Groups Warn Against Removing Import Tariff

RFA, NCGA and AFBF sent a letter to Congressional leaders urging them to oppose efforts to remove the import tariff on ethanol. Compiled by staff

Published on: May 11, 2006

Members of Congress were told Wednesday that striking the secondary tariff on imported ethanol is “short-sighted and detrimental to America’s long-range energy needs.” According to a joint letter from the American Farm Bureau Federation, the National Corn Growers Association and the Renewable Fuels Association, there is plenty of U.S.-produced ethanol to meet demand.

Legislation was recently introduced in the Senate and House that would strike the secondary tariff on imported ethanol. "Such a policy is short-sighted and detrimental to America's long-range energy needs and we strongly urge all senators and representatives to oppose this legislation," the groups write.

The letter again pointed out that removing the 54-cent per gallon tariff on imported ethanol "would be asking American taxpayers to subsidize already heavily subsidized ethanol and sugarcane production in countries like Brazil," the letter states."Brazil does not need U.S. tax dollars to compete effectively, as evidenced by the fact 135 million gallons were imported last year and those volumes are increasing. Congress should not ask U.S. taxpayers to help strengthen the ethanol industry in foreign countries at the expense of U.S. jobs and investment here at home."

RFA President Bob Dinneen adds, "Ethanol is not the reason gas prices continue to hover around $3. Domestic ethanol supply and production is sufficient to meet demand in this country. Removing the tariff doesn't achieve the effect those proposing the idea would suggest. Rather, it would result in American's subsidizing foreign ethanol production at a time when our domestic ethanol industry is beginning to take off. This idea simply doesn't make sense. As Chairman Grassley aptly put it, 'It's a solution in search of a problem.'"

Finally, the coalition noted that removing the tariff would have a "chilling affect on the financial markets as well." With investment, both from Wall Street and Main Street, in corn-to-ethanol growing and interest in cellulosic ethanol production rising, removing the tariff would send a "devastating signal to financial markets."

Currently, 97 ethanol biorefineries nationwide have the capacity to produce nearly 4.5 billion gallons annually. There are 35 ethanol refineries and nine expansions under construction with a combined annual capacity of more than 2.2 billion gallons. In addition, nearly 25 days of ethanol supply is available at storage facilities around the country.