China favours animal feed above ethanol

//19 Apr 2012
China, the second-biggest corn consumer, lowered subsidies for producers of grain-based ethanol by more than half in the latest move to curb industrial use and ensure livestock-feed supply, reports Bloomberg.
Producers now get 500 yuan (US$79) for a tonne of ethanol made with corn or other grain, down from 1,276 yuan last year, COFCO Biochemical Co. said in a statement to the Shenzhen Stock Exchange, citing a Ministry of Finance order.

Subsidies on ethanol from non-grain crops such as cassava will be 750 yuan(US$119), it said, without giving a previous figure.

Corn prices in China surged to a record this year as rising demand from producers of hogs, cattle and poultry outpaced production.

The nation may more than quadruple corn imports to 4 million tonnes in the 2011-2012 marketing year, according to the U.S. Department of Agriculture.

Market analysts conclude that with rising gasoline prices, losses from producing ethanol are shrinking, so “it doesn’t make sense to continue subsidizing this industry,” a spokesman said.