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USDA Secretary Says More Ethanol-Subsidy Cuts Needed

Thursday, September 11, 2008

(American Meat Institute)

U.S. Agriculture Secretary Ed Schafer criticized U.S. ethanol producers this week for depending too heavily on government subsidies and said reductions in government support were needed,

"The ethanol industry has incorporated the fact there are subsidies into their operational, financial models. I think that is a mistake," Schafer said. "They are going to have to see a gradual ... step-down reduction in subsidies."

Schafer said the ethanol industry must eventually become commercially self-sustaining.

"The business model has to operate without the subsidies because eventually they are going to go away," Schafer said on the sidelines of a business journalism conference in Kansas City.

The comments were reported by Reuters News Service, among other news outlets.

 Last week at the National Republican Convention, the Republicans' platform called for an end to government requirements for ethanol-blended gasoline. Republican leaders said markets -- not government -- should determine ethanol usage.  

Secretary Schafer said USDA, in conjunction with the Environmental Protection Agency, the Energy Department and other agencies, plans to roll out a "biofuels action plan" within the next few weeks.

 About a third of this year's U.S. corn crop is going to produce ethanol amid efforts to meet the government's Renewable Fuel Standard, which requires 9 billion gallons in renewable fuels to be blended into the nation's gasoline supply this year, and 11.1 billion gallons in 2009.

For more information, go to www.foodbeforefuel.org or to see the article, go to http://uk.reuters.com/article/oilRpt/idUKN0848375420080908

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