In what could be a shift in the administration's postion on ethanol subsidies, USDA secretary Ed Schafer said last week that cuts in government ethanol subsidies are needed, according to Reuters.

USDA and the Environmental Protection Agency will propose a biofuels action plan within the next few weeks, Schafer said. The plan will describe which elements of the biofuels industry the government sees as sustainable and outline the government's ability to support the industry.

"The ethanol industry has incorporated the fact there are subsidies into their operational, financial models. I think that is a mistake," Schafer told reporters at a business journalism conference in Kansas City. "They are going to have to see a gradual ... step-down reduction in subsidies."