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Ethanol industry may get financial assist from USDA

Agriculture.com Staff 10/20/2008 @ 7:09am

Watch for another bailout from Uncle Sam. This one will go to struggling ethanol companies, Agriculture Secetary Ed Schafer told reporters at the World Food Prize Symposium in Des Moines, Iowa, Friday.

"We're seeing some pressure on ethanol capacity from companies that speculated in buying corn," Schafer said. That occurred last summer when ethanol companies bought $7 corn, he said.

With falling grain prices, "that's starting to balance out some," he said, but USDA is watching the situation and is prepared to offer rural development loans of up to $25 million if money is needed, he said.

Schafer said there is no "litmus test" as to the size of the ethanol company that would qualify for loans. They would be available to large and small ethanol makers, he said. The USDA operating loans have a limit of $25 million.

Schafer said the ethanol industry is too important to the nation to allow it to fall into more financial difficulty.

"We're going to continue to support it and shore it up as much as we can," he said.

Schafer also said that he has made a decision on which years the USDA will use when it issues regulations for the new ACRE (Average Crop Revenue Election) program. Members of Congress are urging him to start the revenue assistance program by using an average of 2007 and 2008 crop prices as the baseline for payments on the 2009 crop. The USDA has been considering using 2006 and 2007.

Schafer said he's "leaning" toward 2007 and 2008, but he would not say exactly when those years would begin, although it appears to be the intent of Congress that they would begin at the start of the marketing year. For corn and soybeans, that's September 1 of this year for the 2008 crop.

Watch for another bailout from Uncle Sam. This one will go to struggling ethanol companies, Agriculture Secetary Ed Schafer told reporters at the World Food Prize Symposium in Des Moines, Iowa, Friday.

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