Ethanol Subsidies Costing Taxpayers at the Pump
WASHINGTON - A report issued last week by the Congressional Budget Office (CBO) suggests the U.S. government may be over-subsidizing ethanol. According to CBO's analysis, 11 billion gallons of biofuels were produced and sold in the United States in 2009, and ethanol produced from corn accounted for nearly all of that total. Corn ethanol subsidies cost taxpayers $1.78 per gallon of gasoline.
The report underscores NCBA's position that it's time for the mature corn-based ethanol industry to stand on its own. "While we support the need to advance renewable and alternative sources of energy, an open and free market is the best driver of competition and innovation in all industries," said Kristina Butts, director of legislative affairs. "Favoring one segment of agriculture at the expense of another does not benefit agriculture as a whole or the consumers that ultimately purchase our products."
Ethanol production is directly linked to feed costs. According to USDA, in 2008, feed costs for livestock, poultry and dairy reached a record high of $45.2 billion-an increase of more than $7 billion over 2007 costs. A report released in September 2008 by the Congressional Research Service (CRS) stated that "the main driver was feed, which may account for 60%-70% of total livestock production costs in any given year." For the 2009 - 2010 marketing year, ethanol production is expected to absorb 4.3 billion bushels of corn, accounting for more than 33 percent of total corn production.