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Mahamad Rodzi Abdul Ghani


Peoria Journal Star



Greasing biodiesel's wheels with palm oil

13/12/05 (Peoria Journal Star)  -   Despite overt hints to Santa's elves that I own enough dress shirts and too many ties for someone who works at home, chances are nearly 100 percent that a swell new shirt and a very understated tie are in my immediate future.
But hey, as Mick Jagger might say, you don't always get what you want.

Then again, sometimes you get more than you ask for, as the American Soybean Association discovered to its dismay a month ago.

The story actually began Aug. 8 when, after "more than a decade of farmer-directed grassroots policy work," crowed an ASA press release, President Bush inked (a "momentous signing," raved ASA) the 2005 Energy Bill.

The Soy Boys swooned ("a crowning achievement for the ASA and its 25 state affiliates") because the legislation extended the $1 per gallon tax credit for "agri-biodiesel made from products like soybeans" and a 50-cents per gallon tax credit for "biodiesel made from other inputs such as recycled cooking oil" through Dec. 31, 2008.

On Nov. 8, however, ASA was fuming as 267,790 gallons of biodiesel made from Ecuadorian palm oil landed in Tampa. All of it (surprise!), floated in on the $1 a gallon federal grease ASA had gladly smeared over itself in August.

ASA, a strong supporter of free trade and free markets, issued another press release. It was "outraged" that the world might take advantage of the Congressional lard and free trade to make a buck.

Even worse, EarthFirst Americas Inc., the Tampa firm that produced and imported the Ecuadorian palm diesel, announced Nov. 9 that the biofuel tax breaks were so lucrative the firm planned to import "up to 45 million gallons" of foreign made biodiesel in 2006 and "over 100 million gallons in 2007."

According to ASA's own numbers, 45 million gallons is 50 percent more biodiesel than was produced in the United States in 2005 and 100 million gallons is about half of all the biodiesel to be made in the United States in 2007.

Of course, 200 million gallons of biofuel won't be made in the United States in 2007 if it can be made cheaper with Central American palm, Canadian canola or Brazilian soy. It likely will be made offshore and exported to the United States.

And all of it will flow through the tax break pipeline that looked so sweet to ASA at summer's end.

Well, says ASA, not if it can convince Congress and the White House to "act immediately... to support enactment of a tariff on imported biodiesel" equal to the lucrative tax break.

Whoa there. To protect U.S. soybean growers, Congress must pass a trade-restricting measure to slow the nation's move away from imported, $60-a-barrel Middle Eastern oil even as the trucking industry and farmers are paying nearly $1 a gallon more for diesel than gasoline?

This free-trade-is-good-for-all-unless-it's-bad-for-me shows most farm groups' true colors. They love free trade in theory; they don't like it in practice.

But that seldom keeps them from touting total nonsense about it. In late September ASA patted itself on the back ("a positive reflection on ... our international market development program") for record U.S. soybean exports during the 2004-05 marketing year.

Nowhere did the ASA note in its self-praise, however, that the average farm price for soybeans during the record-setting year was $5.74 a bushel, or $1.60 a bushel less than the previous year when U.S exports were 216 million bushels less.

This deception is common when politics, not economics, is the focal point of policy. Yes, the U.S. economy is growing 4 percent now, but median household income has fallen five straight years, inflation is now outpacing wage growth, and 7 million more Americans have sunk below the federal poverty mark since 2000.

Farmers and ranchers don't need more shirts and ties from a Santa Claus Congress or elf-playing farm groups. They need honest policy alternatives built on honest economics: supply and demand, free trade and domestic food security, conservation and production.

And all I really want for Christmas is a birdfeeder.

ALAN GUEBERT's column appears each Tuesday. His e-mail address is agcomm@sbcglobal.net.