Abstract
The United States has several tax and investment incentives for ethanol production. These include the federal alcohol mixture credit, federal excise tax exemption and tariff protection on imported ethanol fuel The purpose of this chapter is to analyze the impacts of the federal, ethyl tertiary butyl ether (ETBE) tax credit upon the production of sugarcane and sugar beets in the United States. This new federal regulation provides tax incentives for producing ethanol from sugar crops when it is combined with isobutylene to produce ETBE. It is shown that the ETBE tax credit will have no effect upon the production of sugar crops in the United States for the following reasons: (1) the ETBE tax credit is merely a minor extension of a long list of other tax incentives and subsidies put in place to promote ethanol production from sugar crops; (2) the ETBE tax credit, as well as all the other related tax incentives and subsidies, has not had direct stimulus upon the production of ethanol from domestically produced sugarcane or sugar beets; (3) the current U.S. sugar program inhibits the production of ethanol from sugarcane and sugar beets because it provides both a price support and a price lid at levels too attractive to divert sugar crops from the production of high value sugar to the production of relatively low value ethanol; and (4) the ETBE tax credit is not expected to increase the prices of corn, corn sweeteners and/or sugar. Moreover, there will be no increase in sugarcane or sugar beets acreage as a direct result of the impacts of the ETBE tax credit on the production of corn-based ethanol.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Advincula, C.A. 1992. “Supply Response of the Florida Cane Sugar Industry and Related Policy Implications. ” Unpublished Master’s thesis, Department of Food and Resource Economics, University of Florida, Gainesville, FL (August).
Advincula, C.A., L.C. Polopolus, R.W. Ward, and J. Alvarez. 1992. “Supply Response of the Florida Cane Sugar Industry and Related Policy Implications.” Department of Food and Resource Economics, Staff Paper SP 92-26, University of Florida, Gainesville, FL (November).
Alvarez, J. and L.C. Polopolus. 1990. Sugar and the General Agreement on Tariffs and Trade. Department of Food and Resource Economics, Sugar Policy Series No. 5, University of Florida, Gainesville, FL (November).
Andreas, M.L. 1990. “Testimony on Behalf of Archer Daniels Midland Company.” Paper presented before the U.S. House Committee on Ways and Means, Public Hearing on Certain Tax and Trade Alcohol Fuel Initiatives, Washington, DC (1 February).
Bhatti, M.Y. and J.F. Yanagida. 1990. “Factors Affecting Farmers’ Sugarcane Supply Response in Pakistan.” Pakistan Journal of Agricultural Social Sciences 4: 67–72.
Evans, M.K. 1997. The Economic Impact of the Demand for Ethanol. Study prepared for the Midwest Governors’ Conference, Lombard, IL (February).
Feedstuffs Staff Editor. 1998. “Congress Passes Ethanol Extension of Tax Credit.” Feedstuffs, the Weekly Newspaper for Agribusinesses 70(22): 7.
Florida Audubon Society et al. Versus Nicholas F. Brady, Department of the Treasury et al.} 1991. Civil Action No. 90-1185JSP, U.S. District Court, Washington, DC (June).
Gemmill, G.T. 1976. “The World Sugar Economy: An Econometric Analysis of Production and Policies. ” Ph.D. Dissertation, Department of Agricultural Economics, Michigan State University, East Lansing, MI.
Gressel, J.P. 1984. “United States Sugar Policy and Ethanol Production from Sugarcane in Florida.” Unpublished Master’s Thesis, Department of Food and Resource Economics, University of Florida, Gainesville, FL.
Hauser, R.J. and J.B. Braeden. 1982. “Economic Impacts of Corn Utilization in the Sweetener and Fuel Alcohol Industries.” Paper presented at a Committee on Agriculture Hearing on the Surplus Agricultural Commodities Disposal Act, U.S. House of Representatives, Serial No. 97-BBBB: 72-73 U.S. Government Printing Office (15 September).
Hertzmark, D., S. Flaim, D. Ray, and G. Parvin. 1980. “Economic Feasibility of Agricultural Alcohol Production within a Biomass System.” American Journal of Agricultural Economics 62(5): 965–971.
