December 11, 2006

 

More competition for US corn as tax on imported ethanol extended
 

 

US corn farmers and ethanol makers would continue to have less competition from foreign imports of ethanol until 2009, marking a boost for the ethanol industry but more competition for corn among the various industries.

 

Included in legislation passed by the US House of Representatives and US Senate was an extension of the 54-cent-per-gallon tariff on imported ethanol.

 

The tax was set to expire in October 2007 but will continue to be imposed until January 2009.

 

A leading producer of ethanol is Brazil, but it has its own gasoline supply concerns and it is uncertain how much it would be able to provide.

 

The tariff encourages domestic ethanol production, discourages dependence on foreign energy and keeps other countries from competing with US production, US Sen. John Thune, R-S.D said.

 

"They can already get a certain amount in. But this at least will ensure there will not be a huge flood of imported ethanol coming in from Brazil or someplace else when we're trying to nurture this industry," Thune said.

 

About 5 billion gallons of ethanol will be produced this year and more plants are in the works.

 

Doug Sombke of Conde, president of the South Dakota Farmers Union, said the US has environmental and other standards imposed on farmers and ethanol producers that foreign competitors do not have.

 

His group supports fair trade but not free trade, he said.

 

"If other countries are competing on the same playing field as we are, that's one thing. But when they're not, that's a whole different issue," Sombke said.

 

Republican and Democratic farm state members of Congress who pushed for the tariff extension went against the wishes of President George W. Bush, who earlier this year supported at least a temporary reduction of the import tax on ethanol.