09/27/07 Study says federal ethanol subsidies no longer needed

Farm and Ranch September 27, 2007 An economic study commissioned by national meat industry organizations concludes that there is no longer a need for federal subsidies for ethanol production. Elam: "The bottom line is that with oil at $80 a barrel U.S. ethanol producers simply do not need any federal subsidies in order to be able to afford corn at historical prices and run their refineries and produce ethanol." That is Dr. Thomas Elam, President of FarmEcon.com and author of the study "Fuel Ethanol Subsidies: An Economic Perspective." Elam: "The only real consequence of the subsidy program is to artificially raise the price that ethanol producers can afford to pay for corn, which raises the price of corn to everyone in the system; livestock producers; General Mills producing cereals. Kellogg's; anyone who buys corn." Ethanol proponents like the Renewable Fuels Association, say Elam's study contains several flaws and accuse the meat and livestock industries of using the sky-is-falling rhetoric. They point out that demand for corn for ethanol is just one of many factors behind higher corn and food prices even quoting USDA chief economist Keith Collins saying ethanol is not to blame. The bottom line for Elam is that if all the grain in the world was made into ethanol the impact on liquid fuel supply and petroleum prices would be minimal. I'm Bob Hoff.