US biofuels subsidies a needed risk - Deere exec

11 October 2006 16:04  [Source: ICIS news]

ST. LOUIS, Missouri (ICIS news)--Government subsidies for biofuels were needed to get the US industry on its economic feet, but there should be a recognition of the risk that subsidies once started are hard to remove, a senior business leader said on Wednesday.

In a new industry, some "pump-priming" by the government is needed to stimulate the sector, said Robert Lane, chairman and chief executive of agricultural equipment maker Deere & Company.

But Lane acknowledged a point that critics have made - that once a subsidy is created, it is politically very difficult to remove it. Ethanol and biodiesel production in the US is heavily dependent on tax incentives and also benefits from direct government funding.

That is a risk that can be addressed in terms of the biofuels industry, Lane told the Advancing Renewable Energy conference, sponsored by the US Ddepartment of Energy and the US Department of Agriculture.

He praised the Bush Administration for "aggressively" looking for ways to transition the US farm sector away from subsidies.

Lane said the question of US agricultural subsidies needs to be addressed to secure a hoped-for "quick revival" of the collapsed Doha Round of world trade talks, which focused on lowering barriers to global trade in farm products.

Deere & Company is based in Moline, Illinois and had sales of $19.4bn (€15.5bn) in its last fiscal year ended 31 October, 2005.

By: Stephen Burns
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