Decision on renewing federal ethanol subsidies will affect industry

WOODBURY — As an electronic sign by the road flashed messages last week about “America’s Clean Fuel” and “America’s Peace Fuel,” trucks lined the driveway into the Carbon Green BioEnergy ethanol plant on M-66 near the Barry-Eaton-Ionia county borders.

There were haulers from Vermontville and Clarksville, Portland and Woodland, Stanton and Sunfield, all delivering the source of the patriotic fuel touted for environmental and national security benefits: corn.

And the $60 million plant where a work force of 40 churns out 50 million gallons of ethanol annually is good for business in this rural area halfway between Grand Rapids and Lansing.

“We’re businessmen,” said Brian Haskin, whose Haskin Farms in Ionia County sends the plant 400,000 bushels per year from a distribution hub two miles down the road.

“We (farmers) are going to plant what makes us money. If they make it profitable, we’ll find a way to produce it.

“(Corn-based ethanol) is a boost to the local economy.”

No wonder Haskin hopes Congress extends the federal ethanol subsidies set to expire at the end of the year. The plant’s demand not only pushes up the price of corn, it creates a close-to-home market that reduces freight costs. Most of the plant’s 50,000 bushels of daily corn supply come from within 80 miles.

But the impact of the subsidies — a 45-cents-per-gallon tax credit for “blenders” who add ethanol to gasoline and a 54-cents-per-gallon import tariff — extends much further, to motorists and taxpayers.

The well-being of the world is at stake — at least, that’s the message the sign in front of the plant attempts to convey.

“No wars have been fought over ethanol,” the sign read.

Except, of course, the political battle under way.

“If this credit doesn’t go through, there’s a significant chance we’re going to lose some ethanol plants,” said Loren Koeman, a Grand Rapids agriculture consultant who farms about 3,000 acres near Holland and is secretary of the Lansing-based Michigan Corn Growers Association board.

“As it becomes more and more efficient, we need to keep supporting the industry. It’s not like we’re not spending money on the oil industry. We fight wars to protect oil. It’s naive to think there’s no government cost associated with oil.”

And those benefits come at a cost: $1.78 per gallon of gas replaced by a gallon of corn-based ethanol, according to the Congressional Budget Office.

U.S. Rep. Vern Ehlers, R-Grand Rapids, called the subsidies “a gift to the ethanol-producing industry” that need not be re-given.

“Obviously, it’s good for people to have jobs,” he said.

“It’s good for farmers to make money,” Ehlers said. “But is that an economically sound way to do it? It doesn’t generally pay off to give people make-work jobs.”

Besides, Ehlers added: “Should we really be using food to generate fuel in light of the food crisis in many parts of the world?”

A multiyear extension of the subsidies is key to short-term stability and long-term viability of the industry, Koeman said. The 4-year-old Woodbury plant in Eaton County is already on its fourth owner and closed for eight months before reopening in June 2009. This fall, the facility plans to add more than 1 million bushels of corn storage to its pair of 135-foot silos. Each holds 200,000 bushels.

Through the credit, the country’s investment in ethanol will continue to add cleaner-burning fuel into the energy supply and foster less dependence on foreign oil while retaining a productive agriculture base that enhances local economies, Koeman said.

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source: mlive