Deputy Agriculture Secretary Chuck Conner, speaking to a National Pork Producers Council luncheon Thursday afternoon, noted that the draw on corn for ethanol production is "clearly a factor" in this year's high corn and feed prices because it represents "a new demand factor." However, he said the problem is not the supply of corn but the cost of corn, and the "unprecedented increase in energy costs" for farmers, livestock producers, processors and transportation must also be considered.
He also suggested that the blender's credit for ethanol refineries will be viewed in new terms when it comes up for extension. It always was that when the question came up about extending the credit, "yes just rolled off your lips." However, "the grain-based ethanol industry has matured, and where the justification (for extending the credit) was that the industry was a fledgling industry, that justification is not out there any more."
He said ethanol plants today are efficient and producing a product that's very competitive with gasoline. Ethanol production is becoming increasingly "market driven, not RFS driven," he said.