‘Family feud’ threatens to hurt ethanol lobby

A “family feud” between rival ethanol lobbies represents a "clear and present danger to the corn industry," according to an internal memo written by the president of a third trade association that represents corn farmers.

The memo provides a rare public airing between trade groups usually limited to internal conference calls or K Street happy hour conversations.


Darrin Ihnen, president of the National Corn Growers Association, painted a dramatic picture of a bitter rivalry between the Renewable Fuels Association and Growth Energy for members in a lengthy report that warned of dire consequences, including the loss of political support on Capitol Hill.

He sent the memo to his association’s state branches on Oct. 2 after meeting with the directors of the two groups on legislative strategy and failing to negotiate a detente.

"The ethanol and corn industries face many challenges today that could significantly impact our ability to help provide a renewable domestic alternative to foreign oil, and it is imperative that all parties in the ethanol industry work together cooperatively toward this end," Ihnen said in a subsequent statement.

Ihnen wrote in the memo that he believed the rivalry was hurting the ethanol industry’s lobbying efforts as it turns again to Washington to help it rebound from a deep downturn. He urged the associations to agree to binding arbitration to settle their dispute and demanded a response to the memo by Oct. 9.

And he warned the corn group would end its association with the ethanol group that did not come to the table.

The NCGA would "consider it a hostile action for either GE or RFA to continue to solicit funding from NCGA member states, corn growers or agribusiness supporters of NCGA," unless they reconcile, Ihnen wrote. The memo was first reported by OPIS Net.

In its response to NCGA, the Renewable Fuels Association noted its past record of working with other groups to advance ethanol on Capitol Hill. But it also acknowledged that "our continued success has been threatened by divisions within the ethanol industry that have made it difficult to develop policy consensus and provide our allies with a clear sense of priorities."

The group added, however, there were "practical, procedural and potentially legal constraints" the prevent arbitration.

In its official response to Ihnen’s demand, Growth Energy said it would not agree to arbitration because its lawyers said doing so may violate anti-trust laws.

But the co-chairmen of the group, retired Army Gen. Wesley Clark and ethanol producer Poet CEO Jeff Broin, said they were ready to meet with RFA "at any time."

Even so, in reciting the reasons why Growth Energy was founded a year ago, Clark and Broin may further antagonize their group’s critics.

"As you know, before the formation of Growth Energy, the ethanol industry and corn farmers were unfairly blamed for higher food prices. It is more than fair to say that both the ethanol industry and corn growers were not effective in responding to these brutal attacks," the two wrote.

The group was formed by ethanol producers after they failed to consolidate the industry’s other trade groups, the two said. Growth Energy has added a "vigorous, effective and badly-needed voice to the debate on behalf of ethanol and corn growers."

They take credit for a provision eventually added to the House climate bill that blocked, at least temporarily, the Environmental Protection Agency from implementing a controversial rule that could count land development in foreign countries against ethanol’s carbon footprint. And they noted that the policy they were trying to stop was added in legislation prior to Growth Energy’s existence.

But Ihnen contends tension between the two groups was harming the industry’s lobbying efforts.

"The ethanol family feud is blunting the positives and exacerbating the negatives, especially on policy," Ihnen wrote in the memo.

"In recent meetings in Washington, D.C. and conference calls, political insiders well aware of the ethanol industry and DC political dynamics described the situation as a crisis," he wrote.

Ihnen listed the concerns:

"- Champions for ethanol are reluctant to be meaningfully engaged

- Political support for ethanol has waned

- Supporters and allies for ethanol have significantly diminished"

Hurt by the down economy, corn ethanol companies are lobbying furiously to increase the amount of ethanol refiners can blend with gasoline to increase demand for their product and to block the EPA from calculating land development practices in foreign countries against ethanol’s carbon content, the so-called "indirect land use" rule.

Farmers in foreign countries may cultivate more land, chopping down carbon absorbing forests, to meet global food demand as more American corn is used for fuel. That development should be factored into ethanol’s carbon footprint, critics charge.

But the industry contends it is impossible to link ethanol production in the United States with cultivation practices in other countries.

The other big issue relates to the blend wall. Now gasoline cannot include more than 10 percent ethanol mix. The industry says that provides an unnecessary cap on ethanol production.

"The 10 percent blend wall has stifled growth in ethanol production as well as growth for corn demand," Clark and Broin wrote in their response to Ihnen.
Critics contend a higher blend wall would lead to more air pollution and could damage engines because ethanol is more corrosive than gasoline.