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Corn+Soybean Digest

Corn Ethanol In The Crosshairs

U.S. corn growers have some odd allies and uncharacteristic opponents in their efforts to maintain or expand the nation's ethanol production. As might be expected, the petroleum industry continues to oppose government mandates and incentives to spur growth for U.S. ethanol production, says Brian Jennings, American Coalition for Ethanol executive vice president.

Surprisingly, however, several influential farm groups also oppose long-established government policies to invigorate the nation's corn-ethanol industry, while many environmental groups either favor or are neutral to those policies.

“It's really unfortunate that some farm groups are jumping to the irrational conclusions being put forward in a coordinated effort by the oil companies,” says Jennings, from Sioux Falls, SD. “The main opponents [to ethanol from corn] are the American Petroleum Institute and the American Meat Institute (AMI).”

Among the farm groups joining the AMI in The Coalition for Balanced Food and Fuel Policy are: the National Cattlemen's Beef Association, the National Chicken Council, the National Milk Producer's Association, The National Pork Producers Council (NPPC), the National Turkey Federation and the United Egg Producers. According to the coalition's Web site, these groups are calling for “the current (54¢/gal.) ethanol tariff to expire in December 2008.” The coalition also supports neutralizing any tax incentives that favor one agriculturally based source of energy, such as corn, over others, such as switchgrass.

“We need to take notice that our government could choose to reduce the corn ethanol tax credit,” cautions Chris Hurt, Purdue University Extension agricultural economist. “One recent Senate committee proposal would have reduced the tax credit from 51¢/gal. to 46¢/gal., but it failed to pass. This same unsuccessful Senate proposal also called for a tax credit of $1.11 for ethanol produced from cellulose.”

Ethanol's opponents, however, have less political influence than its allies, says Jon Doggett, National Corn Growers Association (NCGA) vice president of public policy. “The opponents of ethanol incentives have been defeated every time they've tried to reduce or eliminate them,” he says. “Opposition to ethanol is all over the board, but we're not seeing a concerted effort to make an appreciable difference in the public policy debate.”

Ethanol supporters clearly carry more political clout than their opponents, agrees Josh Dorner, a spokesman for the Sierra Club, in Washington, D.C. As proof, he cites a June 20 Senate vote to safeguard against the burning of too much food and feed as fuel, which was rejected by a 31-63 vote. “It wasn't even close,” he says.

Many environmental groups share the Sierra Club's support for ethanol's benefits to the environment as compared to petroleum-based fuels, notes Dorner. “Biofuels have a lot of promise to reduce our dependence on oil and to fight global warming,” he says, “but we also have some concerns, particularly if it means taking land out of the Conservation Reserve Program (CRP) to produce more corn for ethanol.”

Ducks Unlimited echoes the concern over expanding corn acres at the expense of CRP. According to Jim Ringelman, Ducks Unlimited director of conservation programs for the Dakotas and Montana, more corn production for ethanol will likely result in loss of native grasslands, more draining of wetlands, more high-priced land with less land available for wildlife and hunters and much less suitable nesting habitat for ducks.

“Corn provides food resources for ducks during non-breeding periods, but it's not a viable nesting cover,” says Ringelman. “If corn supplants the existing nesting habitat, which is grassland, then it's a net sum loss for the birds.”

Ducks Unlimited and Ceres, Inc. plan to do a collaborative study to better understand how to manage switchgrass for both biofuels production and duck nesting, says Ringelman. “Ethanol made from switchgrass would be much more environmentally sound than just trying to maximize bioenergy production from corn,” he adds.

Meat producer associations, including the NPPC, also want to see more funding for research to manufacture ethanol from switchgrass or other non-food sources. “However, producing ethanol from cellulose material is not yet close to being viable,” says Dave Warner, NPPC director of communications. “We're part of a coalition of livestock producers who want to balance fuel and food resources.”

Still, the ethanol blender's tax credit and tariff incentives have been in force for more than 12 years, argues Doggett. “It's never been a big deal among livestock producers until the price of corn went up,” he says. “The opposition to the blender's tax credit seems to be in direct proportion to the price of corn.”

NPPC's Warner disagrees. “Our main concern is availability,” he says. “If the ethanol industry can pay more (for corn), it will get more — thus causing shortages for feed and food.”

Yet compared to Big Oil, ethanol is still a vulnerable industry and deserving of government incentives, counters Jennings. “All we can do in the ethanol debate is to remind people of the facts,” he says. “Left to their own devices, the oil companies won't buy biofuels.”

The corn ethanol tariff and tax incentives are good public policy, says Jennings, because a growing U.S. ethanol industry benefits rural communities, provides increased energy security and provides consumers with a cleaner-burning fuel that is better for the environment than petroleum-based fuels.

“The majority of Congress agrees,” he adds “and so do the majority of Americans.”

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