16 Jan 2011 - Kudos to American Farm Bureau Delegates

Voting delegates at the American Farm Bureau Convention in Atlanta, Georgia this month made an interesting change in Farm Bureau policy dealing with the ethanol subsidy. I commend them for it.

Let me share some background. Ever since we started producing ethanol in this country, primarily from corn, Congress has felt it important enough to help a fledgling industry get started to cut our dependance on foreign oil, that it has provided a 45-cent a gallon tax credit which goes to gasoline blenders, not to corn producers. In addition, there is a tariff on ethanol imports from countries like Brazil, again to aid the U.S. ethanol industry.

Criticism of the subsidy and the tariff has been increasing and really moved into the spotlight in the last couple of months when the tax extension was debated on Capitol Hill. Congress did vote to extend the subsidy and tariff at current levels, but only for one year, so the debate will return to the spotlight at the end of this year. Up to now the six- million member American Farm Federation supported the tax credit, as well as the blender pumps which can dispense fuel which is up to 85% ethanol. The standard blend, of course, is 10%.

Now, here is the change, the 370 voting delegates decided to modify their policy and voted to discontinue the ethanol credit and instead, use those funds to “invest in the installation of a blender pump network for ethanol and bio-diesel” with a transition from the credit to the infrastructure program to build pipelines to transport ethanol.

In my mind, it is a good move for at least two reasons; it takes away one of the strong arguments used by opponents of ethanol, and eventually, ethanol and alternative fuels will have to stand on their own without government help. Of course, I also wish we would cut our subsidies to the oil industry to level the energy playing field. But the most important reason to me is the fact that it will greatly increase the availability of flex-fuels to consumers across the country. The lack of a national network of blender pumps has been a major impediment to the expansion of the alternative fuels industry.

I cannot leave this discussion without repeating my response to those readers who criticize my support of ethanol and bio-diesel...if you are against alternative energy produced on farms in this country, then you are in favor of supporting foreign oil-producing countries that don’t like us and can hold us hostage at any time by cutting production. Again, I commend American Farm Bureau delegates for their vote in Atlanta.

My thoughts on Samuelson Sez.