Where’s the beef?
The cattle industry again this week voiced concerns that ethanol production is driving up the cost of corn, thus hurting ranchers and feed lots in the pocketbook.
While it’s true that the new energy craze has impacted the cost of corn — it has more than doubled since 2006 — it is also generating new industry in Colorado. At least four ethanol plants have sprouted on our Eastern Plains.
We say give the situation more time so the necessary adjustments can be made to the production of ethanol, leveling out its impact.
Ethanol is an alternative fuel source that mixes grain alcohol, predominantly made from corn, with gasoline.
It takes time for a new enterprise to work out the kinks. That’s why we continue to encourage the development of other agriculture byproducts, such as wood chips, switchgrass and cornstalks, to produce ethanol.
Ethanol production brings jobs and eases our dependence on oil. This is not to say cattlemen don’t have some legitimate concerns.
“The playing field is not balanced,” said Terry Fankhauser, executive vice president of the Colorado Cattlemen’s Association. The American Jobs Creation Act of 2004 gives ethanol blenders a tax credit and thus the ability to buy corn at higher prices, he points out, adding that “commodities, of which corn is one, have functioned best in the free market.”
Fankhauser is eager for the subsidies to be phased out quickly, but they’re not scheduled to end until Dec. 31, 2010.
The subsidies are in place to encourage the petroleum industry, not ethanol manufacturers, to use an ethanol blend and pass the savings on to consumers, according to the American Coalition for Ethanol’s website. That makes sense to us.
To make up for the higher corn prices, the federal government is offering to let ranchers graze their cattle on land now protected by conservation laws. That too would seem to make sense, yet we agree with the cattlemen’s association that it would be “double-dipping.”
If a farmer gets paid to lay fallow his land and then gets to graze cattle there, or cut the hay and sell it, he’s making money twice off the land, as Fankhauser points out.
Ethanol production is a conundrum worth chewing on. Gas prices are leaping daily, which increases costs to ship cattle as well as the feed.
Ethanol is one way to ease some of that demand. Using more ag products in the process will be environmentally helpful as well as beneficial to the nation’s farmers.
Even Fankhauser acknowledges the economic benefits of ethanol production to the state.
Congress should pay attention to the concerns of the cattlemen, but we believe the plans in place for encouraging ethanol production still make sense.
