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Bill targets ethanol credit, tariff

Published on August 5, 2011 3:01AM

Last changed on August 5, 2011 1:41PM

Cattlemen eager to see end to subsidy that gobbles up corn


Capital Press

GERBER, Calif. -- A California lawmaker is cosponsoring the U.S. House of Representatives version of a bill that would repeal a controversial tax credit for producing ethanol.

The legislation by Reps. Wally Herger, R-Chico, and Joseph Crowley, D-N.Y., would do away with the $5 billion annual subsidy which provides 45 cents a gallon to oil refiners who mix gasoline with ethanol, which is mainly made from corn.

The bill would also repeal a 54-cent-a-gallon tariff on imported ethanol which has restricted purchase of the fuel from foreign sources, mainly Brazil.

"We need to get the government out of the way," Herger told the Capital Press. "It (the subsidy) completely disrupts the market. We've seen our food prices go up because of it, and it costs the cattlemen because their feed is going up. It is time that we repeal the subsidies and the tariffs ... and allow the market to work itself."

The bill has been referred to the House Ways and Means Committee, where Herger is the highest ranking Western Republican.

The effort pleases Kevin Borror, who operates the Tehama Angus Ranch in Gerber, Calif. Borror said it is unfair to subsidize one group of farmers to the detriment of another.

"Ethanol is a no-win situation energy-wise because it takes as much energy to produce as you get out of it," he said. "And we need to cut government spending."

The bill comes after the Senate voted 73-27 on June 16 to immediately end the tax credit, which is set to expire at the end of the year anyway, as well as the tariff.

The Senate rejected a measure pass by the House that would have eliminated a program that supports the distribution of ethanol. Still, the other votes mark a change in the political environment surrounding ethanol, which enjoys widespread support in the Midwest.

"The opportunity to put an end to this wasteful subsidy is very strong," Herger spokesman Matt Lavoie said. "The timing seems to be right. The winds are blowing in that direction."

Beef, dairy and poultry groups have long targeted ethanol subsidies and mandates, which they blame for artificially driving up the price of the corn they need to feed their herds. The American Farm Bureau Federation has joined Midwestern corn growers in defending the subsidies.

Herger cites an Iowa State University study that found a one-year extension of the ethanol blenders' credit only created a little more than 400 jobs this year, at the cost of more than $14 million per job.

By contrast, the livestock industry alone is expected to lose thousands of jobs because of higher feed costs, he said. Ethanol consumes 40 percent of the nation's corn crop.

"We cannot afford to be putting $5 billion into an energy source that is not working," Herger said. "Even environmentalists have been coming out against this now because ... it's not cleaning up the air. It gets less mileage per gallon, it's driving food costs up, and we're killing jobs because of it."


Rep. Wally Herger: http://herger.house.gov/


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