Thursday, April 24, 2008

Blunt Says Ethanol Not Tied to Higher Prices

Steelman Shows Most Concern Over Future Impact
Gov. Matt Blunt dismissed concerns Thursday that ethanol production is leading to higher livestock feed prices for Missouri farmers, calling the argument "illogical."
Watch my KY3 News @ 10 report HERE.
A House committee is considering legislation to repeal Blunt's mandate that requires all gas to include 10 percent ethanol. Rep. Mike Dethrow, the bill's sponsor, has called his vote for the mandate "a mistake." Some area farmers agree.
"I think its too much, too quick," said David McCroskey, a dairy and beef management consultant who works with Ozarks farmers. "Right now, more mandatory ethanol use, means more corn use, that doesn't go towards feed and food for our people. We've seen our feed prices, the biggest part driven by corn --- double in the past two years," McCroskey said.
Blunt dismissed that claim, calling it "not logical." He said all commodities --- not just corn --- are rising because of higher energy and fertilizer costs as well as increased worldwide demand.
"They'd be paying even more without the mandate," Blunt said. "It's about $40 a year saved last year because of ethanol," he added. "I think the E-10 mandate or requirement is totally disconnected from the surge in worldwide demand for food prices."
Gary Clark of the Missouri Corn Growers Association noted that the price of grain is not even set in Missouri and reiterated that a repeal "would have zero impact on the price in Missouri."
"We are overproducing corn to meet the need here, corn supply is not the problem," Clark said. He also pointed to a study commissioned by the Corn Growers Association that showed gas would be 9 to 10 cents higher without ethanol.
"We're all upset about the economy right now. The livestock industry is having a tough time, we acknowledge that. But some people are getting the wrong impression," Clark said.
The three leading candidates for Governor all support Blunt's mandate --- and oppose an attempt at a repeal.
"When you talk about the price of ethanol, a lot of things go into it, corn is one, but you've got the weak dollar, exports, weather . . . many, many factors going into it," said Kenny Hulshof's campaign spokesman Scott Baker. "Ethanol is a very small part," he said, noting that Hulshof supports the mandate. He said Hulshof believes ethanol technology "is still in its infant stages, and thinks its important to enhance the market for continued research."
Baker points to this report which quotes a Merrill Lynch analyst who says world oil prices would be 15% higher without the expansion of biofuels.
Hulshof's rival for the Republican nomination, Sarah Steelman, said she's concerned about mandates, but supports this one in the short run.
"As an economist, I am very concerned about the use of mandates in a free market system," Steelman said. "However, the consequences of our nation's continued dependence on foreign oil are so far ranging and serious, that I support mandates in the short run to help establish a market for renewable fuels," she added.
Presumptive Democratic nominee for Governor Jay Nixon also supports the 10% ethanol requirement.

"Ethanol development has been beneficial to our economy and Jay Nixon supports keeping the mandate in place," said campaign spokesperson Oren Shur. "In doing so, we must be mindful of our family farmers who are struggling with the rising prices of everything from fuel to food. If the state can afford to give $95 million dollar in tax credits to one big developer, we certainly have the resources to invest in ethanol and give our family farmers the support they need," Shur added.

1 comment:

Keith Pings said...

Ethanol does not benefit the family farmer. It is a program for the corporate farmer and global agribusiness. Why is BP buying the ethanol production in Brazil?