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GMA, AMI Urge an End to Ethanol Subsidies

WASHINGTON — A 30-year-old tax credit and protective tariff that benefits ethanol producers will expire at the end of 2010. Citing a Congressional Budget Office report which indicates that using ethanol to reduce gasoline consumption by one gallon costs U.S. taxpayers $1.78, a diverse group of food industry leaders, environmental activists and tax activists have called on Congress not to renew the tax-credit program when it expires at the end of the year.

WASHINGTON β€” A 30-year-old tax credit and protective tariff that benefits ethanol producers will expire at the end of 2010. Citing a Congressional Budget Office report which indicates that using ethanol to reduce gasoline consumption by one gallon costs U.S. taxpayers $1.78, a diverse group of food industry leaders, environmental activists and tax activists have called on Congress not to renew the tax-credit program when it expires at the end of the year.

β€œThe question is no longer whether we should extend the tax credit, but rather how soon we should fade out or eliminate it,” said J. Patrick Boyle, president and chief executive officer of the American Meat Institute, during a conference call on Monday. AMI, along with many other food industry groups, has long argued that these credits skew the market for other major buyers who use corn for animal feed or for packaged food production.

Environmental groups, meanwhile, have been pointing out that corn ethanol requires so much coal and natural gas to produce, that there is very little net energy gained from converting corn into fuel.

Other conference call participants included Scott Faber, vice president for federal affairs for the Grocery Manufacturers Association; Craig Cox, senior vice president of the Environmental Working Group; Nathanael Greene, director of renewable energy policy for the Natural Resources Defense Council; and Steve Ellis, vice president of Taxpayers for Common Sense.