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Lawmakers turn up the heat on ethanol

They blame subsidies for an overproduction of corn, which they say has hurt other crops and raised food prices.

May 08, 2008|James Hohmann | Times Staff Writer

WASHINGTON — Under pressure to do something about surging food prices, members of Congress are increasingly questioning the government's incentives for corn-based ethanol production, which have been blamed for contributing to the crisis.

At hearings Tuesday and Wednesday, a bipartisan chorus in the Senate and House called for rethinking ethanol policy. The corn lobby is pushing back, but even ethanol supporters acknowledge that some tinkering may be needed.

Retail food prices rose 4% last year, the largest increase since 1990, and are expected to rise 4% to 5% again this year. Factors at play include poor harvests, bad weather and growing demand.

"Many of these factors are beyond the control of mankind, much less governments," said Sen. Susan Collins (R-Maine). "By contrast, however, biofuel subsidies and mandates are within the control of governments."

Generous subsidies for production, tariffs on imports and mandates for ethanol use have increased the size of the corn crop. One-fourth of corn grown domestically went toward fuel production, not food, last year.

The price of a corn bushel has almost tripled over the last two years. High profits lure farmers to replant wheat and soybean fields with corn, leading to higher prices.

"It may be that we've met the problem, and we caused it," said Sen. Joe Lieberman (I-Conn.), who noted that Congress was motivated by good intentions but overlooked potential consequences.

Last December, a law was passed requiring a fivefold increase by 2022 in the amount of ethanol and other biofuels mixed in with gasoline. But even as the Environmental Protection Agency finalizes the standards for that law, many say that the law needs to be changed.

Rep. Mike Doyle (D-Pa.) said corn ethanol was presented as "an almost Holy Grail solution" to dependence on foreign oil. "Any food that is used for fuel is food that won't be used to feed our nation," he said.

Rep. Jane Harman (D-Venice) said supporters of ethanol may have overstated the possible reductions in greenhouse gas emissions. "Our enthusiasm for corn ethanol deserves a second look," she said.

Suggestions for coping with rising food prices include undoing the 2007 law mandating greater use of ethanol, granting waivers for states struggling with mandates, and even broadening the definition of biofuel to allow nonedible wood taken from national forests -- a proposal introduced in the House by Rep. Stephanie Herseth-Sandlin (D-S.D.).

Ethanol supporters warned against overreacting to rising crop prices, saying the government should encourage the development of energy alternatives over the long term. Rep. Fred Upton (R-Mich.) said ethanol was not "the silver bullet" but remained an "important part" of increasing production.

Longtime ethanol critics have used the higher prices to say they were right all along.

At Tuesday's hearing before the House Subcommittee on Energy and Air Quality, a panel of farm and industry lobbyists argued over the impact of ethanol on the economy and environment. On Wednesday, during a hearing before the Senate Homeland Security and Governmental Affairs Committee, Collins invited a baker from her state to talk about the effect of higher grain prices on his business.

There is dispute about the effect that growing ethanol use has had on prices.

Edward P. Lazear, chairman of President Bush's Council of Economic Advisors, told reporters last week that ethanol production only accounted for between 2% and 3% of the overall increase in global food prices. The International Food Policy Research Institute, on the other hand, estimates that increased biofuel demand accounted for about 30% of the increase in grain prices between 2000 and 2007.

Bruce Babcock, director of Iowa State University's Center for Agriculture and Rural Development, told the Senate committee that eliminating government support for ethanol would decrease the price of corn by only about 13%.

The Rev. David Beckmann, the president of advocacy group Bread for the World, responded that there was a direct link between higher prices and hunger in the developing world, especially as mandates are implemented in years to come.

"This isn't a discussion about wanting to make the ethanol industry collapse," said Sen. John E. Sununu (R-N.H.). "This is a discussion about stopping bad policy that has significant economic consequences, significant environmental consequences, and significant moral implications."

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james.hohmann@latimes.com

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