Ethanol Subsidy Sunsetted on January 1

Hog producers grateful to have level playing field.

Published on: Jan 12, 2012

If you've followed the ethanol issue over the past year or so, you know that allowing the ethanol subsidy to expire and not be renewed has been a hotly debated topic. On one hand livestock producers hurt by high feed prices especially when the ethanol boom begin have argued strongly for the disappearance of the subsidy. Meanwhile, alternative fuel groups naturally wanted to see it reinstated.

One of the biggest advocates in Indiana for not renewing the subsidy was Ernie Brames, a Huntingburg hog farmer. He took his case to his local Congressi0nal representatives, and even to the American Farm Bureau. He often didn't like the answer he got, but he kept on fighting.

Brames feels like it was time well spent, but he's a realistic. He knows there's no guarantee Congress won't reinstate some sort of subsidy for the ethanol industry at some point in the future.

The subsidy was actually a blender's credit, explains Kent Yeager of Indiana Farm Bureau, Inc. The payment went to the blender, often the petroleum company that added ethanol to their fuel. Still, farmers like Brames contend that government money pumped into the ethanol system was pumping up the industry, and creating an unfair advantage.

Brames simply asked for a fair playing field. There were no subsidies or livestock producers when feed prices jumped and hog prices were still relatively low. With feed prices moderating and hog prices at higher levels, brake-even and profits per pig are now realities again. However, one large farrow-to-finish operation in Indiana reports it will take them 15 years to recover from the bath they took when feed prices jumped during the initial ethanol craze and hog prices stayed steady at best.

Look for more in-depth coverage of the ethanol industry in Indiana in the February issue of Indiana Prairie Farmer.  You'll hear from those who support ethanol, and form those who believe it pushed many livestock producers either out of business, or forced them to cut way back on herd size. That's one reason ho prices are better now- many producers got out of the market.