and benefits of contract poultry production, as did two growers, Gary Alexander from South Carolina and Max Carnes of Georgia. Most of the participants in the panel discussion were critical of the system, however. Government officials selected the panel members and obviously stacked the deck in favor of critics.
Satisfied growers at home working
The audience was similarly unbalanced, made up largely of growers who were obviously not happy with their particular situations. However, it has to be understood that the vast majority of growers who are satisfied with the contract production system had no incentive to show up. They didn’t have time to travel to northern Alabama to speak in favor of the status quo: they were back on the farm working.
We know from surveys that most growers are satisfied with the system. We know that companies have waiting lists of current growers who want to add houses, and potential growers who want to get started in the business. Clearly, the audience in Huntsville – and the government’s overall approach to its so-called public workshops – was not representative of the grower community at large or of the programs that have proven successful and beneficial to farmers, processors, and ultimately consumers.