China lowers ethanol subsidies

Source: Dan Piller, Des Moines Register • Posted: Thursday, April 19, 2012

Following the lead of the U.S., China is cutting its subsidies for grain for ethanol production for fear that it will run short of livestock feed, according to a report by Bloomberg News.

Producers have seen their government aid cut from 1,276 yuan last year to 500 yuan, which is about $79 per ton, according to a statement from COFCO Biochemical Co. reported by Bloomberg.

In the U.S., ethanol blenders’ 45-cents per gallon tax credit was allowed to lapse on Jan. 1, although the ethanol mandate that will require the use of more than 13 billion gallons of ethanol this year in the U.S. remains in place.

The Chinese government last November said it would discontinue rebates on value-added taxes paid on grain-based ethanol by 2015.

As consumption of pork and beef has soared in China the government has expressed more concern about livestock production and the availability of feedgrains. The country is a major importer of corn and soybeans, and the U.S. Department of Agriculture estimates that China may quadruple its corn imports this year.