Ethanol plant dispute highlights unintended impact of subsidies

An ethanol plant in the US is pumping out fuel made from sugar beets, and corn farmers are suing to stop it — a small-town dispute that offers an unusual take on the debate over the market-distorting impact of sugar and corn subsidies.

The dispute in Aurora, Nebraska, population about 4,400, brings into conflict two of the largest US farm programmes, one promoting sugar production and the other corn-based ethanol.

Aventine Renewable Energy Holdings is reaping profits producing ethanol with cheap sugar, thanks to a US Agriculture Department subsidy of beet sugar.