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Ethanol divides corn, livestock interests

by 5m Editor
8 February 2007, at 10:05am

US - The best customers for U.S. corn farmers are U.S. livestock producers, who buy half the corn produced in the U.S. as feed for their cattle, hogs and poultry.

But with corn prices more than doubling over the last six months because of the booming demand for ethanol, U.S. beef and pork producers are starting to take positions at odds with their friends in the corn industry. In particular, they are opposing tax and trade policies that offer incentives for corn-based ethanol production.

Last weekend, the National Cattlemen’s Beef Association adopted a tentative resolution calling on Congress to let current tariffs on imported ethanol expire. They also said Congress should let lapse a tax credit to U.S. companies that blend either foreign or domestic ethanol with other fuels. U.S. corn growers oppose both suggestions and have expressed dismay at the positions taken by their top customers.

The U.S. imposes a 54-cent per gallon tariff on imported ethanol and provides a 51-cent per gallon tax credit to ethanol blenders.

The National Pork Producers Council is expected to consider similar resolutions at its annual meeting in March, according to the group’s president, Joy Philippi, who raises pigs in Nebraska. Philippi said some farmers in that state can’t even purchase corn to feed their pigs this spring because corn producers have already contracted their production at today’s high prices to go to elevators or ethanol plants.

“Out here, corn is just about impossible to buy,” Philippi said. She predicts that some pork producers will go out of business if the price of corn remains high. It has jumped from less than $2 a bushel last September to more than $4 a bushel this week.

The problems that livestock producers are facing from high corn prices will likely put some members of Congress in awkward positions, since some of the biggest supporters of the corn industry in Congress also often have livestock producers in their states or districts.

Source: The Hill

5m Editor