Just some more anti ethol stuff

[jec22]

“These subsidies must stop immediately”, noted Marsh. “Turning feed grains into fuel will do nothing to reduce hunger in developing nations and only exacerbate the problem here at home.

This is one of the most interesting quotes in a while.  So, is Marsh telling countries that still use oxen to farm, that they have to quit immediately, because some of their production goes to 'fuel' the ox?  As E. Taylor points out, for decades the American farmer used horses, and those horses ate part of the grain and grass produced on the land.  So grain for fuel, is not new, it is centuries old.     Why, just because we exchanged tractors for horses, can we not still produce 'fuel' for our production?

[John_Walter]

A story today on Agriculture.com (click here) reports that "more than a dozen U.S. senators want to extend a multi-billion-dollar tax break for companies that blend ethanol into gasoline, countering recent attempts to repeal the credit in light of mounting deficits."

Dow Jones Newswires says that 15 lawmakers -- including the top Republican on the Senate's tax committee -- asked for an extension of renewable-fuel tax credits.

"This is not the time to reduce the supply of a domestic source of fuel and place at greater risk the thousands of well-paying jobs that the renewable fuels industry has created," the legislators said in the letter sent to Senate leaders.

Among those signing the letter were Chuck Grassley (R., Iowa), Kent Conrad (D., N.D.) and Debbie Stabenow (D., Mich.). All three senators are members of the Senate's Finance Committee and Grassley serves as the ranking member of that panel.

The drama continues....

John

[GoredHusker]

I think the time to reduce the supply of a domestic source of fuel argument ran out of steam when we started exporting our so called domestic source of fuel.  I think one must first realize that the 17 or so that signed the letter to not extend the blenders credit and tariffs represent more people than the 15 asking for an extension.  The jig is up.  A majority of Americans are against ethanol now because big oil did a lot better job of spinning information than the biofuel sector did.  The direction we're heading towards with technology is making ethanol's shelf life very short.  It's interesting how one group of senators claims only 427 jobs will be lost while the other group claims thousands. 

At the end of the day, I think one must first determine whether or not we've been here before.  Considering the rhetoric and the promising last year about this time with regards to biodiesel, it isn't difficult to assume we won't get the blenders credit extended possibly ever.  I don't see extending the blenders credit even a year as being popular.  Therefore, I don't believe any of the newly elected will vote for it.  However, my math shows that we'll still have to blend upwards of 4.2 billion bushels of corn ethanol due to the mandate.  This is only roughly 500-550 million bushel less than what USDA have us pegged as using.  With the distillers for feed, I'd estimate we'd more than likely only lose roughly 300 million bushels of demand. 

[Jim Meade / Iowa City]

Another thread that belongs in Farm Business.  No marketing content.

[Mark, ncIA]

Don't be such a sour puss Jim.  Politics of bio-fuels have a lot to do with market analysis.  Also, seems any post on this site should be welcomed, as it's pretty much turned into a ghost town.

[Jim Meade / Iowa City]

Mark,

I thin Marketing Talk is a special place, even though I don't often post here.  I'm worried that as more fuzzy topics that are not really marketing get brought here, it tends to get more and more opinion and politics related.  That is bad enough in Farm Business, but I think could be the death of a credible Marketing Talk forum if it gets going.  Who want Ag Forum in markets?  Sorry I'm so touchy.

[jec22]

Jim, I may be guilty as charged.  I think you brought up an interesting point.  Some see marketing as kind of nuts and bolts, when to hedge, when to sell, crop numbers, etc.

I believe marketing, though always most related to weather and crop size, is also a mirror of global and political events.  Call me crazy, but getting feed back on if Americans are really ready for austerity(as I asked Kraft), is important in my marketing plans.  If people don't have money,  they don't buy as much food.  The ethanol topic is big, looks to me like gasoline futures are already starting to place bets that the blenders credit is gone...up sixteen cents a gallon in a couple of days.

And I hope this doesn't come off sounding wrong, stupid or arrogant...but others besides farmers read the marketing page.  Hopefully it is a place where different opinions are respectfully discussed and presented. I like that JR brings the dairy side to the table, cause I want to hear his side and I want him to succeed.  After all, he is one of the grain man's customers.

So, though I am totally guilty of wondering off pure marketing, to me it is a part of it.  I read as many sites about business and global conditions in the mornings as I do about ag, all to help my marketing.  

Fire away any time....I enjoy the debate.

[John_Walter]

Some further word (full story here) from Washington comes in a report today by Successful Farming Business Editor Dan Looker, who interviewed Tom Harkin (D-IA), a supporter of keeping a tax credit for ethanol.  As the behind-the-scenes negotiations of the fate of Bush-era tax cuts continue, the credit's fate remains uncertain, Harkin said.

Harkin and Chuck Grassley (R-IA) are among 15 legislators who have written Congressional leaders urging them to keep ethanol credit. They argue that ending the tax credit would cost more in lost jobs, higher fuel prices and imported petroleum.

According to Looker's story, "Harkin said that all of the tax issues, including estate taxes and tax rates for individuals, will likely be part of an omnibus bill that originates in the House Ways and Means Committee. But, he said, an agreement will be negotiated by the Obama Administration and Democratic and Republican leaders of Congress before anything comes up for a vote."

The Democrats on the House Ways and Means Committee have called for a 20% cut  in the ethanol tax credit.

And so it goes....

John

[kraft-t]

Grassley stated this morning that tax revenues from the ethanol industry brought in more revenue than what goes our in blender credits. Plus the jobs created by the industry are another factor to consider. Pretty damned powerful when you consider Exxon Mobile paid zero income tax in 2009.

[GoredHusker]

Their argument that a lot of jobs will be lost just doesn't hold much water.  The math clearly shows that even if we only blend the mandated gallons 4.2 billion bushels of corn will be used rather than 4.75 billion that USDA has pegged.  Considering I've seen the local plants run at 80% capacity for an extended period of time and not one single person lost their job, I'd have to rationalize that few jobs will be lost. 

In terms of trying to attach it to or make it part of an omnibus bill, I say good luck.  They tried that with the soydiesel credits this past year and each and every time it was the first thing stripped from the bill during negotiations.  Considering that it appears we'll likely see much higher taxes put on fuel, extending these credits will be hard fought when the CBO alrady has a $1.78 taxpayer fee attached to each gallon of ethanol.