WASHINGTON, Oct. 5 – A former chairman of the House Agriculture Committee believes that the political momentum has shifted in in the direction of a federal policy that would relax some of the tax incentives and mandates that have encouraged the heavy use of corn in ethanol production.
Rep. Bob Goodlatte, R-Va., told the National Chicken Council's 57th annual conference Wednesday that he is optimistic about chances of a bill that he has introduced to reduce the renewable fuels standard, which now requires 15 billion gallons of ethanol annually, when corn stocks are low. If in use today, he said, the formula “would trigger a 25 percent reduction in the renewable fuels standard.”
“I think the momentum is building,” he said. Although his “trigger approach is a new idea,” he said that concern about the government's role in the ethanol industry is one that has been coming under increasing pressure.” He cited a Senate vote earlier this year to repeal the blender's tax credit and a House vote rejecting a proposal to subsidize installation of ethanol-pumping equipment.
“We are going to need help from the companies represented here,” Goodlatte said, as well as “the farmers that do business you and all the companies up the line.” Environmental groups will support his approach, he added. “This is an opportunity for an unusual coalition that will bridge party lines.”
He expects “15 to 20 co-sponsors” initially for his legislation to base the RFS on the corn stocks-to-use ratio but added that some would join him in a separate piece of legislation that would simply eliminate the standard. “My first preference is to eliminate the RFS and make ethanol complete in the market,” he said. “But there may not be the political will in Congress” to enact it.
“Many factors affect the cost of feed, but the one factor that can not be ignored is ethanol,” Goodlatte said. “The government has created the industry with the blenders' tax credit, import tariffs and the renewable fuels standard. It has created a domino effect that is hurting consumers. The higher cost of those crops is passed on to livestock and food processors.”
He said that, in ethanol policy, “government is picking winners and losers. It has created an artificial market.” With increasing food and feed grains diverted into fuel, he added, “there are increasing concerns . . . real concern that higher corn and feed costs are here to stay. There are real concerns about having enough to satisfy the RFS.”
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