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Northwest Iowa Dairy Outlooks

A local discussion of current science and issues concerning dairying in northwest iowa

The CME daily report noted that US Senate rejected the cloture motion which would have allowed the Coburn amendment to proceed. The amendment would have eliminated as of July 1, 2011 the 45 cent tax credit US refiners receive for using US ethanol. The program costs US tax payers about $6 billion a year and given recent debates about the budget and the debt ceiling, there was some speculation the Coburn amendment would pass. The sharp selloff in corn futures on Tuesday was partly attributed to this expectation. But the cloture motion was rejected by 20 votes indicating
that the corn growers lobby is still powerful the US Congress.

Alternative amendments have been proposed which would tie the current tax credit to the price of oil. If oil prices are high the credit could be reduced/eliminated and any money not spent on the program would go towards tax incentives for expanding the ethanol infrastructure. Needless to say this amendment is fully supported by the ethanol industry that has been trying to increase the demand base for its product, most notably by getting the EPA to raise the rate at which ethanol can be blended with gasoline.

It seems to me that a twenty -year-old industry ought to be able to stand on its own merit without being supported by taxpayer dollars.


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