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Ethanol Boom Divides Farm Lobby

by 5m Editor
14 September 2007, at 11:51am

US - As a chief advocate for corn farmers around the country, Rob Litterer will be working the halls of Congress this fall to push for increased ethanol production. But he's facing stiff opposition from what on the surface seems an unlikely source -- the farm lobby.

The burgeoning ethanol industry is creating a wave of prosperity for rural towns throughout the Midwest, but the energy bonanza is also pitting farming groups on separate sides of the fence.

Corn farmers are pushing for more ethanol production as the industry creates an enormous new market for their crop, giving corn prices the kind of lift they haven't seen in years. But the corn farmer's win is the hog farmer's loss. Meat, dairy, and other food producers are pushing back against the ethanol boom as higher grain prices cut into their already slim profit margins.

So as Litterer, incoming president of the National Corn Growers Association, visits with members of Congress in coming months, he knows that meat and dairy lobbyists will be close behind, delivering the opposite message.

"There is no question they have a policy that they are opposed to an increase," Litterer said. "But I don't think their opposition carries any water."

The tension between grain producers and food producers is roiling agricultural markets around the world as high oil prices spur governments to subsidize food-based fuels like ethanol and biodiesel.

The Mexican government this week put a cap on tortilla prices after prices shot up between 20 and 30 percent over uncertainty that there would be enough U.S. corn available for export. Brazil will ask the World Trade Organization to formally investigate U.S. farm subsidy programs -- including payments for ethanol production. Brazil is the second-largest producer of ethanol in the world after the United States, but is the No. 1 exporter of the fuel, which in Brazil is mainly made from sugarcane.

Source: BusinessWeek

5m Editor