Farmers worried about ethanol subsidy cuts

(CBS News) 

The overwhelming U.S. senate vote last week to end massive annual subsidies to the ethanol industry wasn't the final word on the issue, but it did show the program is in peril. The prospect is not going over well in the heartland of America, either.

CBS News correspondent Cynthia Bowers reports that farmers like Illinois corn farmer Paul Taylor says he was caught off guard by the Senate vote to cut $6 billion in ethanol subsidies.

"I think it's a blow to American corn farmers," Taylor says.

The 45-cent per gallon tax break goes to ethanol refiners, but farmers benefit because the increased demand for corn boosts prices.

"The impact it could have on our bottom line is anything we do to reduce demand ultimately reduces our price," Taylor says.

Still, corn prices have doubled since last year, and with this week's vote, the Senate sent the message when it comes to budget cutting that everything is fair game.

In a statement, Republican Senator Tom Coburn said: "Today's vote was a major victory for taxpayers and a positive step toward a serious deficit reduction agreement, which is our only hope of averting a debt crisis."

Just one short decade ago, about 10 percent of America's corn went to ethanol. Now, the number is closer to 40 percent. That's nearly half of all the corn we grow in this country going right into the gas tank.

Oil analyst Phil Flynn says after 30 years of tax payer help, it's time for the ethanol industry to stand on its own.

"This industry is big enough to take the training wheels off. You know, why do they need a 45- to 50-cent a gallon credit just to do their business?" Flynn says.

Michigan Congressman Mike Rogers agrees. He said he applauds the Senate action and expects to see similar action prop up in the House.

"I believe ethanol is a viable fuel source, but it can't continue at the way we are doing it. It may in fact be bankrupting the country. We just can't allow for that to happen," Rogers says.

One alternative that could save billions of dollars is to reduce the subsidy, and farmer Paul Taylor says he could live with that.

"The short answer is: Yes, we're willing to play ball. We want to be at the table. We want to be players. We want to talk about where the ethanol industry is going from this," Taylor says.

For now, farmers are watching this year's crops and wondering about what's next.

[karek40]

What it means is corn will not bring as much at where it is sold in bulk (may not decrease price much for consumer). If consumer prices are reduced then we should get more illegal immigrants since tacos will be somewhat cheaper to produce. (How is that for a little politically incorrect humor)

[Walter L. Johnson]

All this really guarantees is that Ethanol plants won't pay for themselves in three years or less like they used to do. I approve of ending the subsidy, since it has increased the cost of foreign ad and stressed nations dependent on the price of corn for survival. Given a choice between starving people and Ethanol I will pick the people. There are a lot of ways to power transportation besides gaoline diluted with Ethanol. Indeed in Italy 80% of electricity comes from thermal energy tapping heat from its ancient volcanos, and most of
Washiington State's power comes from hydroelectricity with most of the balance coming from solar forms of energy like wind farms.

People though don't have a choice between food crops and something else. Even livestock are now heavily fed on grain and corn that would otherwise feed people, who can't simply chose to eat grass instead.

[sjc_1]

Most of the corn goes to feed animals and not people nor fuel.

[longtree-2009]

would think all farm subsidies should end right now. it's just another form of welfare using taxpayer monies.

[GPINK001]

Sorry for the return comment...
The technology exists with a few bugs needing to be worked out to farm oil algae. The oil can be refined to make gas or used as a deisel biofuel. The projected yield per acre is from 20 to 100 times that of corn in fuel value and some estimate that could be way above it with year round harvests. Hydrogen can be extracted and the resulting carbon dioxide recycled to increase the yield. dissolved nutrients in our polluted rivers can be taken upstream and the naturally filtered water returned to the water. The resultant solids can be burned for fuel or composted and used as soil enriching mulch. Nobody starves, the farmers can make a decent living and the world is a little better place to live.
I think that both the liberal and conservative positions are useless bone-headed, and tunnel visioned propositions that are designed to enrich a particular crop of cronies at the expense of those who make the wealth of our nation possible, meanwhile fueling an atmosphere of mistrust and instability on both a national and international level.

[JJ_in_tulsa]

Do you people have any idea how many farms are bought by wealthy people because they are subsidized by OUR fed government NOT to grow anything? You can pick up a piece of property for a song IF you agree to NOT grow anything, or not grow anything that won't grow there anyway. The whole thing is a total waste of taxpayers money, and ethenol is such a waste of dollars, Refuse to get natural gas which is plentiful and waste food instead, the logic misses me.

[JJ_in_tulsa]

you didn't add substance, just a misaligned comment, are you the "comment police"??? seriously! Her comment was well written

[WillMunny1]

That's subsidy that should have been cut years ago and more pork from waste from congress men for their corn growing farmer constituents. Cutting these sorts of pie in the sky subsidies who save hunreds of millions of dollars.
It's junk fuel the majority of consumers do not want in their gas tanks for their high performance engines that are now the standard for most fuel efficient vehicles.

[WillMunny1]

Correction: 'That is a subsidy that should have been cut years ago and more pork and waste' from congressmen'

[GPINK001]

Congratulate me. I just filled my tank and starved a third world family with the alcohol included in the gas I put in my tank and dumped a ton of greenhouse gas into the atmosphere before I even turned on the key. But I DID contribute to decreasing the massive national debt in the higher taxes I am paying for gas, assuming, of course, that the oil companies are turning that money over to the government. Since ethanol has a very low energy content, my gas mileage is way down. I keep record of it. So, to buy food and go to work, I am paying higher taxes.
It requires precious large amounts of food to make ethanol. The process involves sprouting the corn, roasting it, fermenting it, distilling it, drying it, packaging it, blending it and delivering it to the local gas station. The fermentation ALONE puts an equal weight of carbon dioxide for every pound produced. A gallon is around 7 pounds. That does not include other metabolic processes of the yeast. Distillation is a very high energy consumption part of the process.
The only "winners" in the game are greedy politicians who wallow in the eating of more megabucks during times of economic crisis along with the pseudo-recovery measures that we are paying for in hideously low interest rates and again in higher taxes and unjustified massive wages to the wealthiest slugs in our nation. Congratulations America! Wake up!
Get real, please! Put your electronic parasitic gadgets away and start thinking a little...

[dixon8811]

These companies make so much money that six billion should be easily covered. One less bonus for ceo's.

[Brokennews]

The Senate voted 73-27 on this bill.
That means that both sides were on board with this.
Those spouting off about this being a Repub / Dems appear pretty ignorant!!