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Coalition Letter Urges President To Immediately Suspend Import Tariff on Ethanol

Wednesday, July 2, 2008

A coalition of groups concerned about skyrocketing corn prices sent a letter urging President Bush to exercise his emergency authority and immediately suspend the duties and quotas on imported ethanol used as a motor fuel additive.  The signatories, representing 35 groups, pointed out that the combination of the ethanol mandate and steep tariff designed to keep out foreign ethanol has sharply increased the pressure on domestic corn stocks and has greatly contributed to the tripling of corn prices and food price increases in the U.S.

 The letter notes that the suspension of the tariff will help producers, processors and consumers who are being directly and immediately impacted by rising feed and food prices due to the government mandate to convert nearly 30 percent of the domestic corn crop into fuel.  The President can immediately suspend the tariff using the authorities provided by the Constitution, the National Emergencies Act, Tariff Act of 1930, Trade Expansion Act of 1962 and the International Emergency Economic Powers Act. 

 “The suspension of the 54 cents per gallon duty on ethanol will benefit Americans by introducing market competition for a product that is mandated and foster downward pressure for domestic ethanol and its feedstock.  Domestic dairy, livestock and poultry farmers, food and beverage manufacturers, employees in these industries and American food consumers will benefit from this action,” the letter notes.    Signatories included American Meat Institute, American Bakers Association, American Beverage Association, Butterball, LLC, Cal-Maine Foods, Inc., Capitol Land & Livestock, Citizens Against Government Waste, The Coca-Cola Company, Darden Restaurants, Inc., Dean Foods Company, Georgia Poultry Federation, Grocery Manufacturers Association, Indiana State Poultry Association, International Food Distributors Association, Iowa Turkey Federation, Minnesota Turkey Growers Association, Mountaire Corporation, National Cattlemen’s Beef Association,  National Chicken Council, National Council of Chain Restaurants, National Milk Producers Federation, National Pork Producers Council, National Restaurant Association, National Tax Payers Union, National Turkey Federation, North Carolina Poultry Federation, PepsiCo, Inc., Pilgrims Pride, Inc., Smithfield Foods, Inc., The Snack Food Association, Taxpayers for Common Sense, Tyson Foods, Inc., United Egg Producers, United Egg Association and Virginia Poultry Federation.

 AMI President and CEO J. Patrick Boyle said that while there are many factors driving up corn prices, the combined impact of an ethanol mandate, subsidies, and a trade-distorting ethanol tariff has concentrated the economic consequences on American livestock and poultry producers and consumers.  “The immediate suspension of this duty could lower the economic pressure on livestock and poultry producers as well as on fuel consumers,” Boyle said.

 The letter was sent the day after Indiana Senator Richard Lugar (R-IN) told President Bush that “to demonstrate leadership, the United States should lift the tariff on Brazilian ethanol that now shelters the U.S. industry” and several days after the USDA crop report suggested a drop in corn production this year due to a wet spring and the historic flooding in the Midwest.  The letter explains that suspending the duties and tariff will reintroduce market competition into the equation and “alleviate a portion of the unnecessary feed and food price inflationary pressures that are adversely impacting our economic well-being.  The suspension will also help American consumers struggling with their grocery bill.”

 “In the short term, we’re asking the President for immediate relief from the tariff,” Boyle noted.  “But in the long term, we need to reopen the decision to burn our food as fuel,” he added.

 The U.S. Constitution and statutes cited confer authority on the Executive to exercise controls over international economic matters and established procedures governing the use of this power, including close consultation with Congress.  Under these legal authorities, the Administration can immediately take this action to favorably influence the price of feed grains, our food infrastructure and dampen our energy costs. 

 The letter notes that this spring Federal Reserve Chairman Ben Bernanke told Congress they should eliminate the tariff on ethanol to ease food inflation.  “This type of action could also benefit the more than 15 million people employed in animal agriculture, food and beverage manufacturing, and food service segments of the U.S. economy,” the letter notes.  

 For a copy of  the letter, click here: http://www.meatinstitute.org/ht/a/GetDocumentAction/i/39576

 And for more information, go to http://www.foodbeforefuel.org/  and http://www.balancedfoodandfuel-old.org/.



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