WASHINGTON Foodservice industry officials are hopeful that Congress' passage this week of the $307 billion farm bill will help ease the soaring food inflation that has battered restaurant businesses.
Approved by an apparent veto-proof margin, the five-year measure would cut the per-gallon tax credit for blenders of corn-based ethanol from 51 cents to 45 cents, and raise the tax incentive for development of nonfood-based ethanol.
In addition, the bill provides for government regulation of unchecked electronic trading in energy commodities that has been criticized for inflating fuel costs as much as 30 percent, through exploitation of a so-called Enron loophole that permits speculative market manipulation.
The reduction in incentives for corn-based ethanol would affect last year's congressional mandate for a five-fold increase in the production of the alternative fuel, which has resulted in as much as one-third of the nation's corn harvest -- critical for livestock and poultry feed -- going toward ethanol. The mandate and current incentives also have caused farmers to convert acreage from other foods to more lucrative corn crops, further accelerating skyrocketing commodity inflation, critics contend.
The farm bill's provision to "Close the Enron Loophole" would mitigate the effects of excessive speculation in the energy market that has driven up the price of a barrel of oil by anywhere from 10 percent to 30 percent regardless of supply-and-demand dynamics, according to proponents of the new regulatory oversight.
The U.S. Bureau of Labor Statistics last month reported that wholesale food prices in the first three months of the year were up 8.5 percent from year-earlier levels, on top of a 7.6-percent annual increase in 2007, the largest single-year food price increase in 27 years.
President Bush has said he intends to veto the farm bill, but both the House and Senate are believed to have enough votes to override a veto. The bill passed by a 81-15 vote in the Senate and by a 318-to-106 margin in the House.
The bill also expands a nationwide school snack program that provides fresh fruits and vegetables for low-income children.