* Biofuel output would fall 10 pct without tax breaks
* Corn, soybean price would drop 15 cts per bushel
* Ethanol tax credit, import tariff expire in 2010
* Biofuel trade groups seek long-term extension
By Charles Abbott
WASHINGTON, March 9 U.S. fuel ethanol and
biodiesel production would be cut by 10 percent if Congress
allows biofuel tax credits to expire this year, a University of
Missouri think tank said on Tuesday.
Corn and soybean prices would fall by 15 cents a bushel,
estimated the Food and Agricultural Policy Research Institute
(FAPRI). One-third of the corn crop is used to make fuel
ethanol and about 11 percent of U.S. soybean oil is used for
Fuel ethanol producers such as Archer Daniels Midland Co
(ADM.N), POET and Valero Renewable Fuels (VLO.N) -- the three
largest distillers -- would be affected too.
The ethanol tax credit of 45 cents a gallon and a tariff of
54 cents a gallon on ethanol imports are scheduled to expire at
the end of this year. The $1-a-gallon biodiesel tax credit died
at the start of the year but would be revived for 2010 in a
bill pending in the Senate.
Without the tax breaks, said FAPRI, ethanol and biodiesel
production will track the usage levels mandated by a 2007
energy law. It guarantees annual use of 15 billion gallons of
corn-based ethanol beginning in 2015 and 1 billion gallons of
biodiesel starting in 2012.
FAPRI said ethanol production would fall by 1.5 billion
gallons a year lower, a 10 percent drop, without the tax
breaks. Imports also would surge.
Biodiesel production would run roughly 10 percent lower
without the tax breaks, or about 100 million gallons a year in
2012 to 2014, said FAPRI.
For each fuel, said the think tank, there would be less
incentive to produce more than the volume guaranteed for use.
"We will be looking for a long-term extension so that
investors can invest in the industry (all feedstocks included)
with some confidence," said Matt Hartwig of the Renewable Fuels
Association, a trade group. Hartwig said smaller U.S.
production would mean "a loss of jobs, a loss of tax revenue
and increase reliance on imports."
A spokesman for Growth Energy, an ethanol trade group, said
the tax credit "provides value to the consumer in the form of
lower gas prices" and should be extended.
Biofuels are popular in farm country as a home-grown fuel
and an additional source of income. Environmental groups say
biofuels encourage overuse of farm chemicals and drive up food
(Reporting by Charles Abbott; Editing by Lisa Shumaker)