Schafer Clarifies USDA Loan Program

USDA has been trying to get the message out that they are not bailing out ethanol plants that lost money speculating on commodity markets this year.

The problem started when Secretary of Agriculture Ed Schafer told members of the press at the World Food Prize symposium in Des Moines that some ethanol plants might be eligible for loans through USDA. “There is going to have to be some credit applied to companies to buy some lower-priced corn to blend with their higher-priced corn obligations,” Schafer said.

Reaction from the livestock industry was swift and angry. Eight major livestock organization leaders wrote to the secretary protesting what they viewed as preferential treatment for the ethanol plants. “Many of our producer and processor members also took long positions on corn and soybeans and are paying above-market rates right now,” they wrote. “We in animal agriculture are particularly concerned that you would consider adding one more level of support for the corn-based ethanol industry.”

So, Schafer met with those groups today to try and explain the USDA’s Business and Industry Loan Guarantee Program. “We walked through the B&I loan guarantee program, which has been used by their memberships, and we assured them that this was a long-standing program that we would use to help finance businesses in rural America, some of them may be ethanol facilities,” Schafer said.

Schafer notes that the loan program is there for the livestock industry as well. “And we’re going to pass along the elements of the Business and Industry loan guarantee program to them that they can pass out to their members.”

No word from the livestock industry on whether they would consider that a “bail out.”