The Grocery Manufacturers’ Association (GMA), along with 90 other groups, has re-affirmed its support for proposals to end the refundable Volumetric Ethanol Excise Tax Credit (VEETC) which subsidizes the blending of corn-based ethanol into gasoline.
Arguing that VEETC artificially raises US food prices and distorts energy markets, the organizations have sent a joint letter to Senators Coburn (Republican, Oklahoma) and Cardin (Democratic, Maryland) applauding their proposal to introduce bi-partisan legislation to end the tax credit.
The legislation would help to curb high food prices and, if enacted immediately, would save taxpayers nearly $4bn during the remainder of 2011, claims the group.
Patrick Boyle, president and CEO, American Meat Institute, wrote: “With the US corn supply at record lows, corn prices at record highs and ethanol production absorbing 40 percent of US corn production, government subsidies for corn-based ethanol, like VEETC, continue to artificially inflate the market for corn.”
“As a result, the cost of feeding livestock has increased, which in turn drives up the cost of food production for everyone in the supply chain, trickling down to the consumer. This bipartisan bill is an important step in reversing that trend.”
Joel Brandenberger, president, National Turkey Federation (NTF), wrote: “Food and energy should never have to compete with each other for key inputs because of government mandates. The corn-based ethanol industry has received more than 30 years of support and protection at the expense of the American taxpayer and those in animal agriculture who use corn for feed. Therefore, NTF supports eliminating the tax credit for ethanol.”
Nearly 70 percent of the costs of raising turkeys are from feed, according to NTF. So rising corn prices have a significant impact on turkey production costs which are not all passed along to consumers. “However, a sustained increase in feed costs ultimately will result in consumers paying higher prices for all poultry and meat products,” said Brandenberger.
Marie Brill, senior policy analyst, ActionAid USA wrote: “In the context of record breaking high food prices, the U.S. can invest in national security and global economic recovery while saving taxpayer dollars by eliminating the duplicitous corn ethanol subsidy.”
Geoff Moody, GMA director of energy and environmental policy, wrote: “It is now time for the (US corn ethanol) industry to stand on its own without being propped up by the American taxpayer. This legislation is an important step in that direction and toward reducing our reliance on food and feed for fuel. We urge Congress to pass this important legislation quickly.”
A GMA statement described the group as: “A broad and diverse coalition of business associations, taxpayer advocates, hunger and development organizations, agricultural groups, free-market groups, religious organizations, environmental groups, budget hawks, and public interest organizations.”