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Cattlemen Attack Loans to Ethanol Plants

23 October 2008

US - The National Cattlemen’s Beef Association (NCBA) has hit out at USDA moves to support the ethanol industry over corn prices.

The NCBA has sent a letter to USDA Secretary Ed Schafer expressing disappointment at comments he made in outlining Rural Development assistance for ethanol plants hurt by the high corn prices.

The NCBA says that in remarks made in Des Moines last week Secretary Shafer said: "There's going to have to be some credit applied to companies to buy some lower-priced corn to blend with their higher-priced corn."

"These higher corn prices are due in large part to extensive federal subsidies for the ethanol industry. The plants in question hedged on the futures markets and are now seeing the consequences of risky business decisions," said Andy Groseta, NCBA President.

However he added that Secretary Schafer acknowledged the questionable business practices, saying, 'There is some pressure out there by companies that have gotten away from their focus on producing ethanol and started speculating on the commodity markets, and that's hurt them.'

"Cattle producers, meanwhile, have been facing the hard realities of rising corn prices for quite some time, and have suffered a record $1.5 billion in cattle feeding losses in just the first six months of 2008," Mr Groseta said.

"In the letter sent to Secretary Schafer, NCBA explained that over the past two years, 'producers have seen their operating costs dramatically increase due to government support of the corn-based ethanol industry… These costs are now contributing to lower calf and feeder cattle prices.'

"Much has been made of the importance of ensuring energy security for the United States, which is a worthy objective and one the membership of NCBA fully supports.

"However, continuing to subsidize the ethanol industry at the expense of other agricultural sectors risks our food production capacity. While energy independence is an important goal, it must be balanced with one of our strongest suits: our ability to feed Americans and the world.

"Corn-based ethanol is a mature technology that should be able to compete on the open marketplace without government intervention to prop it up. While we appreciate that the funds in question are not new money or exclusively available to biofuel plants, the ethanol industry's need for increased funding after years of subsidies highlights an underlying fault in USDA's approach to food and fuel policy.

"America's cattle producers are not asking for a bailout, but we do ask for the chance to compete for corn and commodities on a level playing field, without further government intervention."

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