Food and fuel debate starts anew despite falling commodity prices

Despite falling corn prices, the food-versus-fuel fight is in full swing in Washington.

Ethanol producers that were on the defensive last summer as food prices soared are trying to turn the tables on the food industry behind the attack, as a new administration that has promised broad support for renewable fuels like ethanol prepares to take office.

{mosads}With a new website and advertising campaign, companies that turn corn into fuel are asking why prices at grocery stores have remained high even though corn prices have tumbled from $8 to $4 per bushel. The site, GrowthEnergy.org, includes a clock that keeps track of the time that has elapsed since they called on stores to lower prices. The group is also running advertisements in newspapers, including The Hill.

“We want to make sure that the issues on the food-or-fuel debate are clear and get talked about,” said Bruce Rastetter, the CEO of Hawkeye Energy and a board member of the new group, at a news conference Tuesday in response to one held by ethanol’s critics.

Supporters say ethanol helps the United States reduce its dependence on foreign oil and boosts rural economies in tough financial times.

Critics of corn-based ethanol — unable to block a new mandate requiring that 15 billion gallons of corn-based ethanol be blended into the nation’s gasoline supply two years ago — are pledging to redouble their efforts next Congress. They want to reduce the fuels mandate and end tariffs and tax credits that protect the domestic ethanol industry.

Ethanol makers hold particular disdain for the Grocery Manufacturers Association, a group that includes food companies like Kellogg’s and Kraft, because it paid for much of the anti-ethanol campaign. But a number of groups are allied against ethanol producers, from oil companies to environmental groups to livestock producers, who dislike ethanol for different reasons.

Representatives from the National Chicken Council, National Turkey Federation, various food companies and environmental groups like the Environmental Working Group sarcastically celebrated 30 years of government support with a cake and a news conference at the National Press Club. They said it was time for the industry to stand on its own.

Ethanol policies are in “need of significant reform and redirection,” according to Joel Brandenberger, president of the National Turkey Federation.

“Most people at 30 move out of their parents’ home and stop taking allowance,” Brandenberger said, comparing the policies to an unmotivated adult unable to cut the cord.

Ethanol makers likened the support of their program to an economic stimulus program.

“The federal government has an important role in supporting programs that promote the common good,” said Dave Vander Griend, president and CEO of ICM, an ethanol producer.

But critics want Congress to write in a safety valve that would delay ethanol production mandates if corn prices rose too high. That will happen, they warn, if a mediocre harvest can’t accommodate the growing demand for corn as a fuel as well as a food.

They also want to end the tariff that protects domestic ethanol producers from having to compete with sugar ethanol imports from Brazil, and the blending tax credit to be reduced further than it was in the last farm bill, when it was cut from 51 cents to 46 cents a gallon.

Ken Cook, president of the Environmental Working Group, said that ethanol policies could make it harder for President-elect Barack Obama to implement his plans to kick-start a new green economy. Ethanol support eats up too much money, starving other more environmentally beneficial programs, Cook indicated.

He estimated that support for ethanol amounts to around 65 percent of all the money the government invests, through appropriations and tax credits, on renewable energy.

“That’s an awful lot of eggs in one basket,” Cook said.