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Ag groups: Killing the ethanol tariff would hurt the U.S.
WASHINGTON , D.C. — Members of Congress were told last week that striking the secondary tariff on imported ethanol is “short-sighted and detrimental to America’s long-range energy needs.”

According to a joint letter from the American Farm Bureau Federation, the National Corn Growers Association and the Renewable Fuels Association, there is plenty of U.S.-produced ethanol to meet demand.

“Congress should not ask U.S. taxpayers to help strengthen the ethanol industry in foreign countries at the expense of U.S. jobs and investment here at home,” said AFBF President Bob Stallman. “Gasoline prices will not be positively affected by this move. The facts clearly show that record crude oil prices, tight refining capacity and lower gasoline production are responsible for nearly the entire price hike Americans are seeing at the pump.”

The groups stated that sugarcane-based ethanol production in other nations, such as Brazil, is already highly subsidized, and does not need U.S. tax dollars to compete effectively, as evidenced by the fact that the U.S. imported 135 million gallons of Brazilian ethanol last year and those volumes are increasing.

“This idea is a solution in search of a problem,” said RFA President Bob Dinneen. “There is no shortage of ethanol in this country and removing the tariff will not impact prices at the pump. What it will do is discourage the financial community from investing in new technologies and new ethanol production. It is the wrong signal to send just as America’s ethanol industry is picking up steam.”

While demand for ethanol has grown over the past several months due to decisions by the petroleum industry to voluntarily remove MTBE (a petroleum based additive) from gasoline, that change has not caused the large spikes in retail gasoline prices, the groups emphasized to Congress.

Production of ethanol in the United States has expanded exponentially to meet demand over the past several years, while no new petroleum refineries have been constructed in decades. Today, 97 ethanol biorefineries nationwide have the capacity to produce nearly 4.5 billion gallons annually, and 35 new ethanol refineries and nine expansions are under way, with a combined annual capacity of more than an additional 2.2 billion gallons per year.

The groups told Congress that just as the nation looks for ways to further reduce U.S. dependence on imported oil, including the commercial production of cellulosic ethanol, lifting or suspending the tariff would send a devastating and chilling message to investors and the ethanol industry.

This farm news was published in the May 17, 2006 issue of Farm World.