Meat industry wants ethanol import tariff lifted

A coalition of meat industry groups is asking President Bush to exercise his emergency authority and immediately suspend the duties and quotas on imported ethanol used as a motor fuel additive.

Among members of the coalition are the American Meat Institute, National Cattlemen's Beef Association, National Chicken Council, National Turkey Federation, National Pork Producers Council, Pilgrims Pride Inc., Smithfield Foods Inc. and Tyson Foods Inc.

The reason the coalition is calling for the lifting of import ban on ethanol is skyrocketing corn prices, as corn is the primary ingredient in livestock feed.

In its letter to Bush, the coalition said the suspension of the tariff will help producers, processors and consumers who are being directly and immediately impacted by rising feed and food prices due to the government mandate to convert nearly 30 percent of the domestic corn crop into fuel.

The president can immediately suspend the tariff using the authorities provided by the Constitution, the National Emergencies Act, Tariff Act of 1930, Trade Expansion Act of 1962 and the International Emergency Economic Powers Act.

"The suspension of the 54 cents per gallon duty on ethanol will benefit Americans by introducing market competition for a product that is mandated and foster downward pressure for domestic ethanol and its feedstock," the coalition wrote. "Domestic dairy, livestock and poultry farmers; food and beverage manufacturers; employees in these industries and American food consumers will benefit from this action."

"The immediate suspension of this duty could lower the economic pressure on livestock and poultry producers as well as on fuel consumers," AMI President and CEO J. Patrick Boyle said.

The request to lift the import tariff also has the support of Sen. Richard Lugar, R-Ind.

Lugar said the U.S. should lift the tariff on Brazilian ethanol "that now shelters the U.S. industry."

Earlier this week, the USDA reported that corn planted area for all purposes is estimated at 87.3 million acres, down 7 percent from last year.

But despite the decrease, the USDA reported that corn planted acreage is the second highest since 1946, behind last year's total of 93.6 million acres.

Growers expect to harvest 78.9 million acres for grain, down 9 percent from 2007. If realized, this would be the second highest since 1944, behind last year, the USDA said.

Earlier this week, the USDA said farmers increased corn plantings 1.31 million acres from their March intentions.

According to the coalition, the suspension will also help American consumers who are struggling with their grocery bills.

But according to the Consumer Price Index from the U.S. Bureau of Labor Statistics, in January 2002, an average household paid $102 a week for food (groceries and eating out) and $25 a week for gas. By June 1 of this year, a household paid $124 a week for food (an increase of 23.1 percent) and $83 a week for gas (an increase of 335.8 percent).

"In the short term, we're asking the president for immediate relief from the tariff," Boyle noted.

"But in the long term, we need to reopen the decision to burn our food as fuel," he added.

Renewable Fuels Association President Bob Dinneen said the campaign to lift the tariff is being orchestrated by Brazilian sugar and ethanol producers to sell more of their product in the United States.

According to the U.S. Energy Information Administration, the U.S. imported 49.4 million gallons of ethanol in April. Domestically, U.S. ethanol plants manufactured 708 million gallons of ethanol in April, of which consumers used 751 million gallons.

"America does not tax nor does it prevent imports of Brazilian ethanol from entering our market," Dinneen said. "Rather, it ensures through the offsetting secondary tariff that Brazilian ethanol producers cannot reap subsidies from American taxpayers."

He said removing the secondary tariff on imported ethanol is a poor solution in search of a problem.

"The secondary tariff is not a barrier to imports," Dinneen said. "In fact, large quantities of foreign ethanol already enter this country without paying the tariff through a trade loophole known as the Caribbean Basin Initiative. Still more arrives directly from the shores of other nations into American ports, paying the secondary tariff."

He said removing the tariff will do nothing to reduce fuel or food prices.

"The only result of such a change in policy would be that American taxpayers would be required to subsidize foreign ethanol production, which, in the case of Brazil, has enjoyed decades of preferential government treatment," Dinneen said.