May 2, 2008

Ethanol subsidy cut could help lower food prices

US House Majority Leader Steny Hoyer, D-Md., said Wednesday (April 30, 2008) he believes a deal to cut ethanol subsidies reached by lawmakers during Farm Bill negotiations could help lower rapidly rising food prices.

House and Senate lawmakers last week reached a tentative deal that would cut 6 cents off the 51 cent-a-gallon subsidy to producers of the alternative fuel.

That deal was reached to cut expenses out of the overall Farm Bill budget, but Hoyer said that it could help the tame escalating costs of food.

The bill is in its final stages before Congress completes the legislation and passes it on the White House for the President's signature.

The theory "was to try to become more dependent on the Midwest than the Middle East," Hoyer said during his weekly press conference. 

A significant shift by US farmers, encouraged by subsidies, to grow corn for ethanol rather than for food has been frequently cited as a factor behind the rapid rise in food prices globally.

Final agreement on the Farm Bill could be reached later this week.