NCGA Applauds Senate Bill to Improve Small Ethanol Producer Credit (03-15-05)

The National Corn Growers Association (NCGA) commends Sen. Jim Talent (R-Mo.) and a bipartisan group of cosponsors for introducing legislation last week that redefines “small ethanol producers” and extends the recently enacted tax credit for biodiesel producers.

The current small ethanol producer tax credit applies only to those producers who generate 30 million gallons or less per year. Under the measure introduced Friday, the current limit would be raised to 60 million gallons, allowing more ethanol producers to utilize the existing tax credit.

Iowa corn grower Daryl Haack, chair of NCGA’s Ethanol Committee, said the legislation will make larger new-generation ethanol plants eligible for the tax credit.

“Most of the plants coming online today are at least 40 or 50 million gallons,” he said. "It just makes sense to raise the cap and include these new, larger plants. This will make it easier for new ethanol plants to get up and running."

Twelve of the 16 ethanol plants currently under construction will produce more than 40 million gallons per year. The average capacity of those plants is 48 million gallons.

"Raising the limit from 30 million to 60 million gallons will definitely help the farmer-owned plants in Missouri and across the country," said B.J. Bailey, president of the Missouri Corn Growers Association. "We appreciate Sen. Talent's efforts to make this happen and we're looking forward to final passage of the bill."

The small producer tax credit provides 10 cents per gallon on up to 15 million gallons of production annually, capped at $1.5 million per year per producer. Lawmakers said the tax credit provides an incentive for farmers interested in investing in ethanol plants.

The bill, S.610, was co-sponsored by Sens. Kit Bond (R-Mo.), Blanche Lincoln (R-Ark.), John Thune (R-S.D.), Tim Johnson (D-S.D.), Norm Coleman (R-Minn.), Chuck Hagel (R-Neb.), Dick Durbin (D-Ill.), Tom Harkin (D-Iowa) and Ken Salazar (D-Colo.).

“Our legislation corrects an inequity for our producers and provides incentives for producers who want to start an ethanol plant or a soy crushing facility,” Talent said. “Renewable fuels are at the crux of economic growth and jobs; at the crux of energy security; at the crux of consumer benefits; at the crux of environmental quality; and at the crux of value-added agriculture for America’s producers.”

Rep. Steve King (R-Iowa) introduced a similar measure in the House of Representatives in January.