Both Sides Gathering Ammo
For Upcoming Ethanol Fight

WASHINGTON —(AP)— Floyd Schultz, who grows corn and soybeans in Plainfield, Ill., has ripped the tags off half a dozen bags of corn seed in the past week and scribbled notes on them to members of Congress.

His message, echoed by other farmers taking the same lobbying tack, is simple: Don't let the subsidy for ethanol die.

Schultz, 52, who has farmed the same 1200 acres all his life, figures ethanol producers' use of corn adds as much as $25,000 a year to his income. At a time when both prices and exports of corn are depressed, he was only too happy to help pressure Washington to preserve the tax breaks for the grain-based fuel additive.

"It's just vital that we keep this industry strong," Schultz said.

When House and Senate negotiators meet in the next week to write a compromise version of a massive transportation funding bill, among the many differences they must resolve is whether to continue ethanol's tax break beyond 2000, when it is due to expire.

The House highway bill after 2000 would halt the 5.4 cent-per-gallon discount off the federal gasoline tax given to marketers who blend gas with ethanol. The Senate version would extend the credit through 2007, while gradually reducing it.

"If it doesn't get extended this time around, it's going to be incredibly difficult to ever do it again," said Greg Guenther, president of the Illinois Corn Growers Association.

Ethanol supporters say farmer-owned ethanol-producing cooperatives need the extra time to become profitable and farm-state economies need the six percent of the corn crop ethanol uses. They also tout it as an environmentally friendly fuel that could reduce America's dependence on foreign oil.

But ethanol's opponents say it is not all that green and call it a tax code boondoggle that has survived due to the political clout of farmers and Decatur, Ill.-based Archer Daniels Midland Co., the nation's largest single ethanol producer and a major campaign contributor.

It's a perennial debate, with the pro-ethanol forces lately holding the upper hand.

But they face a formidable foe: Rep. Bill Archer from oil-rich Texas, the powerful Republican chairman of the tax-writing House Ways and Means Committee. Archer turned back an effort last month to extend ethanol's tax credit in the House bill. He then used the savings from ending the credit in 2000 to repeal a railroad diesel fuel tax and a tax on truck tires and to divert gas taxes paid by recreational boaters to safety programs.

"It's just bad policy, and he's going to do all he can to keep it from being extended," Ways and Means spokesman Ari Fleischer said.

Farmers' groups are running print and radio advertisements urging farmers to call a toll-free number that connects them to their congressmen. They also are encouraging growers to send corn tags to Capitol Hill, as Shultz was doing.

They have high-level supporters. President Clinton has made his pro-ethanol position clear. And just Monday, Agriculture Secretary Dan Glickman told a gathering of agricultural journalists: "This administration will actively oppose any effort to eliminate the ethanol program. The president is committed to extending the credit."

House Speaker Newt Gingrich, a potential Republican presidential candidate mindful of ethanol's importance in Iowa, an early caucus state, also has been vocal about his intention to fight for ethanol.

Sen. Chuck Grassley, R-Iowa, who will serve on the conference committee, said the role of the speaker, who has rescued ethanol before, will be crucial.

"Common sense ought to dictate that it ought to go through easily," Grassley said. "But when you're up against Big Oil, anything can happen."