Ethanol Tax and Tariff Changes Likely to Affect DDGS Value

National Hog Farmer
Steve Meyer
Jan. 9, 2012 4:29pm

To paraphrase the Munchkins, Queen Glinda and Dorothy in the Wizard of Oz – “Ding, dong the blenders’ tax credit is dead!” Both the blenders’ tax credit and the ethanol import tariff expired on Dec. 31. The tax credit, which allowed ethanol blenders to save 45 cents/gallon on each year’s tax bill, and the tariff, which added 54 cents/gallon to the price of any ethanol imported into the United States, were mainstays of the federal government’s three-legged policy that contributed to the meteoric growth of corn-based ethanol production from 2006 through 2010.

It appears that the ethanol business will finally have to deal with basic economics – sort of. The federal policy’s third leg, the renewable fuel standard, is still in place and will require ethanol blenders to use 13.2 billion gallons of corn-based ethanol this calendar year. But any move toward a more market-based situation is an improvement, right? Well, sort of.

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