By DOUG SCHMITZ
Iowa Correspondent

DES MOINES, Iowa — A coalition of top agriculture officials from eight Midwest states, led by Iowa Agriculture Secretary Bill Northey, has asked Congress to quickly extend the Volumetric Ethanol Excise Tax Credit (VEETC), which expires at the end of the year.

“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 told Congress last month.
In fact, legislation introduced in both the U.S. Senate and the House of Representatives would extend the current ethanol tax policies to 2015.

Joining Northey in signing the letter was: 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; Dr. 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.

“As agricultural leaders in our states, we have witnessed firsthand the benefits of domestic ethanol production,” the letter stated.
“We believe that extending the tax incentives for this critical value-added industry makes good public policy and common sense.”
Established in 2004 in the JOBS Creation Act, the VEETC provides a $.51 per gallon payment to gasoline refiners for blending ethanol into the U.S. gasoline supply, which the 2008 Farm Bill reduced to $.45 per gallon.

In the May 21 letter to Senate Majority Leader Harry Reid (D-Nev.), Senate Republican Leader Mitch McConnell (R-Ky.), House Speaker Nancy Pelosi (D-Calif.) and House Republican Leader John Boehner (R-Ohio), the Midwest agriculture leaders also said they “strongly support” extending the ethanol tariff and the cellulosic tax credit, along with the VEETC extension.

“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,” the letter stated. “These good-paying jobs provide important benefits and put billions of dollars in the pockets of rural families.”

In the letter, the state ag officials cited a recent study by the University of Missouri’s Community Policy Analysis Center that 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 letter stated.

“The good news is that we are just scratching the surface of America’s ethanol potential,” the letter said. “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, the state agriculture officials continued, “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, the letter stated, “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 switchgrass, to increase domestic supplies and provide new economic opportunities in rural America,” the coalition told congressional leaders. “But, all present and future benefits of ethanol are in jeopardy if these vital policies are not maintained.”

But the American Meat Institute (AMI), along with the National Pork Producers Council, the National Turkey Federation, the National Chicken Council and the National Cattlemen’s Beef Assoc., sent an April 28 letter to Congress urging the U.S. House Ways and Means Committee to let the ethanol tax credit and protective tariff expire.
“Although we support the need to advance renewable and alternative sources of energy, we strongly believe that it is time that the mature corn-based ethanol industry operates on a level playing field with other commodities that rely on corn as their major input,” the groups told Congressmen Sander Levin of Michigan and Dave Camp of Michigan, chairman and ranking Republican member, respectively, of the tax-writing committee.

“The blender’s tax credit, coupled with the import tariff on foreign ethanol, has distorted the corn market, increased the cost of feeding animals, and squeezed production margins – resulting in job losses and bankruptcies in rural communities across America,” the AMI letter said.

However, the Midwest agriculture leaders said while the Renewable Fuels Standard requires ethanol use, it doesn’t require it to be domestically-sourced.

As a result, the coalition said “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,” the letter concluded. “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.”