Eliminating the federal Volumetric Ethanol Excise Tax Credit (VEETC) is a misguided attempt to transfer taxpayer exposure for biofuels production incentives to fossil fuel production. Considering the much higher taxpayer cost of protecting and developing fossil fuel production, it is clear that there are no tax savings when it comes to reducing incentives to produce a clean, renewable liquid fuel with decentralized production facilities. Given increasingly volatile weather and global events on coastlines throughout the world, including the catastrophic events last week in Japan, and unrest in the Middle East, it is becoming increasingly clear that we must make sure our energy supplies follow the three of a good system: diverse, decentralized, and domestic; but most importantly, renewable, stated Keith Dittrich, Chairman of the American Corn Growers Association (ACGA).
If the concerns are that ethanol tax incentives are driving up the value of grains and food in general, we must not forget that these incentives will then also drive up grain production globally with the increased market prices that are offered. This has a two-fold effect: first, of improving the livelihood of small farmers around the world who once again have incentive to produce. For example, a recent New York Times article mentions that some farmers in Mexico are now producing under contract with PepsiCo, instead of traveling to the United States for employment. The second pronounced effect will be simply expanded production of grains and other food in the world that will ultimately balance supply and demand, driving food costs back down.
Other recent efforts to scale back production incentives for corn-based ethanol underestimate the efficiency of current commercial agricultural production practices. These practices are geared towards increasingly productive grain production, which not only provide ethanol capacity, but valuable livestock feed products as well.
Therefore, ACGA strongly opposes any attempts to reduce incentives that expand and protect biofuels production and wishes to remind policy makers and consumers that such attempts are ill-fated and do not reflect the realities of our current energy system.
