Hypocritical Big Food Opposes Federal Investment – Except Its Own

November 18, 2008

Washington, DC – Today, Growth Energy called on the Grocery Manufacturers Association (GMA) to discontinue its deceptive attacks on the government’s investment in ethanol and other renewable fuels. They also warned that curbing investment now could stop progress in the development of second-generation biofuels that can further reduce the nation’s dependence on foreign oil and help reduce greenhouse gas emissions. The call to action coincides with reports that the government spends $55 billion on federal food subsidies.

“The federal government has an important role in supporting programs that promote the common good,” said Dave Vander Griend, President & CEO of ICM, Inc. and board member of Growth Energy. “Whether by funding anti-poverty programs like food stamps or championing renewable energy that will jumpstart our green economy and create jobs, we believe that it is good public policy to make smart investments for our nation’s future.”

While millions of Americans in need benefit from programs like food stamps and Women, Infants & Children (WIC), they also serve as a reliable revenue stream for many large food companies. In fact, GMA has long been an outspoken critic of “cost containment” policies that would limit food stamp recipients from purchasing brand name products. Further, food manufacturers, like many other industries, benefit from farm subsidy safety nets that have kept commodity prices artificially low for years.

Yesterday, Growth Energy launched a countdown clock to track the hours and days elapsed since the group called on GMA and its members to lower prices for consumers at the grocery store in line with drop in the cost of corn and oil, which have decreased significantly. At a press conference last week, Growth Energy challenged GMA to either lower food prices or admit to the fundamentally flawed argument it has been making about biofuels. To date, GMA has not responded and Growth Energy has repudiated claims that there will be a lag time in the decrease of food prices, noting that there was no lag time when food makers increased their prices earlier this year. See the graph below on the increasing price of food.

“We want GMA to come clean about the misinformation that it has been spreading. The truth is that today’s ethanol is a great investment for America’s energy future. It is America’s best renewable fuel, reliable and affordable alternative to foreign oil that is available right now,” said Bruce Rastetter, CEO of Hawkeye Renewables and board member of Growth Energy. “Investments in ethanol lower the cost of gasoline for consumers, reduce greenhouse gas emissions and help reduce our dependence on foreign oil. The ethanol industry competes with a heavily subsidized oil industry, while at the same time, depending on that competitor to blend their product and reach consumers.”

What is commonly described as the “ethanol subsidy” is actually a tax credit that is given — not to ethanol producers – but to blenders of fuel, which are typically oil companies, to encourage them to blend ethanol with gasoline. Ethanol producers do not receive direct payment from the federal government through this tax credit. The government’s estimated $3 billion investment to encourage ethanol use has produced major returns, including $47.6 billion to the nation’s GDP, the creation of more than 200,000 jobs and $4.6 billion in tax revenues. Further, researchers at Iowa State University recently found that ethanol policies saved the U.S. government $2.65 billion in fewer farmer support payments in 2007 alone.

Despite record oil prices, oil companies are slated to receive more than $32.9 billion in tax benefits, royalty relief, and research and development subsidies from the Federal government over the next five years. A recent study by the U.S. General Accounting Office found that, since 1968, the oil industry has received approximately $150 billion in tax incentives. By comparison, the ethanol industry has received $11.2 billion.

About Growth Energy

Growth Energy is a group committed to the promise of agriculture and growing America’s economy through cleaner, greener energy. Growth Energy members recognize America needs a new ethanol approach. Through smart policy reform and a proactive grassroots campaign, Growth Energy promotes reducing greenhouse gas emissions, expanding the use of ethanol in gasoline, decreasing our dependence on foreign oil, and creating American jobs at home. More information can be found at GrowthEnergy.org.