Ethanol Industry No Longer Needs Federal Support: Study

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Ethanol Industry No Longer Needs Federal Support: Study

WASHINGTON -- The ethanol industry in the United States is thriving and no longer needs a high level of federal support, according to a new study commissioned by the American Meat Institute, National Chicken Council and National Turkey Federation.

Agricultural economist Thomas Elam authored the study, which found the influence of the federal support program, which consists of direct support to small ethanol producers and a tax credit of 51 cents per gallon to fuel blenders who add ethanol to gasoline, has shifted from making ethanol feasible to causing significant increases in food costs and distorting farmer planting incentives.

"If the ethanol industry achieves 100 percent E10 market share in the United States, it would take about 200 million tons of corn annually," said Elam. "This is equal to a 10 percent reduction in the current global grain supply."

Elam further projected that when fully implemented, federal supports will drive up the cost of corn and other grains by $34 billion a year and could eventually cost a family of four about $460 a year in higher food costs.

In addition to driving up prices, federal supports are adding little, if anything to the stated goals of the renewable energy program, Elam concluded. He said data show that if all gasoline in the country had 10 percent added ethanol - the formulation called "E-10" - that would displace only 2.5 percent of current crude oil imports and 1.5 percent of overall crude oil consumption.

To view the study, go to: