Meat Industry and Environmentalists Agree: Ethanol Subsidies Suck
There's not much that environmentalists and the people who run giant animal feedlots can agree on, except when it comes to the $6 billion the government hands over annually to the ethanol industry.
Late last week, all six of the country's big meat lobbying groups called for the Senate to get rid of both the generous tax subsidies for corn-based ethanol and the import restrictions on foreign ethanol. And today environmentalists are busy touting a Congressional Budget Office (CBO) report that backs up what they've been saying for years -- that government support of ethanol is an expensive, energy-intensive way to reduce greenhouse gas emissions that doesn't make much economic sense.
Of course, meat producers and groups like the National Resources Defense Council (NRDC) want ethanol subsidies to go away for very different reasons. The meat industry, which relies on corn for animal feed, doesn't like the way that rising ethanol production has sent corn prices soaring. In a letter to Sen. Harry Reid and Sen. Mitch McConnell, the American Meat Institute, the National Cattlemen's Beef Association, the National Chicken Council, the National Meat Association, the National Pork Producers Council and the National Turkey Federation describe the huge financial hits the industry has suffered in recent years:
The U.S. pork industry endured the two most challenging years in the industry's history in 2008 and 2009. Total losses for the industry amounted to more than $6.2 billion and average farrow-to-finish operations lost nearly $23 for each animal marketed from October 2007 through January 2010...The cause of the losses was higher production costs driven primarily by higher corn and soybean prices.Environmentalists aren't exactly pulling out any violins. Many of them would like to see cattle farmers stop using corn altogether, on the grounds that cows are designed to roam on pasture and eat grass, not be crammed into giant smelly feedlots where they eat grains and create polluting lagoons of manure.
But still, in a blog post today on the CBO report, Sasha Lyutse of NRDC voiced some of the exact same concerns as the meat industry:
We are spending billions in scarce taxpayer dollars to prop up a decades-old corn ethanol industry and a mature, polluting technology.The CBO detailed the large amounts of energy that are required to grow corn and transform it into the ethanol that get pumped into our cars -- the natural gas used to synthesize corn fertilizers and the natural gas and coal used to power ethanol plants. The team of authors came to this damning conclusion:
"Because the production of ethanol draws so much energy from coal and natural gas, it can be thought of as a method for converting natural gas or coal to a liquid fuel that can be used for transportation."While the logic for ending ethanol subsidies and import protections is becoming more and more obvious, it doesn't mean that Congress is likely to let the gravy train dry up when tax credits are set to expire at the end of the this year. The most ethanol subsidy-opponents can hope for is a small reduction in the tax credit from 45 cents a gallon to 36 cents.
Because for all the lobbying heft wielded by large meat companies and other food interests, it still can't hold a candle to the combined political power of corn growers and oil companies, who are the ones who actually receive the tax credit.
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