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Ethanol-Subsidy Cuts Needed, Says USDA Secretary

Does the ethanol industry rely too heavily on government subsidies?

Does the ethanol industry rely too heavily on government subsidies? Ed Schafer recently criticized the industry for just that, saying that ethanol companies are even budgeting in subsidies into their financial models, reported Reuters in a recent article.

Schafer said the ethanol industry must eventually become commercially self-sustaining.

"The business model has to operate without the subsidies because eventually they are going to go away," Schafer said on the sidelines of a business journalism conference in Kansas City.

Last week at the National Republican Convention, the Republicans' platform called for an end to government requirements for ethanol-blended gasoline. Republican leaders said markets -- not government -- should determine ethanol usage.

Secretary Schafer said USDA, in conjunction with the Environmental Protection Agency, the Energy Department and other agencies, plans to roll out a "biofuels action plan" within the next few weeks.

About a third of this year's U.S. corn crop is going to produce ethanol amid efforts to meet the government's Renewable Fuel Standard, which requires 9 billion gallons in renewable fuels to be blended into the nation's gasoline supply this year, and 11.1 billion gallons in 2009.

What does this all mean for the livestock industry? The organization, Food Before Fuel, is working to decrease grocery bills for consumers, thus helping livestock producers with their high production costs. Their main page even quotes, Did you know? The price of prepared animal feed has increased 41.8 percent from July of last year.

What are your thoughts about the food vs. fuel debate?