WASHINGTON – U.S. Agriculture Secretary Ed Schafer last week criticized domestic ethanol producers for depending too much on government subsidies and said that reductions were needed.

"The ethanol industry has incorporated the fact there are subsidies into their operational, financial models. I think that is a mistake," Schafer reportedly said. "They are going to have to see a gradual ... step-down reduction in subsidies."

Schafer was speaking on the sidelines of a business journalism conference. His comments were carried by various news agencies including Reuters.

Secretary Schafer said U.S. Department of Agriculture (USDA), in conjunction with the Environmental Protection Agency (EPA), the Energy Department and other agencies, plans to roll out a "biofuels action plan" within the next few weeks.

About a third of this year's U.S. corn crop is reportedly going to produce ethanol amid efforts to meet the government's Renewable Fuel Standard, which requires 9 billion gallons in renewable fuels to be blended into the nation's gasoline supply this year, and 11.1 billion gallons in 2009.

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Source: American Meat Institute