Hertzmark, D., D. Ray, and G. Parvin. 1980. The Agricultural Sector Impacts of Making Ethanol from Grain, p. 969. Golden Solar Energy Research Institute, Denver, CO (March).
Kiker, C. and J.P. Gressel. 1986. “Economic Appraisal of Ethanol from Sugarcane: Policy Effects.” Internationaljournal of Energy Systems 6: 90–95.
Lopez, R.A. 1989. “Political Economy of U.S. Sugar Policies in the 1980s.” American Journal of Agricultural Economics 71(1): 20–31.
McNew, K. and B. Gardner. 1996. “A Sweet Deal or Just Gas for Corn Farmers?” Economic View Points 1(2): 9–11.
Polopolus, L.C. 1996. “World Sugar Markets and U.S. Sugar Policy.” Food and Resource Economics Department, Staff Paper 96-7, University of Florida, Gainesville, FL (July).
Polopolus, L.C. and J. Alvarez. 1991. Marketing Sugar and Other Sweeteners.Amsterdam, Netherlands: Elsevier.
Polopolus, L. and A. Schmitz. 1991. “The Effect of the ETBE Tax Credit on the Production of Sugar Crops in the United States,” in Florida Audubon Society et al. Versus Nicholas Brady et al., U.S. District Court, Department of the Treasury, Washington, DC (25 June).
Ronnigen, V.O. and M.D. Praveen. 1989. How Level Is the Playing Field? An Economic Analysis of Agricultural Policy Reforms in Industrial Market Economies. Foreign Agricultural Economics, Report No. 239, ERS/USDA, Washington, DC (December).
Schmitz, A., R. Allen, and G.M. Leu. 1985. “The U.S. Sugar Program and Its Effects,” in Gordon C. Rausser and Kenneth R. Farrell, eds., Alternative Agricultural and Food Policies and the 1985 Farm Bill. Giannini Foundation of Agricultural Economics, University of California at Berkeley, Berkeley, CA, and Resources for the Future, Washington, DC. San Leandro, CA: Blanco Publishers.
Schmitz, A. and D. Christian. 1990. “U.S. Sugar.” Paper prepared for the U.S. State Department Conference on Sugar Markets in the 1990s, Washington, DC (May).
USDA/ERS (U.S. Department of Agriculture, Economics Research Service). 1989. Feed Situation and Outlook. USDA/ERS, Monthly Report, Washington, DC (February).
—. 1990. The 1990 Farm Act and the 1990 Budget Reconciliation Act. USDA/ERS, Miscellaneous Publication No. 1489, Washington, DC (December).
—. Various issues. Sugar and Sweetener Outlook and Situation Report. USDA/ERS, Monthly Report, Washington, DC.
—. 1989. Sugar and Sweetener Report.USDA/ERS, Monthly Report, Washington, DC. (December).
Wall Street Journal.1997. “Futures Prices and Cash Prices,” p. C-12. New York, NY (21 May).
Womack, A., S. John, W. Meyers, J. Matthews, and R. Young. 1981. “Impact Multipliers of Crops: An Application for Corn, Soybeans and Wheat,” in Applied Commodity Price Analysis and Forecasting.Ames, IA: Iowa State University Press (12-13 October).
Author information
Authors and Affiliations
Editor information
Rights and permissions
Copyright information
© 1999 Springer Science+Business Media New York
About this chapter
Cite this chapter
Schmitz, A., Polopolus, L. (1999). Alcohol Fuel Tax Policy: Sugar, Corn and the Environment. In: Casey, F., Schmitz, A., Swinton, S., Zilberman, D. (eds) Flexible Incentives for the Adoption of Environmental Technologies in Agriculture. Natural Resource Management and Policy, vol 17. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-4395-0_10
Download citation
DOI: https://doi.org/10.1007/978-94-011-4395-0_10
Publisher Name: Springer, Dordrecht
Print ISBN: 978-94-010-5888-9
Online ISBN: 978-94-011-4395-0
eBook Packages: Springer Book Archive