Fuel ethanol subsidies will also look at food prices in addition to oil prices

The current production company loses a few tons for every one ton of sales
The reporter learned from Henan Tianguan Enterprise Group Co., Ltd. on December 4 that in 2008, the country will once again adjust the fuel ethanol fiscal subsidy policy, that is, in implementing the flexible subsidy policy, in addition to the reference to oil prices, it will also refer to food prices.
Last year, the Ministry of Finance jointly issued the "Implementation Opinions on the Development of Bio-energy and Bio-chemical Finance and Support Policies." The Opinions stated that a risk fund system and an elastic loss subsidy mechanism will be established. When the oil price is higher than the normal production and operation reserve price of the enterprise, the state shall not be allowed to make any loss subsidies. The enterprise shall establish a risk fund; when the oil price is lower than the guaranteed reserve price, the enterprise shall use the venture fund to make up for the loss through profit, if the oil price runs for a long time. The elastic loss subsidy mechanism will be launched.
The new flexible subsidy policy, the country will establish a reference protection price according to the changes in domestic gasoline prices, the price of fuel ethanol is lower than the reference protection price, the state will give subsidies so that companies can avoid losses to the greatest extent. However, according to the Tianguan Group, there are still food prices other than oil prices that currently affect the cost of fuel ethanol production companies. In particular, since the beginning of this year, the global corn and other food prices have soared. In this situation, the economic value of fuel ethanol is affected. However, due to global energy shortages, the outlook for fuel ethanol is still promising. The state's adjustment to the fiscal subsidies for fuel ethanol is based on such considerations.
According to analysis by Tianguan Group, after implementing the flexible subsidy policy, the amount of subsidies received by enterprises will decrease year by year. The state will gradually liberalize fuel ethanol production and achieve full marketization of fuel ethanol. In 2007, the state's subsidy for fuel ethanol was reduced to 1,373 yuan per ton, a decrease of 255 yuan over 2006 and a decrease of 500 yuan over 2005.
It is understood that since the promotion of ethanol gasoline in China, it has been implementing financial subsidy policies for fixed-point fuel ethanol producers. This is due to the fact that China's gasoline and fuel ethanol prices are all subject to unified national pricing and there is a price upside down. The state stipulates that the price of fuel ethanol will be executed at the same time as the 90th gasoline ex-factory price announced by the price coefficient multiplied by 0.911. As the international oil price soared, the adjustment of domestic oil prices lags behind. At the same time, the price of corn has risen more. At present, it costs hundreds of dollars to sell one ton of fuel ethanol.
According to another source, at present, China's subsidized fuel ethanol production companies include Jilin Fuel Alcohol Co., Ltd., Henan Tianguan Group, Anhui Fengyuan Biochemical Co., Ltd., and Heilongjiang China Resources Alcohol Co., Ltd.

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