Senate ag committee hearing focuses on Farm Bill energy programs

By Kris Bevill | February 15, 2012

Agriculture Secretary Tom Vilsack and a handful of bioenergy stakeholders were given the opportunity to present the Senate Committee on Agriculture, Nutrition and Forestry with their opinions on the importance of the Farm Bill’s energy programs during a Feb. 15 committee hearing focused on the legislation’s role in supporting energy and economic growth for rural communities.

The 2008 Farm Bill provided a total of about $2 billion in funding for energy title programs which include the Rural Energy for America Program, the Biomass Crop Assistance Program and the Biorefinery Assistance Program, among others.

The primary message sent to committee members by all who testified during the Feb. 15 hearing was that the energy title programs play a vital role in developing and supporting bioenergy industries and, while budgetary constraints are an accepted fact in current policymaking, witnesses stressed that the Farm Bill’s energy programs deserve to be funded.

Vilsack commended the committee’s efforts in the 2008 Farm Bill to focus on energy policy and said renewable energy continues to offer an important source of jobs and economic growth for rural communities, particularly in the areas of biofuels and biomass. But he urged the committee to try to streamline future Farm Bill programs and develop them in a way that offer’s the USDA more flexibility in their application.

“Over the course of many years, this committee and Congress have provided USDA with more than 40 programs in rural development, many of which have overlapping authorities and goals,” he said. “Together, I hope we can look at streamlining the USDA’s grant and loan authority to reduce the number of programs, while maintaining the flexibility to continue to serve rural communities and businesses in an effective and comprehensive way.” Vilsack stressed the need for the agency to be granted flexibility in order to support regional development, telling committee members that more can be done to target resources for regional projects.

Along the topic of streamlining funding in the face of budget constraints, Sen. John Thune, R-S.D., questioned Vilsack on the importance of continuing to provide funding for biomass collection, harvest and storage activities under the Biomass Crop Assistance Program and asked whether that component of the program plays an important role in continuing to develop cellulosic ethanol projects.

Vilsack said that component is “clearly important” in developing cellulosic ethanol and stressed ethanol’s role in reducing gas prices for U.S. consumers, but he pointed out that funding for BCAP suffered a 96 percent reduction last year, leaving the agency with little money to divide between collection, harvest and storage projects and energy crop development projects under BCAP, forcing the agency to choose which component delivers the “biggest bang for the buck” with the funds available.

“We have $17 million to deal with a several hundred million dollar need,” he said. “With $17 million, there’s not a whole lot that you do relative to the collection, storage and harvesting. I think you’ll probably see the majority of that being used in project areas.” Vilsack encouraged the committee and Congress to give serious thought to keeping BCAP in the next Farm Bill, but said, “If you’re going to have it, it needs to be adequately resourced.”

Kansas sorghum farmer, cattleman and ethanol plant investor Bill Greving stressed the beneficial role ethanol production plays in rural economies and emphasized the importance of funding provided through the Bioenergy Program for Advanced Biofuels (Section 9005 of the 2008 Farm Bill) to incentivize the use of alternative feedstocks such as sorghum at ethanol plants.

According to Greving, eight of the ethanol plants in Kansas received payments through the program last year for ethanol produced by using sorghum as a feedstock. The financial benefits received by the ethanol plants inspires them to demand more sorghum, which in turn benefits sorghum producers, who are encouraged to grow more of the drought and heat resistant crop, he said.

He further added that sweet sorghum and biomass forage sorghum also qualify under the 9005 program and said the feedstocks offer great potential for future ethanol production. “Sweet sorghum is the next logical step for ethanol production in the United States and the continuation of the 9005 program is essential in supporting the development and commercialization of sweet sorghum ethanol,” he said.

Greving offered his personal experience as a grower and cattleman operating within close proximity of an ethanol plant as proof that the biofuels industry provides local economic benefits to rural communities. Selling sorghum to the nearby 40 MMgy Prairie Horizon Agri-Energy LLC plant has allowed Greving Farms to realize a 30-cent-per-bushel increase in the price received for its crop, he said. He also purchases economically attractive wet distillers grains from the plant which is used in feedlot rations at his 1,000-head cattle finishing lot, he said. “While those who have spoken before me are focused on policy, I am focused on the production of food, fuel and feed in a synergistic system, which I believe will make our operation, and operations like ours, profitable in the future,” he said.

Steve Flick, chairman of the board at Missouri’s Show Me Energy Cooperative, testified on behalf of the National Farmers Union on the importance of BCAP, REAP and the Biorefinery Assistance Program in supporting renewable energy ventures.

Show Me Energy is the beneficiary of the first BCAP project approved by the USDA last year, a project which attracted farmers to enroll 26,000 acres of land across 39 counties within a matter of a few months. Flick said farmers will begin planting native grasses on those acres early this year, which will lead to the creation of hundreds of direct jobs and thousands of indirect jobs and produce about 130,000 tons of energy crops targeted for renewable energy production.

“We recognize that there are obvious constraints on the budget,” Flick said. “However, programs like BCAP, REAP and Biorefinery Assistance should not be seen as a handout, but rather a hand up that will change the way we live in rural America. It will change the way we produce energy and it will change us as a country for the better.”

Flick is also a member of the Ag Energy Coalition, a group formed last year by a wide cross-section of ag-related groups with the sole focus of extending energy title funding in the 2012 Farm Bill. The coalition issued a statement commending committee leaders Debbie Stabenow, D-Mich., and Pat Roberts, R-Kan., for holding the hearing, which the group said demonstrated the important role energy programs have already played in promoting job growth and renewable energy throughout the U.S. “The jobs growth potential for ag-based energy is astounding, but we must stay the course for an all of the above ag-energy policy,” said Lloyd Ritter, co-director of the coalition.

None of the ethanol groups provided oral testimony at the hearing, but the Advanced Ethanol Council submitted a letter to committee leaders encouraging them to extend funding for the Cellulosic Biofuels Producer Tax Credit and the Special Depreciation Allowance for Cellulosic Biofuel Plant Property, both of which the AEC said are vital to continuing the development of advanced ethanol.

“Several billion dollars have been invested in advanced biofuels development with the expectation that Congress will stay the course with regard to its commitment to the industry,” AEC Executive Director Brooke Coleman said in the letter. “A tax increase on advanced biofuels at this time would curtail investment and undercut an industry just starting to close deals and break ground on first commercial plants.” The AEC also requested extensions for REAP, BCAP and the USDA loan guarantee program, but suggested reforms to BCAP and the loan guarantee program.

The deadline for Congress to approve a new Farm Bill is Sept. 30.