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Farm-state lawmakers on the warpath against ethanol detractors

Agriculture.com Staff 05/09/2008 @ 10:23am

Farm-state lawmakers in the House and Senate stepped up their defense of the ethanol industry on Thursday, pointing to data that show the biofuel is responsible for only a small fraction of current food price increases.

Specifically, leaders took issue with the recent talk of repealing the Renewable Fuels Standard (RFS) by, among others, Texas Governor Rick Perry and Republican presidential hopeful, Senator John McCain (R-AZ).

"I'm sympathetic to people who are hurting, but to put the blame on ethanol and stop a biofuel just as its making traction in the market is not going to help the situation. In fact, if you take away ethanol, you're going to drive up the cost of energy and food even more," Senator Charles Grassley (R-IA) said Thursday. "Ethanol has been a convenient target. But the truth of the matter is that we've got events around the world having a much greater impact on the price of food and gas. We need to stop scapegoating ethanol and be intellectually honest about the real causes behind the increased food prices."

Senate Agriculture Committee chairman Tom Harkin (D-IA) told reporters Thursday that critics fail to see the rising tide of production costs is causing higher prices for not food only. Ethanol-makers are facing the same challenges.

"Look at energy costs, input costs, diesel fuel and gasoline, not only for planting, but harvest, transportation, use of the crops, manufacturing, distribution, warehousing and retail sales. When you add all that up [with] China and India, who are demanding more and more quality protein, we have this giant sucking sound in the market," Harkin said Thursday.

He added other conditions -- like ongoing drought conditions in Australia and parts of southeast Asia -- are part of the equation. The convergence of all factors -- not just ethanol production -- is "what's causing high prices," Harkin said.

Ethanol's presence in the U.S. fuel complex is keeping a 15% damper on overall costs, according to Rep. Stephanie Herseth-Sandlin (D-SD). Without that price effect, food prices would actually be higher because of transportation costs. Still, ethanol's blame remains when, instead, other markets should assume responsibility, she said.

"The use of ethanol not only extends gasoline supply, but brings down costs," Herseth-Sandlin said. "It's important to account for the impact of food prices at home. Oil companies, by and large, refuse to take accountability for what rising prices are doing to our country."

Part of the disconnect plaguing ethanol's public view today, Harkin said, is the perception of corn as both an ethanol and feed source. Too many people see the corn supply going to ethanol being taken away from the human food supply chain. Even if it was, corn's protein is untouched by the ethanol refining process.

"That corn you use for ethanol is not the corn that goes on the plate. It feeds cattle, hogs, poultry and other livestock," Harkin said. "With ethanol, you take the starch out but have the protein left. So, you're not losing much by making ethanol. But, you've got this myth and it's spinning around and around and it's not right."

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