Corn prices are way up, and cattle ranchers, dairymen and others who depend on the grain to feed their animals are pointing to corn ethanol as the culprit.

Prices are up, they say, because demand for corn used as a fuel source has skyrocketed.

The battle has once again found its way into the political realm, where efforts are under way at both the state and national levels to cut subsidies for the corn-based additive, which is blended into gasoline to help it burn more cleanly.

Last week, U.S. Sens. Dianne Feinstein, a California Democrat, and Tom Coburn, an Oklahoma Republican, introduced legislation that would eliminate a cash subsidy that gives oil refiners 45 cents for every gallon of ethanol they blend with gasoline.

At the same time, a bill proposed by Assembly Member David Valadao, R-Hanford, that would have eliminated state funding for ethanol derived from corn was defeated in a state legislative committee. Valadao has vowed to bring the bill back in the near future.

Riverdale dairy operator Jamie Bledsoe said corn ethanol is hurting business, which in turn costs jobs and, ultimately, hurts consumers who pay higher prices.

In 2003, he paid $96 a ton for rolled corn to feed his cows. Today, he is paying $320 a ton.

"They are basically turning food into fuel, and it is being subsidized by the government," Bledsoe said. "I feel like I am competing against Uncle Sam for my corn."

But ethanol producers dispute being cast as villain in this economic drama.

Fresno resident Bill Jones, the former California Secretary of State who is chairman of the board for Pacific Ethanol, said corn ethanol has helped keep gas prices down. He also said it is a vital product that will help wean America off its oil dependence while a new generation of non-corn ethanol is developed.

"It is a very important transition fuel," Jones said.

Ethanol isn't new, and neither are subsidies for the additive. But the debate picked up after then-Gov. Gray Davis ordered gasoline producers to phase out the additive oxygenate methyl tertiary butyl ether, or MTBE, which was found to be polluting ground water.

In the mid-2000s, corn prices started to rise as demand for the commodity -- driven by its use as a fuel additive -- skyrocketed.

Corn went from around $2.20 a bushel to as high as $7.57 a bushel. On Friday, the price was slightly less than $7 a bushel.

Michael Marsh, CEO of Western United Dairymen in Modesto, said the problem has been exacerbated by Midwestern farmers who have increased corn production at the expense of soy and other crops. Soy also is used to feed cows.

The result, Marsh said: feed costs once made up around 49% of the total monthly cost of maintaining a cow. By 2009, it was pushing 58%. The difference is breaking some dairies, he said.

But Jones, the Pacific Ethanol chairman, called this "a very complex issue that is easy to demagogue. That's why you see such an unusual alliance on [Valadao's] bill."

Indeed, Valadao's bill found dairy and poultry interests aligned with the Sierra Club of California and the Union of Concerned Scientists, two groups that are concerned about corn ethanol's effect on the environment.

Jeremy Martin, a senior scientist with the Union of Concerned Scientists' Clean Vehicles Program, disputes the idea that corn ethanol reduces greenhouse gas emissions.

He said countries like Brazil have increased corn acreage by plowing under tropical rainforests, which increases the release of carbon into the atmosphere.

source: fresnobee

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