FAPRI Study Finds Extending Current Ethanol Tax Credit and Tariff Would Boost Ethanol Production and Corn Prices

Grainnet (Biofuels Journal)
Date Posted: June 29, 2011

Columbia, MO—Extending the current ethanol tax credit and tariff would boost corn-based fuel production -- and corn prices, report University of Missouri economists.

The current 45-cent tax credit for biofuel blenders and associated 54-cent tariff on ethanol imports were studied by the MU Food and Agricultural Food and Policy Research Institute (FAPRI).

Economists ran “what-if” scenarios on FAPRI computer models of the U.S. farm economy.

Both tax laws are due to expire Dec. 31, 2011.

With incentives in place, they saw fuel production from corn go up 1.2 billion gallons a year and corn prices rise 18 cents per bushel.

Increased demand for corn as an ethanol fuel source would expand corn acreage by 1.7 million acres, said Seth Meyer, MU FAPRI economist and author of the study, released June 27.

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