The time is ripe to eliminate large subsidies for ethanol

The U.S. Senate recently voted 73-27 in favor of an amendment by Sen. Dianne Feinstein, D-Calif., to eliminate the Volumetric Ethanol Excise Tax Credit, or VEETC, and repeal the import tariff on foreign ethanol. The amendment was identical to the Ethanol Subsidy and Tariff Repeal Act, which was introduced by Sen. Tom Coburn, R-Okla., and Feinstein in May.

"Today's overwhelming vote shows a bipartisan consensus to repeal irresponsible ethanol subsidies and tariffs," Feinstein said at the time. "The 73 votes sent a powerful message that the days of big subsidies for ethanol are coming to a close. We must be serious about addressing the debt and deficit, and this is a good first step."

The ethanol subsidy currently gives large oil companies 45 cents for every gallon of ethanol they blend with gasoline, even though much of that use is mandated by law. If the subsidy would have been repealed by July 1, as the amendment calls for, it would save approximately $2.7 billion for the remainder of 2011.

The ethanol tariff comprises a 54-cent-per-gallon secondary tariff and a 2.5 percent ad valorem tax. The ethanol tariff makes the United States more dependent on foreign oil by increasing the price of imported ethanol.

"Ethanol is the only industry I know of that receives a triple crown of government support: its use is mandated by law, it enjoys protective tariffs and oil companies receive federal subsidies to use it," Feinstein added. "These flawed policies, which cost taxpayers nearly $6 billion a year, must be changed."

Right after this vote, the House of Representatives introduced a similar bill, led by Rep. Wally Herger, R-Chico, to do just about the same thing as passed in the Senate.

Chickens, turkeys, ducks and other poultry are fed a diet of 70 percent to 90 percent corn; it's a major energy source for the welfare of our birds. The dairy and cattle industries also feed huge amounts of corn to their animals to keep them healthy and robust.

Nearly all the ethanol produced in this country is distilled from corn. The demand for corn for ethanol is a major factor for the increasing corn prices that has poultry companies spending three times as much for corn as they did in 2006, when the ethanol industry's demand really kicked in. California's family-owned poultry companies are spending $300 million more for corn today than they did last year.

Consumers won't and can't pay enough to fund this outrageous increase in corn prices. With 40 percent of the corn crop going to ethanol instead of food, prices to farmers are putting many of them out of business. Food prices will also continue to go up, and we attribute much of these increases to a federal policy that must change.

While we are supportive of the Senate's recent actions, we must be diligent to see these changes enacted – and soon. The Senate vote was only a primer for what's to come, since any legislation like this must originate in the House before the Senate can do anything. Their historic vote was huge for the anti-corn ethanol folks, like us, which is why we now see the House looking to do much the same thing.

But like everything that goes on in Washington, D.C., we must be as vigilant as ever and continue to let our leaders know how important this is to animal agriculture, the food industry and the consumers who rely on food throughout the world. If you are concerned about jobs, then you should be with us in trying to eliminate these subsidies. These corn subsidies have got to go and not soon enough. But I urge you to send a note to your member of Congress, thank both Sens. Feinstein and Barbara Boxer for their work to eliminate these subsidies, and make a pest of yourself.

If you are concerned about corn ethanol subsidies, don't let today go by before contacting the office of your member of Congress. Now!

source: sacbee