Washington, 19 Nov - High food prices and tough economic times are making it easier to sell arguments against subsidies supporting the U.S. ethanol industry, a coalition of ethanol opponents said Tuesday
But it will be an uphill battle to push for lower tariffs and tax incentives on the gas additive, made mainly from corn, admitted officials from a group of livestock producers, food companies, environmental groups and tax reform advocates.
"No one here believes that Congress or the administration are going to come up, roll up their sleeves, and say (we're) reforming ethanol in the first 100 days" after President-elect Barack Obama is sworn in, said Joel Brandenberger, president of the National Turkey Federation.
"But we think the message is getting out there and I think they're more willing to listen and respond," he said.
Under U.S. law, ethanol must be added to gasoline to reduce harmful greenhouse gas emissions and lessen dependence on oil imports.
The additive is more expensive than gasoline. To compete, the industry relies on high tariffs that curb imports as well as U.S. tax incentives worth 51 cents a gallon.
This year, U.S. drivers pumped 9 billion gallons of ethanol into their gas tanks, consuming a third of the U.S. corn crop.
That was blamed for driving up corn and other grain prices to record highs earlier this year -- a premise rejected by ethanol proponents.
Corn futures prices have plunged 35 percent from record highs seen in July, but food prices have not dropped, ethanol lobby groups said Tuesday, blaming food makers.
However, livestock groups and food makers said they are still working with supplies they bought during the price spike, and argued corn prices could rise again.
The renewable fuel mandate is set to rise to 36 billion gallons by 2022, but lawmakers want a growing proportion of the fuel additive to come from nonfood plant sources.
Obama, who represented the corn-producing heartland state of Illinois in the Senate, pledged during the presidential campaign to expand the biofuel mandate to 60 billion gallons per year by 2030.
"We believe strongly that the new administration is going to support biofuels," said Bruce Rastetter, chief executive of Hawkeye Renewables, an Iowa ethanol producer.
But if corn prices rise again, the administration and Congress could become more open to exploring ethanol reforms, said Brandenberger of the turkey producers.
Environmental advocates are now more aligned against corn-based ethanol, said Ken Cook, president of Environmental Working Group, part of the anti-ethanol coalition.
"Congress has been drunk on ethanol but there are signs of sobering up," Cook told a news conference.
The coalition released an Ipsos Reid poll showing 56 percent of Americans want ethanol subsidies reduced or eliminated, while 32 percent support the measures.
Ethanol makers, hurt by a sharp drop in gasoline prices and a glut in supply, said their industry needs tax incentives more than ever, and released a study saying the economic benefits of their industry more than pay for the subsidy.
The largest publicly traded U.S. producer, VeraSun Energy Corp, recently filed for bankruptcy protection, and the industry has warned of more consolidation.