Subsidizing corn for a sacred cow A 107-page report (PDF) from the state legislative auditor’s office says the state should stop subsidizing ethanol and questions the potential for increased environmental benefit from increasing production of corn-based ethanol.
The recommendation to end public subsidies for ethanol producers is based on strictly economic analysis that shows increased profitability for ethanol producers has eliminated the justification for subsidies. The state program, begun in 1987, is a producer payment program. The Job Opportunity Building Zones (JOBZ) program has also provided subsidies for recently-built ethanol and biodiesel facilities. According to the report, “the producer payment program has paid $93 million over the last five years to companies that have earned profits of $619 million” during the past five years, and “about $44 million is scheduled to be spent on the producer payment program from fiscal year 2010 through 2012.” The report recommends ending the subsidy and “redirecting the funds to programs designed to further reduce fossil fuel energy use and greenhouse gas emissions.” That, of course, is not going to happen because the ethanol industry has a lock on legislative support, as well as the support of the governor.