Policies of Energy and Economic Growth for Rural America in a 2012 Farm Bill

by Josh Rathod (Advanced Biofuels USA) With a refreshing sense of focus, Senator Debbie Stabenow (D-MI), Chairwoman of the Agriculture, Nutrition and Forestry Committee, opened the hearing on Energy and Economic Growth for Rural America by stating the importance of passing a Farm Bill later this spring. This bill would be instrumental in supporting the 16 million Americans that are currently employed in agriculture related jobs as well as increasing the potential of this industry through “bio-economies.” In the context of the limited budget allowed to assist such growth (with an optimistically low $23 Billion cut planned for agriculture government funding) the Committee looked to panelists for advice as to the most efficient ways to allocate these limited funds.

In the case of panelist and Secretary of Agriculture, Tom Vilsack, the committee sought advice as well as transparency considering the USDA’s role in aspects of bio-industry. Development of rural America being the focus of the hearing, statements from Vilsack solicited the committee’s support for biofuels and renewable energy as some of the most exciting tools available for developing rural economies. Development of biofuels and renewable energy in rural communities would encourage private sector involvement. He explained that the agricultural sector harbors untapped resources to provide for US food and fuel needs. Growth in biofuels and renewable energy industries would provide millions of jobs.

Being one of the committee’s major concerns, the budget for crop insurance seemed a persistent topic of conversation. In President Obama’s current agriculture budgeting strategy, nutritional assistance programs have a hefty priority over crop insurance. Although Senator Pat Roberts (R-KS), Ranking Member of the Committee, and other members disagreed with Vilsack’s view that the 12.5% return on investment seen in crop insurance agencies shows that it is in less need of government finances, the hearing was still conducted with an atmosphere of collaboration.

Some of the other major items on the committee’s docket were funding for crop protection, feedstock research, the issue of limited market access, diversification of biomass feedstocks and biomass transportation. Senator Ben Nelson (D-NE) made some good points on the diversification of feedstocks, saying that it would be, “nearly impossible to reach the 36 billion gallons [of biofuel production] requirement by 2022,” and that in order to create sustainable growth of the biofuels industry there needs to be a shift from using traditional foodstocks (corn-based ethanol having neared its 15 billion gallons production cap) to non-food feedstocks. Senator Nelson also announced his concern for the discontinuation of the Rural Microenterpreneur Assistance Program (RMAP), which is a program that helps provide capital to rural entrepreneurs in the industry.

In an exciting response to these concerns, Vilsack first explained that the USDA would be attempting to bridge the credit gap between startup, government funding and commercial funding by the private sector and that the USDA also supports the development of algae, switch grasses and woody biomass as alternative feedstocks. As if to show that he meant business, Vilsack alerted the Committee five minutes later that funding for RMAP loans of 2010-2011 had just been approved. This, of course, was followed by the committee’s humorous comments on the Secretary’s political clout as well as some personal reassurance that the Committee and USDA are expecting tangible results from the hearings leading up to the new Farm Bill.

To the issues of crop protection, feedstock research, limited market access, diversification of biomass feedstocks and biomass transportation – Vilsack’s advice was somewhat uniform. Secretary Vilsack’s repeated pleas were for Congress to look into cutting many of the current assistance programs that are not efficient. Programs that remain should be provided with more flexibility so that the USDA is utilized more potently in building rural businesses. Some examples of programs that should remain with improvements are the Business and Industry Program, which narrowly provides assistance to commercial level facilities and the Renewable Energy for America Program (REAP) that could be used to facilitate blender-pump placement but is being resisted and, Vilsack states, is not flexible enough.

Adequate funding was also mentioned. Under the jurisdiction of the Biomass Crop Assistance Program (BCAP), transportation and storage of biomass needs to be improved. However, because the budget only calls for $17 million after a 96 percent reduction last year, the USDA has been forced to use these funds for feedstock research where they will get more, “bang for the buck.” The importance of this program was later echoed by other panelists and Vilsack requested that if the Senate has a goal for a program, it should focus on giving it adequate funding.

As said previously, the impression this hearing leaves is that there is unity between the USDA and this committee on the pursuit of rural economic growth through biofuels. Goals and cooperative meetings were planned with great confidence as well as in good humor (a refreshing site indeed in a committee of a bipartisan nature) and judging from the events of the day’s hearing, it is not hard to feel confident in the development of the upcoming Farm Bill as well as the biofuels industry as a whole. READ MORE and MORE (25 x '25)