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Raising 'Sugar-Cane': Investigative Report into Ethanol Industry Battles

October 13, 2011

DES MOINES, Iowa - A battle being waged in the ethanol industry pits sugar against corn, and it reaches from Florida to the Midwest to Latin America. Florida is at the center of this "energy war," and this investigative report by Les Coleman examines the history, business and political links between sugarcane-based ethanol and ethanol distilled from corn.

The long arm of Florida "Big Sugar" reaches far outside the state and across international frontiers.

Flo-Sun, through subsidiaries such as Florida Crystals and Domino Foods, has milling and refining operations around the world. The rulers of Flo-Sun are Palm Beach-based brothers Pepe and Alfonso Fanjul, whose father came to the United States on the heels of the Cuban Revolution more than a half-century ago.

The Fanjuls, naturally, have their eye on Latin America. So do their close friend and neighbor, David Koch, and his brother, Charles, who head Koch Industries. Their common goal: the importation of sugar cane-based ethanol.

Brian Jennings, executive vice president of the Midwest-corn-dominated American Coalition for Ethanol, says cane ethanol is not domestic and escapes domestic taxes.

"We don't have any sugar cane members, to my knowledge. A lot of sugar ethanol that makes its way into the United States comes through the Caribbean Basin Initiative, which does escape the tariff, the secondary tariff."

That's a 54-cent-per-gallon tax break for imported sugar ethanol. One recent piece of legislation before the U.S. Senate was an effort to repeal the fuel subsidy for corn-based ethanol exclusively produced in the U.S. - an effort backed by "Big Sugar" and the Koch brothers.

The billionaire Kochs are key backers of the Tea Party movement and its pro-free-market, small-government ideology. But Jennings says preserving the free market may not be what is behind the Kochs' move into the ethanol business.

"I think it's disturbing that Koch is lobbying to kill the ethanol tax incentive at the same time the company owns shares in ethanol. Koch will continue to fight U.S. ethanol, I'm sure, even though they have ownership interest. I'm not surprised to hear they are involved in Brazilian sugar ethanol production, either."

The Kochs' pot of ethanol gold may not be at the end of some Iowa cornfield rainbow, but in Paranagua, Brazil, where one of their companies, Koch Fertilizer, has built a 57,000-cubic-ton warehouse to provide fuel for the booming Brazilian sugar-cane ethanol industry. Koch Fertilizer is produced offshore, in Trinidad and Tobago, and Jennings doesn't like it.

"I'm a little bit jaded when it comes to a company like Koch. Unfortunately, this type of thing has been happening for years, when it comes to farmers and ranchers trying to get a fair price for their product."

Republican Florida Gov. Rick Scott wants to expand South Florida ports to accommodate sugar ethanol imports. Florida sugar producers gave Scott $100,000 in his successful bid for governor.

Part 2 in the series Tuesday will feature an examination of the sugar industry's campaign money trail.

This investigative report was produced with cooperation from The American Independent News Network:

Also see:

Les Coleman, Public News Service - IA