The Ottumwa Courier

AP Iowa

November 25, 2013

Iowans worry about ethanol's lost political clout

(Continued)

U.S. Sen. Charles Grassley of Iowa said he hopes to thwart the administration's proposal in Congress if it survives the 60-day comment period.

Meanwhile, Republican Gov. Terry Branstad planned to press his fellow GOP governors, especially those with possible presidential aspirations, to be mindful of the ethanol industry's economic importance. He met with New Jersey Gov. Chris Christie at a governors' association meeting in Arizona this week. On Tuesday, Branstad launched a Website for people to leave comments for the EPA.

For politicians eying the White House, "Whoever comes here better understand the importance of renewable fuels, or they are going to have hell to pay in rural Iowa," Branstad said in a recent interview.

The federal government began actively supporting ethanol, which is made by fermenting and distilling corn, about 40 years ago when petroleum prices spiked and anti-air pollution efforts were ramping up. Refineries initially were given a tax credit to produce the grain alcohol and Congress later required oil companies to blend it in their gasoline.

In Iowa, the nation's leading corn producer, about 45 percent of its crop went into ethanol last year. The state has 42 ethanol plants that produced 3.8 billion gallons.

Branstad said cutting the federal requirement would lower corn prices that have already fallen this year because of an unexpectedly robust harvest.

"They're making a huge mistake," Branstad said at the governors conference this week. "And they're going to drive corn below the cost of production."

Democratic U.S. Rep. Dave Loebsack of Iowa City said a loss of federal support would be "a devastating decision for Iowa's farmers, rural communities and economy."

If the federal mandate was reduced or ended, ethanol producers would rely on the handful of states with their own ethanol fuel standards, and on exports which accounted for about 1 billion gallons last year. The proposed change would likely hurt smaller producers more than powerhouses like Archer Daniels Midland and Cargill.

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