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Published March 14, 2011, 04:30 AM

Corn growers urge ethanol reform

TAMPA, Fla. — In breaks with past policy, the National Corn Growers Association passed resolutions March 5 urging reform of ethanol and an “investigation” of changes to the direct payments program.

By: Jerry Hagstrom, Special to Agweek

TAMPA, Fla. — In breaks with past policy, the National Corn Growers Association passed resolutions March 5 urging reform of ethanol and an “investigation” of changes to the direct payments program.

All four groups that met in Tampa, Fla., at the Commodity Classic — the corn growers, the American Soybean Association, the National Association of Wheat Growers and the National Sorghum Producers — issued a joint statement urging deficit reduction that would include reform of entitlement programs including Social Security, Medicare and food stamps.

Both corn growers measures passed by voice vote March 5, having been considered at a final delegate voting session after the issues proved contentious at earlier meetings.

All four groups are facing public questioning of farm subsidies during a period of record farm prices, but the corn growers’ situation is the most complicated because the policies that affect them include the ethanol tax credit and the protective tariff, as well as farm subsidies.

Unified ethanol policy

Congress reauthorized the 45-cent tax credit for ethanol blenders and the 54-cent protective tariff in December, but only for one year. Four groups with ethanol interests — NCGA, the Renewable Fuels Association, Growth Energy, which represents ethanol plant builders and operators, and the American Coalition for Ethanol — are trying to develop a single policy position to present to Congress and the Obama administration. While current subsidies encourage production, Growth Energy maintains that the major issue facing ethanol in the future is consumer acceptance of the fuel and is urging the other groups to support government aid to encourage flex-fuel cars and construction of blender pumps in exchange for a declining tax credit.

“We are going to see something different than the volumetric ethanol excise tax credit as it currently exists,” said Jon Doggett, a lobbyist for the corn growers, commenting on the resolution after the vote.

Growth Energy sounded enthusiastic about the corn growers’ resolution in a statement.

“It is good news that NCGA has endorsed steps to reform access to the market and give consumers an opportunity to choose their fuel,” Growth Energy said. “With the blender pump installations and more flex fuel vehicles, as we proposed under Fueling Freedom, we can compete against oil without government assistance or interference once we’ve got the market access.”

The Renewable Fuels Association had a more measured response in an e-mail March 6.

“Their commitment to the industry is undeniable and we appreciate their involvement and leadership in helping move this industry forward,” said spokesman Matt Harwig. “Transforming the tax credit to ensure for the continued growth and evolution of America’s ethanol industry is the top legislative agenda item. The corn growers share that vision and this resolution reflects their commitment to a strong and unified industry.”

A corn industry spokesman said the Renewable Fuels Association favors a flexible tax credit that would be tied to the price of oil. RFA President Bob Dinneen thinks the tax credit needs to reflect economic factors, the source said, as well as improve the ethanol infrastructure.

Direct payment debate

The corn growers’ direct payments resolution reads: “NCGA should investigate transitioning direct payments into programs that all producers the ability to manage risk while assuring food security.”

The direct payments resolution passed after debate. Ohio corn growers campaigned hard for a change in policy. Farmers in Corn Belt states such as Iowa, Illinois and Indiana have complained that their crop insurance costs have gotten too high as crop prices have risen. But growers from more western and southern states have defended the direct payments, and opposed stronger language favoring the use of the payment money for other farm bill purposes.

The American Soybean Association, which also met March 5, said that if Congress cuts spending, members should look to eliminate redundant programs and improve the efficiency of services.

The ASA rejected resolution language to urge Congress that any reductions in direct payments be achieved by first reducing the maximum amount each person is eligible to receive, rather than a straight percentage reduction in each program crop per acre direct payment.

A delegate advocate for that resolution said if Congress makes a straight percentage reduction, large farmers whose payments are capped at $40,000 will not see any reduction in their government payments while smaller farmers would get less. But another ASA delegate said that large producers should not be penalized, and the group voted against that part of the resolution.

ASA also passed a resolution supporting extension of the biodiesel tax credit, which also expires at the end of 2011, but said it would support restructuring the tax credit from a blender’s credit to a producer’s credit.

ASA passed another resolution that said definitions of food as “wholesome or nutritious” should not be based on matters such as geographical origin, growing practices or descriptions such as whether it is locally grown or contains biotech traits or high-fructose corn syrup. That statement could have implications for trade negotiations because the European Union wants to strengthen the legal position of farmers such as the sparkling wine growers from the Champagne region of France, who claim that the word Champagne should not be used with sparkling wine produced elsewhere.

Deficit reduction

Meanwhile, all four groups passed a resolution stating that farmers “recognize that reducing federal deficits and the national debt is critical to putting the American economy, including U.S. agriculture, on a sound course for future growth and prosperity.” The groups signaled that they would expect some cuts, but that they should be proportionate.

“We note that agriculture made a down payment in cutting spending when the Department of Agriculture directed $4 billion in savings under the Standard Reinsurance Agreement for federal crop insurance toward deficit reduction,” the groups said. “We believe any further reduction in discretionary spending should recognize and reflect this contribution. We would also note that agriculture-related programs represent less than one-half of 1 percent of the federal budget.”

The groups said “any meaningful approach to deficit and debt reduction in the fiscal year 2012 budget must encompass all entitlement programs and all discretionary spending.”