Federal support for ethanol no longer necessary
September 20, 2007
by FoodBusinessNews.net Staff
WASHINGTON — The ethanol industry no longer requires a high level of federal support, according to a study prepared for three trade associations representing the animal protein industry and conducted by Thomas Elam, an agricultural economist and president of the web site FarmEcon.com.
The influence of the federal support program, which consists of direct support to small ethanol producers and a tax credit of 51c per gallon to fuel blenders who add ethanol to gasoline, has shifted from making ethanol feasible to causing significant increases in food costs and distorting farmer planting incentives, according to Mr. Elam’s findings.
"If the ethanol industry achieves 100% E10 market share in the United States, it would take about 200 million tons of corn annually," Mr. Elam said. "This is equal to a 10% reduction in the current global grain supply."
The agricultural economist projected that when fully implemented, federal supports will drive the cost of corn and other grains up by $34 billion a year and may eventually cost a family of four approximately $460 a year in higher food costs.
Mr. Elam’s report was prepared for the American Meat Institute, National Chicken Council and the National Turkey Federation. The full study may be viewed at www.balancedfoodandfuel.org.