The President of the National Corn Growers Association has shot off a letter to Cargill complaining about the latters reported intention of importing Brazilian ethanol into the US via a new plant in El Salvador. @griculture Online explains the mechanics of the transformation, which would allow Cargill to convert the Brazilian ethanol into fuel grade ethanol and import it while avoiding the ethanol tariff.
El Salvador is one of the nations covered under the Caribbean Basin Initiative (CBI), which allows up to 7% of the previous years US fuel grade ethanol production to be exempt from import duties. Cargills decision, NCGA says, is a means to circumvent US tariffs on imported ethanol.
Since 1980, the US has imposed a $0.54 per gallon tariff on imported ethanol -- the only exception to that being ethanol from CBI nations. (For a good overview of Ethanol Fuel Incentives in the US, see this report, released January 2004 by the California Energy Commission.)
Another factor: Brazilian ethanol costs approximately $0.50 per gallon to produce. Corn-based production in the US costs at least twice that, if not more. Estimates of the cost of production vary based on method as well as basic model. The Cargill math is pretty clear.
Proponents of biotech-driven bioethanol production say the dynamics of that will change over time, bringing the production cost of from biomass down to the level of gasoline. If the price of oil keeps rising, that target will be increasingly easy to meet. One thing that has not changed as of yet -- ethanol, with its hefty tax break, continues to be a lightening rod for political wrangling.