By Karl Plume
GRAPEVINE, TEXAS (Reuters) - A major U.S. corn producer group says it will continue to pursue incentives to expand ethanol production despite criticism from ailing meat and dairy producers that the corn-based biofuel is to blame for their current economic woes.
The National Corn Growers Association said corn farmers will need all the demand outlets available to them as they face a difficult year ahead due to high production costs and depressed grain prices.
"We are supportive on higher blend rates based on sound science, provided the EPA goes along with it. We will support that, anything above the 10 percent," said NCGA president Bob Dickey, referring to the U.S. Environmental Protection Agency's limit for the maximum amount of ethanol currently blended into the U.S. fuel supply.
Livestock, poultry and dairy farmers are struggling with mounting losses and bankruptcies as historically high corn feed costs and recession-depressed meat and milk prices have sapped their profitability.
They have called on the suspension of government mandates to steadily increase the use of ethanol.
"They've been through the valley before and they probably will be through the valley again. But I firmly believe that we need all our demand bases -- livestock, ethanol, exports, whatever," Dickey said, stressing that he himself is a livestock producer.
He was speaking on the sidelines of the Commodity Classic grain industry gathering this week.
A coalition of U.S. governors this month called on the EPA to issue a waiver to allow the sale of 13 percent ethanol blends and government officials are currently exploring the possibility.
Ethanol makers have been pushing to boost blends as high as 20 percent, but any increase would need the support of automakers, which are concerned with the higher blends' impact on fuel lines and catalytic converters.
Federal law requires the use of 10.5 billion gallons (40.8 billion liters) of ethanol this year and 12 billion gallons in 2010.
The U.S. Agriculture Department said 4.1 billion bushels of corn, or about 33 percent of the 2009/10 crop, will be needed to meet that requirement, up from a forecast of 30 percent the current marketing year.
Corn producers are preparing for a difficult year this year as corn prices have been falling while many of their input costs remain at historically high levels.
Corn has tumbled from a record high of more than $7 a bushel to less than $4 a bushel, which is below the cost of production in many areas.
"There is a lot of concern among corn producers about what this next year is going to bring. I think the margins are going to be tighter than they have in the past because of the rising input costs," Dickey said.
He predicted corn prices would eventually recover along with crude oil, which tends to guide the corn market due to the grain's role in ethanol production.
"I don't see the price of crude oil staying at the $40 a barrel level it is today. I'm actually amazed that oil prices are where they are right now," he said.
(Reporting by Karl Plume; Editing by Marguerita Choy)
