PELLA, IA --Texas Governor Rick Perry thrashed the ethanol issue in corn country Tuesday, arguing the federal government should get out of the business of picking winners and losers and end federal subsidies to energy businesses, including the ethanol industry that looms so large in Iowa.

"[W]hether you're in the oil and gas business, the tax credits they get, whether you're in the ethanol business and the renewable fuel standard or whether you're in the wind side, from Washington DC, I do not think it is the federal government's business to be picking winners and losers in frankly any of our energy sources," Perry said to a forum on manufacturing jobs in Pella, Iowa.

Perry brought up ethanol during a jobs forum in Pella in response to a question about whether wind energy subsidies should continue. Iowa's Republican Gov. Terry Branstad who moderated the forum noted that Sen. Charles Grassley, R-Iowa, supports federal funding for wind energy.

Ethanol advocates have expressed disagreement with Perry's energy plan since he unveiled it in October with one group saying Perry's rhetoric about winners and losers doesn't match his energy plan.

"He does pick a winner," said Monty Shaw, a spokesman for the Iowa Renewable Fuels Association. "Perry's energy plan leaves Iowa running on empty."

Shaw notes that Perry's plan calls for letting current subsidies for a variety of energy industries expire. And while federal subsidies for renewable fuels such as ethanol have expiration dates, Shaw says petroleum subsidies don't have an expiration date and thus, Perry's plan chooses the oil and gas industries as winners, while renewable fuels lose.

His campaign insists Perry would end federal energy funding entirely.

"Gov. Perry's plan makes it clear that he will work with Congress to phase out ALL federal subsidies in order to level the playing field among all energy sectors," a Perry spokesperson told Fox News. "These sectors will have time to adjust their model before any subsidies related to their industry expire."

Perry's tough talk on ethanol Tuesday came in a politically delicate setting. The manufacturing facility at which the jobs forum was held is surrounded by corn fields and ethanol production is a boon to Iowa's economy. The state's farmers provide corn a raw ingredient in the production of 3.7 billion gallons of ethanol each year, nearly a third of America's output. The state is home to 41 ethanol processing plants.

But despite his second-tier status in Iowa polling and the popularity of ethanol here, Perry insisted that as president, he would put the federal government out of the ethanol business, noting that it should focus on other responsibilities.

"They ought to get back to what they ought to have been doing which is standing a good military and securing the border and then let the states work out most of the rest of these things," Perry said.

After forum moderators pressed further on the issue, Perry did leave an opening for some money to go to energy but said it should be limited to research and development.

"R and D is the one place that I would allow the federal government to be engaged," he said.

But that's not enough for those who support ethanol. They say despite Perry's claim that he looks at all energy industries as being equal, his plan gives an unfair advantage to the petroleum industry that creates so many jobs in Texas.

"He hasn't figured out that he's running for president of the United States instead of Texas," one ethanol advocate said.