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Northwest Iowa Dairy Outlooks

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

Category Archives: ethanol

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A coalition of livestock, poultry and dairy organizations expressed extreme disappointment with the U.S. Environmental Protection Agency’s denial of requests that it waive a federal law that requires corn to be turned into ethanol for gasoline. In the wake of the worst drought in more than half a century, livestock producers see that they play second fiddle to the corn interests of the upper midwest.

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Last week’s USDA S/D report lowered estimated corn yields to 153 bu/acre, the same as last year. Folks in the fields feel the damage to the corn crop has been even more significant than this lower forecast indicates. The effect that high overnight temperatures had on the developing corn crop was the major concern.

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It appears that the federal tax credit for ethanol blenders and the tariff on imported ethanol will end on July 31 Senator Dianne Feinstein (D, Calif.) announced that she had reached an agreement with Senators Klobuchar (D, Minn.) and Thune (R, SD) to
end these two facets of the federal biofuels policy.

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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.

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Senators Chuck Grassley (R-IA) and Kent Conrad (D-ND) May 4 introduced bipartisan legislation to update ethanol tax policies in an effort to boost domestic energy production and increase America’s energy independence and security. This bill would significantly reduce tax incentives for ethanol by extending through 2016, at descending levels, the volumetric ethanol excise tax credit (VEETC), the alternative fuel refueling property credit, the cellulosic producers’ tax credit, and the special depreciation allowance for cellulosic biofuel plant property.

As ethanol already makes up nearly 10 percent of the U.S. fuel supply, the Senators noted that many of these existing tax policies have helped to successfully develop ethanol and reduce America’s dependence on foreign oil while generating economic activity in the U.S. This piece of legislation is designed to ensure certainty that is necessary for additional private investment and job creation to further develop ethanol as a leading alternative energy source.

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Sen. Tom Harkin (D-IA) is the lead sponsor of a Senate bill aimed at expanding markets for biofuels, according to a news release from Harkin’s office.

The bill intends to increase the number of flex-fuel vehicles on the road, increase the number of blender pumps dispensing biofuels and authorize loan guarantees for the construction of renewable fuel pipelines, the release said.

“Because we import 60 percent of the petroleum we consume, our country is vulnerable to disruptions in the supply of petroleum and our economy faces a constant threat from volatile oil prices,” said Sen. Harkin, the former chairman and now senior member of the Senate Agriculture Committee. “With more than two-thirds of our petroleum supply consumed by our transportation sector, there is a tremendous opportunity to expand the production and use of biofuels. Biofuels displace close to 10 percent of our gasoline supplies, and they have the potential to make significantly larger contributions.”

The bill’s co-sponsors are Senators Tim Johnson (D-SD), Amy Klobuchar (D-MN), and Al Franken (D-MN) and is supported by the corn growers associations.

While some livestock producers benefit from ethanol by-products, most of us just pay more for corn. Let’s hope Senators from non-corn producing states rally against this hand-out for corn farmers. After a decade of eating at the governmental trough, its time the biofuel industry stands on its own without the tax-payers proping it up.

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