GoodFuels

No Bail Out for Ethanol Plants

Agriculture Secretary Ed Schafer wants to make it perfectly clear that the government is not bailing out ethanol plants that lost money this year by speculating on the commodity markets.

“Some people thought we were taking part of the $700 billion bail out package and giving it to ethanol people,” Schafer said Monday after a meeting with livestock industry groups concerned about comments he made to reporters at the World Food Prize symposium in Des Moines on October 17.

In fact, the livestock industry was up in arms about what they thought was “preferential treatment” for the ethanol plants. “Many of our producer and processor members also took long positions on corn and soybeans and are paying above-market rates right now,” they wrote to the secretary last week. “We in animal agriculture are particularly concerned that you would consider adding one more level of support for the corn-based ethanol industry.”

That was never the case, however. Schafer was referring to USDA’s Business and Industry Loan Guarantee Program which was established in 1974 to help credit-worthy rural businesses by backing loans from private lenders for up to $25 million. On Monday, he explained that program to livestock industry representatives, noting that it was available for their memberships as well. “We assured them that no specific money was being set aside only for the ethanol industry,” Schafer said.

He understands why the livestock industry might have misinterpreted news stories about potential loans to ethanol plants. “It’s one of those situations where everybody is nervous out there, a lot of these folks have seen increased feed costs,” Schafer said. “There’s been a big effort by others to blame ethanol for increased feed and food costs and certainly ethanol production has been a small portion of that but it’s easy to kick around the new kid on the block and so we attack ethanol.”

Listen to Schafer’s comments here: