Rising input costs contribute to shrinking herds, groups say

By TIM HEARDEN

Capital Press

Livestock groups are finding themselves pitted against Midwest corn growers -- and on the same side as environmentalists -- over whether government ethanol subsidies should continue.

The two sides are lobbying Congress as a 30-year-old tax credit and protective tariff for ethanol is set to expire at the end of this year.

Livestock producers have complained the subsidies artificially increase the price of the corn they need to feed their animals, which, in turn, has prompted them to trim their herds.

Beef producers say the high feed costs are largely to blame for their having lost $7 billion in equity from December 2007 to February 2010.

"We know that some of the proponents of ethanol have been looking for ways to extend both the tax credit and the import tariff," said Kristina Butts, the National Cattlemen's Beef Association's director of legislative affairs. "First of all it's an intervention in the marketplace, and it affects (producers') input costs."

The NCBA was joined by the American Meat Institute, the National Turkey Federation, the National Chicken Council, the National Pork Producers Council and the National Meat Association in sending a letter to U.S. senators asking that the subsidies be allowed to sunset.

On the other side, the American Farm Bureau Federation led a group that included corn and sorghum producers in urging Congress to pass legislation extending the tax incentives through 2015.

The bills -- the Renewable Fuels Reinvestment Act and the Green Jobs Act -- would extend four key ethanol tax incentives, including a 45-cent-a-gallon blenders' credit, the Renewable Fuels Association explains.

"Ethanol plays a vital role in America's energy supply," AFBF President Bob Stallman said in a statement. "It is a clean, high-octane fuel that is produced in America. These bills reaffirm long-standing congressional support for this domestic energy supply while at the same time helping to maintain a vital economic engine in many rural communities."

Tax credits for ethanol amount to about $6 billion annually, drawing a wary eye from many in the deficit-conscious Congress. The tax credits have also drawn opposition from groups such as the Environmental Working Group, which argues that ethanol's "federal subsidy grab" has taken money away from development of solar, wind and geothermal energy.

The debate comes as the ethanol industry -- which includes thousands of corn and grain growers in the Midwest and elsewhere -- is awaiting the U.S. Environmental Protection Agency's approval for gasoline suppliers to voluntary increase the amount of ethanol they add in fuel from 10 percent to as much as 15 percent.

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Renewable Fuels Association: http://www.ethanolrfa.org/