Most involved in animal agriculture have been hoping to hear the pronouncement that the ethanol lobby had finally lost a vote in Congress, and that day has come at last.
“Ethanol got creamed” in the last two house votes, according to Rep. Tom Latham, a republican from Iowa speaking at the United Egg Producers Legislative Board Meeting in Washington, D.C., May 9-11, 2011. With around 285 votes against the ethanol lobby’s position on both votes, ethanol’s strangle hold on Congress may be slipping away.
Latham, who is a member of the House Appropriations Committee, said, “The debate on ethanol here [in Washington] is virtually over and ethanol has lost. The debate is over.” He explained that while he did not agree with framing it as a fuel versus food debate, once it was perceived as an either food or fuel choice, ethanol lost.
A new reality
According to Latham, the ethanol industry understands the new political reality. “The ethanol industry gets it. They are not going to be able to sustain what they have. What they are trying to do is rather than having a sharp cutoff is to have a transition which gives them a way to move into a free market system,” he said. “There are going to be major reductions, if not a cutoff, of the subsidies. As far as the mandates go, they are in place, but I don’t think the cellulose part of the mandate is doable at this point since the technology isn’t there.”
One area where the ethanol industry is not raising the white flag is on mandates for ethanol use in motor vehicle fuels. In fact, ethanol producers are pushing for corn-based ethanol to be classified as an advanced biofuel so that the mandated number of millions of gallons of corn-based ethanol can be expanded. Even without subsidies for ethanol use, mandates will force ethanol use in motor vehicle fuels.
Ethanol is not the primary driver behind high corn prices, according to Latham. He cited Federal Reserve policies, which have led to a weak dollar as the biggest driver of increases in the price of corn and other commodities.
Latham, who has been in Congress for 17 years, said that he has seen a dramatic change in Washington over the past year. “The whole debate has changed dramatically since last year, it is now about how much you are going to cut not how much you are going to spend,” he said. “We do not a revenue problem in Washington, we have a spending problem.”
With around 42 cents of every dollar spent by the federal government this year being borrowed, Latham said that spending must be cut very soon. “We only have about four or five years to change things, otherwise we will be Greece.”