Senators Call for an End to Ethanol Subsidy

Senators Tom Coburn (R-OK) and Ben Cardin (D-MD) have introduced legislation that would repeal the 45 cents/gallon Volumetric Ethanol Excise Tax Credit (VEETC), more commonly known as the ethanol blender’s tax credit. Senator Coburn said, “The ethanol tax credit is bad economic policy, bad energy policy and bad environmental policy. The $6 billion we waste every year on corporate welfare should instead stay in taxpayers’ pockets where it can be used to spur innovation, stimulate growth and create jobs.” The American Meat Institute (AMI) commented, “With the U.S. corn supply at record lows, corn prices at record highs, and ethanol production absorbing 40% of U.S. corn production, government subsidies for corn-based ethanol, like VEETC, continues 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.” The Renewable Fuels Association (RFA) countered, “At a time of rapidly rising gas prices, which threaten a fragile American economic recovery, it makes no sense to deprive Americans of a lower cost choice at the gas pump or to stop America’s investment in an American-made, job-creating alternative to foreign oil. If recharging our economy is a top fiscal and economic priority for these senators, then job one should be redirecting the $1 billion a day we spend on foreign oil back into the U.S. economy. Ethanol is part of the solution, not the problem.”

Mexican Truck Agreement Resolved —- The United States and Mexico reached an agreement to resolve the dispute regarding cross-border trucking. The phased-in program with high safety standards authorizes both Mexican and United States long-haul carriers to engage in cross-border operations. Mexico instituted tariffs last August in retaliation for the U.S. failing to comply with the North American Free Trade Agreement (NAFTA) trucking provisions. The action included a 5% tariff on U.S. bone-in hams and a 20% tariff on cooked pork skins. With the agreement, Mexico will eliminate half of the $2.4 billion in tariffs when the agreement is finalized. The remaining tariffs will be lifted when Mexican trucks enter the United States. The National Pork Producers Council (NPPC) said, “It is imperative that Congress support this agreement. Any attempt to stop or otherwise undermine the agreement will invite Mexico to reinstate retaliatory duties on pork and other products, causing the United States to lose exports and jobs.”

Agriculture Supports Pending FTAs — The U.S. food and agriculture industry reiterated its strong support for the pending Free Trade Agreements (FTAs) with Korea, Colombia and Panama. Over 60 companies and associations sent a letter to the Senate Finance Committee, reminding the Congress of the importance of the three FTAs. The letter stated, “The three trade agreements combined represent almost $3 billion of additional agriculture exports to these trading partners. These gains can only be realized by implementation of these three agreements. There is urgency to the need for passage of the agreements. The United States is watching other countries implement their own trade deals with these countries giving them a competitive advantage while its sales and market share decline.” While the United States continues to wait for passage of the Colombia FTA, U.S. market share has been dropping in Colombia due to competitors implementing their own trade agreements. The United States has seen its exports to Colombia drop almost 50% from 2008 and 2009. Wheat and corn have taken the largest losses. Those signing the letter included Agri Beef, American Farm Bureau Federation, American Meat Institute, American Soybean Association, Cargill, CoBank, Dairy Farmers of America, Elanco Animal Health, National Association of Wheat Growers, National Cattlemen’s Beef Association, National Corn Growers Association, National Council of Farmer Cooperatives, National Pork Producers Council, National Turkey Federation, Smithfield Foods and U.S. Premium Beef.

Slaughter Reintroduces Antibiotic Legislation — Congresswoman Louise Slaughter (D-NY) has introduced legislation that would ban the use of antibiotics for animals except for when the animal is sick. “The Preservation of Antibiotics for Medical Treatment Act (PAMTA)” would ban the use of antibiotics in animals for growth promotion, disease prevention and control. Slaughter said, “We know that the widespread use of antibiotics on healthy animals is contributing to the growth of bacterial resistance to the drugs we use to treat humans. While we’re giving antibiotics to pigs and chickens, we’re allowing people to die. If anyone believes that antibiotic resistance isn’t a problem, consider the $16 to $26 billion that’s added into the cost of our health care system each year going to treat bacteria our antibiotics are ill-equipped to fight.” The Coalition for Animal Health stated, “This legislation ignores the several layers of protection in place so we can use antibiotics to keep animals healthy without harming public health. It also ignores the current stakeholder process in place at the Food & Drug Administration (FDA) to increase the involvement of veterinarians in the use of antibiotics in food animals and to tighten the definition of judicious use.” Congresswoman Slaughter introduced similar legislation in the last Congress.

P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.