Ethanol's Growing List of Enemies

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...More corn for ethanol producers, of course, means less for livestock. Ranchers in wide-open Western states and pig farmers in the rural stretches of the South and Midwest are finding their businesses slammed by policies cooked up in Washington.

Hitch says the feedstock that's primarily made from corn is the single biggest expense for his business. As corn costs have doubled, meat packers and processors like Tyson Foods (TSN) and Smithfield Foods (SFD) have to pay more for the animals they buy.

"The current approach and pace is full of risks to traditional users of feedgrains," Matthew Herman, a Tyson Foods manager, told a House subcommittee earlier this month. "Without adequate safeguards for the unintended consequences, the future of U.S. animal agriculture is put in great jeopardy."

Economists argue that making ethanol from corn wouldn't make any sense without the government's help. The mix of federal and state subsidies to corn ethanol amounted to a conservative estimate of $5 billion to $7 billion in 2006, says Koplow of Earth Track. A considerable chunk of that money comes from the 51 tax refund for each gallon of ethanol refiners blend with gasoline to make fuels that can power flexible-fuel cars...

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