April 23, 2012
China lowers ethanol grain-based producers' subsidies
In the latest move to curb industrial use and ensure livestock feed supply, China lowered subsidies for producers of grain-based ethanol by more than half, reports Bloomberg.
Producers now get CNY500 (US$79) for a tonne of ethanol made with corn or other grain, down from CNY1,276 (US$202) 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 CNY750 (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 four million tonnes in the 2011-12 marketing year, according to the USDA.
Market analysts conclude that with rising gasoline prices, losses from producing ethanol are shrinking, so "it doesn't make sense to continue subsidising this industry," a spokesman said.