The National Corn Growers Association on Tuesday lashed out at Cargill Inc. for considering bringing Brazilian-made ethanol into the United States by way of El Salvador to avoid tariffs.

The friction between the corn growers group and Minnetonka-based Cargill follows news reports from Reuters that Cargill is negotiating to build a dehydration plant in El Salvador that would convert ethanol from Brazil into fuel-grade ethanol for shipment to the United States.

A statement from the St. Louis-based growers association said moving the ethanol through El Salvador would circumvent U.S. tariffs on imported ethanol that would apply to direct shipments from Brazil. The El Salvador plant has trade protection to directly compete with American corn farmers through a Caribbean Basin Initiative trade policy.

For its part, Cargill noted it has been part of the U.S. ethanol industry since 1992 but that its Latin American investment is still under discussion. Responding to the corn growers' criticism, Cargill issued a statement that noted ethanol is becoming a worldwide market.

"Today, demand for ethanol both domestically and globally is at an all-time high and continues to expand. As a result, Cargill is preparing to become more involved in the global ethanol trade," the company said.

"As part of that effort, we have been in discussions regarding a potential investment in Central America, but we are not in a position to elaborate on those discussions."

El Salvador is among countries in the United States' Caribbean Basin Initiative (CBI) trade program that allows member countries to exempt import duties of up to 7 percent of the previous year's U.S. fuel grade ethanol production.

"While this may be a legitimate and legal use of the CBI, it runs counter to the intent and spirit of other U.S. legislation that is primarily responsible for the growth of the ethanol industry in the United States," said Dee Vaughan, a Texas farmer who serves as president of the corn group.

Vaughan said it was "disheartening and curious" that Cargill would consider this investment at the same time American corn farmers are investing in ethanol plants to produce the alcohol-fuel substitute for U.S. motor fuel use. Ethanol displaces about 10 percent of petroleum at some gas stations.

While Cargill rival Archer Daniels Midland is the biggest domestic producer of ethanol, farmers across the Corn Belt states have been rapidly building ethanol plants as states change environmental regulations that require the cleaner burning petroleum substitute.

Farmer-owned enterprises nationwide, including 12 ethanol plants in Minnesota, are producing about half of the estimated 3.3 billion gallons of ethanol anticipated to reach markets this year. That production is expected to reach 5 billion gallons next year as intended new plants come on line.

Ethanol can be made from practically any organic matter that ferments. American ethanol is mostly made from processing corn, while Brazilian ethanol is primary made from sugar.

U.S. ethanol prices have nearly doubled in the past year, to about $1.80 per gallon currently in the Twin Cities, while local auto gasoline prices have passed through the $2 per gallon threshold in the past few days.

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