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Corn+Soybean Digest

State Ag Departments Ask for Extension of Ethanol Tax Credits

Iowa Secretary of Agriculture Bill Northey joined seven of his colleagues in requesting congressional leaders to act quickly to extend the Volumetric Ethanol Excise Tax Credit, which expires at the end of the year. Legislation has been introduced in both the Senate and House of Representatives that would extend the current ethanol tax policies to 2015.

“The failure to extend the biodiesel tax credit and the damage that has been done to that industry clearly highlight the need to act in a timely manner to make sure these critical policies are in place by the end of the year,” Northey says.

Northey was joined in sending the letter by Jon Farris, South Dakota acting secretary of agriculture; Robert J. Boggs, director of the Ohio Department of Agriculture; Doug Goehring, North Dakota commissioner of agriculture; Tom Jennings, director of the Illinois Department of Agriculture; Jon Hagler, director of the Missouri Department of Agriculture, Rod Nilsestuen, Wisconsin secretary of agriculture; and Greg Ibach, director of the Nebraska Department of Agriculture.

Here’s what they wrote:

Dear Congressional Leaders:
America’s farm families and rural communities provide the food, feed and fiber on which our nation and world relies. Increasingly, they also “grow” renewable fuel sources that help reduce America’s dependence on foreign energy.

As a result, we strongly support legislation that has been introduced in the House and Senate to extend the Volumetric Ethanol Excise Tax Credit (VEETC), the ethanol tariff and the cellulosic tax credit.

As agricultural leaders in our states, we have witnessed firsthand the benefits of domestic ethanol production. We believe that extending the tax incentives for this critical value-added industry makes good public policy and common sense.

In small communities all across the country, ethanol production is creating jobs both at biorefineries and in the many small businesses that provide needed goods and services. These good paying jobs provide important benefits and put billions of dollars in the pockets of rural families.

A recent study by the University of Missouri’s Community Policy Analysis Center found that failure to renew the tariff would result in 39,506 job losses in the first year after the tariff lapses, 115,624 job losses in the second year and 161,384 in the third year. The corresponding and dramatic decline in economic activity was calculated at $9.2 billion the first year, $26.4 billion the second year and $36.7 billion the third year – and remaining in the double digits during the 10-year projection.
The good news is that we are just scratching the surface of America’s ethanol potential. Evolving ethanol production technologies are greatly improving efficiencies. Likewise, farmers are utilizing breakthrough technologies that greatly increase crop production on fewer acres with fewer inputs. Just this past year, American farmers harvested a record 13.2 billion bushels of corn on 7 million fewer acres than were needed to produce the previous record crop, again showing the ability of our nation’s farmers to feed the world and support a growing ethanol industry.

In addition, rapidly developing technologies have the potential to unleash another renaissance for American agriculture. Cellulosic ethanol production will allow corn stalks to join dedicated energy crops, such as switch grass, to increase domestic supplies and provide new economic opportunities in rural America.

But, all present and future benefits of ethanol are in jeopardy if these vital policies are not maintained.

The Renewable Fuels Standard requires ethanol use but does not require it to be sourced domestically. As a result, a failure to continue these important tax policies could add imported ethanol to the already too long list of foreign energy sources on which we depend.

As representatives of rural America, we strongly urge you to support the extension of these important policies that allow us to successfully produce domestic fuel. America’s farmers stand ready to continue their role as providers of food and feed, and are eager to continue to provide renewable fuel as well.

Bill Northey, Jon Farris, Robert J. Boggs, Doug Goehring, Tom Jennings, Jon Hagler, Rod Nilsestuen, Greg Ibach

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