Coalition calls on Congress to rethink its ethanol policy
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13/05/2008
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Financial Times (London)
The global food crisis is inspiring a broad new coalition on Capitol Hill seeking to change US policies on ethanol production. Interests ranging from US food manufacturers and livestock producers to environmentalists, humanitarian aid agencies and consumer groups are calling for Congress to rethink so-called "food to fuel" mandates that would require the US to use 9bn gallons of ethanol this year. Critics say the mandates are driving up the price of corn, wheat and other grains, leading to record global food prices and political instability. The groups face what many say is an insurmountable hurdle in challenging the powerful ethanol lobby in Washington, which has received support from both Democrats and Republicans as well as the Bush administration. Ethanol has for years been seen as an attractive solution to combat America's "addiction" to foreign oil, and was initially supported by some environmentalists, though many are now questioning the policy of converting corn to fuel. While most analysts predict that neither Congress nor the administration will radically alter its stance on the mandates, there are signs that critics of ethanol are beginning to be heard on Capitol Hill. Barack Obama, the Democratic presidential hopeful, said the US might have to rethink its policy on corn ethanol because of rising food prices. "What I've said is my top priority is making sure people are able to get enough to eat. If it turns out we need to make changes in our ethanol policy . . . that has got to be the step we take," he said in a recent interview with NBC. John McCain, the presumptive Republican presidential nominee, has also criticised the ethanol mandates. For now, critics of the policy are keeping their eyes on the Environmental Protection Agency. The EPA has until late July to respond to a recent request by the governor of Texas, Rick Perry, that the administration consider waiving 50 per cent of the mandate require ethanol production this year. Kevin Book, a senior analyst at Friedman, Billings, Ramsey Group, an investment bank, said there was no chance the administration or the Congress would take on the mandates this year because taking on the "farm juggernaut" represented "political suicide". The food crisis, Mr Book said, was still seen as a "foreign problem" and would do little to sway lawmakers in an election year in which the top 10 ethanol-producing states account for half the electoral votes needed to win the presidential election. Scott Faber, vice-president of federal affairs at the Grocery Manufacturers' Association, which is leading the opposition to ethanol, remains hopeful, however. "Clearly the advocates for corn ethanol have a 30-year head start and a multi-billion-dollar bankroll at their disposal, thanks to the largesse of the American taxpayer. But the future of these food-to-fuel mandates will turn far more on the price of food and the facts on the ground than who has the biggest bankroll." Copyright The Financial Times Limited 2008