Officials with the nation's leading meat and livestock associations have signed and sent a letter to Agriculture Secretary Ed Schafer, questioning the agency's plans to guarantee loans to ethanol plants that struggled to pay for high-priced corn this past year.

"Such a program would be a startling new development that discriminates in favor of one segment of American agriculture," the eight organizations said in the letter, pointing out that livestock producers and meat processors also struggle with the risks associated with betting on future prices for corn.

"We in animal agriculture are particularly concerned that you would consider adding one more level of support for the corn-based ethanol industry," the groups said, noting the Renewable Fuel Standard mandate and the blender's credit that already support the ethanol industry.

But USDA Press Secretary Keith Williams told Meatingplace.com the groups are mischaracterizing the Business and Industry Loan Guarantee Program as a cash grant to ethanol, explaining that the program has been in existence providing loan guarantees to any rural business since 1974. "It is not targeted to ethanol businesses," he said.

Government guarantee

A rural business has to find the lender that will make the guaranteed loan. The bank lends the money, while the government guarantees the private loan. USDA does not guarantee marginal or substandard loans through this program, nor provide relief to lenders that have marginal or substandard loans, Williams said.

"The credit quality of each B&I application is thoroughly reviewed," he said. "In particular, USDA reviews the borrower's cash flow, collateral, equity and management, and also the status of its industry. Financial statements, insurance, appraisals, business plans, and feasibility studies are also reviewed and analyzed."

The eight groups are the American Meat Institute, National Cattlemen's Beef Association, National Chicken Council, National Meat Association, National Milk Producers Federation, National Pork Producers Council, National Turkey Federation and United Egg Producers.

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