ACGA Offers Energy Solutions

May 3, 2001

The American Corn Growers Association (ACGA) told a House subcommittee there are "innovative ideas" rural areas can use to help solve the nation's energy problems. The ACGA testimony was presented to the House Subcommittee on Conservation, Credit, Rural Development and Research.

Larry Mitchell, ACGA's CEO said farmers have experienced skyrocketing prices for the essential production agriculture inputs such as fertilizers, chemicals, natural gas and fuel oil. High natural gas prices have also led to large price increases for fertilizer. In addition, farmers in California have suffered rolling blackouts -- severely affecting dairy operations -- and farmers all over the West have suffered the consequences of numerous price spikes in electricity markets.

"Corn producers in the Midwest are reporting that increased prices for just fertilizer and energy related irrigation expenses will add an additional 30 cents per bushel to their production costs," Mitchell said. "And producers in Texas and Oklahoma are reporting anhydrous ammonia costs have risen from $65 per ton just a few years ago to over $400 per ton for this crop season, an increase of over 600 percent. These energy related costs are in addition to many other production related costs such as transportation, tillage, harvest, etc."

ACGA suggested an expansion of the use of bio-fuels, including ethanol and full commercialization of ETBE (ethyl tertiary butyl ether). The group also called for establishment a new Farmer Owned Reserve (FOR) and recommend a portion of the FOR should be dedicated to a Strategic Energy Reserve for the renewable fuels industry. "This initiative would help stabilize the growth in the domestic ethanol industry and give critical assurances to producers, lenders and processors that grain will be there even during lean times," stated Mitchell.

ACGA also called for a statutory modification be made to the Conservation Reserve Program (CRP) to reduce or eliminate the bureaucracy for producers who would like to erect wind-powered generators on CRP acreage, citing that any minor reduction in environmental benefits due to the erection of towers on these very small plots of land would be more than offset by environmental benefits gained in the production of electricity from clean and renewable wind power. The organization endorsed a provision of the Bush administration's 2002 budget request which would provide a 15% tax credit for the purchase of residential solar energy systems, an increase from the current 10%.

Mitchell also recommended a study to determine the advantages of providing environmental benefits index (EBI) points during the CRP bidding process to producers who agree to plant cover crops proven to be higher in their carbon sequestration. An additional suggestion was to provide financial incentives such as governmental cost sharing or tax incentives to enable farmers to use voluntary measures to reduce nitrogen runoff. Such an initiative would not only move towards solving a serious environment concern, but also reduce the energy required to produce improperly utilized nitrogen fertilizers.