GMA issues “perfect storm” warning against ethanol credits

17-Apr-2011 - Last updated on 18-Apr-2011 at 15:53 GMT

The Grocery Manufacturers Association has issued “a perfect storm” warning about a repeat of the 2008 food commodity crisis; this time sparked by diverting US corn production from food and feed to produce fuel.

The warning was delivered last Wednesday (April 13th) by the association’s vice president for federal affairs, Scott Faber in his testimony on federal biofuels policies before the Senate Committee on Environment and Public Works.

“The same factors that caused a ‘perfect storm’ for commodity prices in 2008 are once again contributing to rising food and food ingredient prices, including strong global demand, poor weather, rising energy costs, commodity speculation, and trade restrictions,” said Faber. “However, one difference between 2008 and 2011 is that even more of our food and feed is being diverted to produce fuel.

13 billion gallons

“Today, nearly 40 percent of U.S. corn production is diverted from food and feed to produce more than 13 billion gallons of corn ethanol. Many experts have confirmed the link between corn ethanol and higher commodity prices, including researchers at the Congressional Budget Office and the US Department of Agriculture.”

GMA wants Congress to freeze the amount of corn ethanol that must be blended into gasoline to provide advanced fuels more time to reach commercial scale. “In addition, Congress should immediately end the Volumetric Ethanol Excise Tax Credit (VEETC) and instead invest in advanced fuels,” added Faber. “Congress should reject proposals to redirect the VEETC to corn ethanol infrastructure and instead invest in advanced fuels that that do not pit our energy security needs against our food security needs.”

Geoff Moody, GMA director of energy and environmental policy, told FoodNavigatorUSA that accomplishing the association’s objectives would require the passage of bill in Congress and the President’s signature.

Grain supply problems

“This issue is very controversial,” said Moody. “I don’t see a quick passage of anything – unless there are grain supply problems in the US this summer.”

Meanwhile, last month GMA, along with 90 other groups, re-affirmed their support for proposals to end VEETC.

Ending the tax credit would help to curb high food prices and, if enacted immediately, would save taxpayers nearly $4bn during the remainder of this year, claimed the group.

Supporters include: The American Meat Institute, National Turkey Federation (NTF) and the charity, ActionAid USA.

GMA claims its campaign against ethanol credits enjoys support from: “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.”