Ethanol Producers Seek Revision in Legislation

Forty-nine current and future ethanol producers from 16 states have sent a letter to the chairmen of the House and Senate tax writing committees urging them to include a correction to the small ethanol producer credit in the final version of pending energy legislation.

Washington D.C. – September 27, 2002 [] The group, spearheaded by the Renewable Fuels Association, is working to allow farmer-owned ethanol plants that organize as cooperatives access to the small ethanol producer credit program. As currently implemented, farmer cooperatives cannot take the credit. The ethanol producers wrote: “At this critical time for America and its need for energy independence, we urge you to include in the final energy agreement a provision to modify the “small ethanol producer credit.” Ethanol is one of the few viable sources of renewable fuels that will assist in meeting the domestic energy needs of this country. “Under current law, small ethanol producers are allowed a 10-cents per gallon production income tax credit on up to 15 million gallons of production annually. The provision is generally available to all small ethanol producers except those organized as farmer cooperatives. Due to their structure, farmer cooperatives are not able to take the credit. “Farmer cooperatives are businesses owned and controlled by farmers. Originally, the credit was created to incentivize farmers’ involvement as small ethanol producers. Unfortunately, the effect of the credit, as currently designed, actually works as a disincentive to farmers organized as a cooperative.
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