AMI Urges Legislators to Allow Ethanol Tax Credit and Protective Tariff to ExpireThursday, April 29, 2010
(American Meat Institute)
AMI, joined by national industry trade associations including the National Turkey Federation, the National Chicken Council and the National Cattlemen’s Beef Association, urged the House Ways and Means Committee on Wednesday to allow a 30-year-old tax credit and a protective tariff for ethanol to expire at the end of this year.
“Although we support the need to advance renewable and alternative sources of energy, we strongly believe that it is time that the mature corn-based ethanol industry operates on a level playing field with other commodities that rely on corn as their major input,” the groups wrote in a letter to Congressmen Sander M. Levin of Michigan and Dave Camp of Michigan, chairman and ranking Republican members, respectively, of the tax-writing committee.
The letter notes serious concerns over the negative economic effects that government support for corn-ethanol has had on animal agriculture, specifically the Volumetric Ethanol Excise Tax Credit (VEETC) and the import tariff on foreign ethanol.
“The blender’s tax credit, coupled with the import tariff on foreign ethanol, has distorted the corn market, increased the cost of feeding animals, and squeezed production margins -- resulting in job losses and bankruptcies in rural communities across America,” the letter reads.
The letter notes that a September 2008 by the Congressional Research Service (CRS) stated that the dramatic increase in livestock production costs were attributed to higher costs for feed.
“There is no safety net to protect against the volatility in the commodity markets, forcing all industries to pay higher prices for input costs due to the fluctuations in the corn market,” the letter states.
The letter points to significant hardships suffered by the agriculture industry:
- A decrease in turkeys raised of more than 6 percent since 2007 levels and a near 9 percent reduction from 2008 levels – to adjust to these increased input costs. More importantly, the turkey industry eliminated nearly 3,000 jobs vital to rural America in 2008 and 2009 alone.
- Total losses for the pork 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.
- A record $7 billion lost by the cattle feeding sector of the beef industry from December 2007 to February 2010.
- A cumulative additional cost on the broiler industry of $15 billion since corn prices began their rise in the fall of 2006. This additional cost does not include the higher cost of other feed ingredients, such as soybean meal, whose prices tend to move in tandem with corn. Accordingly, broiler companies have suffered reduced profitability.
The letter ends by reminding the committee that animal agriculture is united in its support for energy independence and the development of the renewable fuels industry.
“However, 30 years of support has created a mature corn ethanol industry that now needs to compete fairly in the marketplace and allow for the next generation of renewable fuels to grow,” the letter concludes.
For a copy of the letter, click here: http://bit.ly/9vleGE.share on facebook share on twitter