VEETC is imperative to corn, ethanol markets

The South Dakota Corn Growers Association calls bipartisan action in Congress to extend the Volumetric Ethanol Excise Tax Credit (VEETC) this week an imperative step, which would maintain thousands of jobs and ensure the nation’s ethanol fuel production is maintained and stays domestic.

South Dakota Congresswoman Stephanie Herseth Sandlin will sign on with Representatives Earl Pomeroy (D-ND) and John Shimkus’ (R-IL) plan to introduce legislation to extend the VEETC for five years at the existing 45 cents per gallon; the Small Ethanol Producers Tax Credit, and the secondary tariff on imported ethanol. The bill also extends the cellulosic ethanol tax credit to align with the VEETC.

“Extending the VEETC is the single most vitally important action Congress can take to support nearly thousands of jobs in all sectors and allow the ethanol industry to continue bolstering the economy with domestically produced fuel,” said Gary Duffy, president of the SDCGA.

A recent study warned that if the VEETC credit is allowed to expire it would cost 112,000 jobs and reduce domestic ethanol production by 38 percent. This loss of production would be made up for with imported fuels.

The VEETC and small producer’s credit are scheduled to expire at the end of 2010 and the cellulosic production credit is scheduled to expire at the end of 2012. The legislation will provide meaningful long-term extensions of these tax credits, giving the industry the certainty it needs to maintain current production and continue to invest and develop the next generation of biofuels.

“As corn farmers get ready to plant this Spring, a strong and growing ethanol market is critically needed for the additional bushels of corn we produce every year on the same acres,” said Duffy. “And the economic boost the industry offers throughout South Dakota communities alone is unparalleled. It is critical that the ethanol industry has the incentive to expand production to meet the demands of consumers.”

The fact of the matter is these incentives work. In 2009 alone, the increased tax revenue generated by American ethanol production returned $8.4 billion to the federal Treasury, $3.4 billion more than the cost of VEETC. This doesn’t include the billions of dollars generated in state and local economies all across the country.