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Concerns about biofuels may come too late for Farm Bill

by Rob Runyan
April 16, 2008

As Congress battles over dollar figures in a new Farm Bill, it nears a Friday deadline the president has said he won’t extend. But Congress's inability to settle on new farm legislation at the original deadline last September may have afforded an opportunity to address newly exposed issues in the current debate.

The benefit of time could allow the final version of the bill, to address growing concerns over the production of biofuels. Mandates and incentives for biofuel production have been ramped up in recent legislation, including the 2002 farm bill and the Energy Independence and Security Act signed by President George W. Bush in December.

The much talked-about study published in the Feb. 29 issue of the journal Science, which revealed that biofuels may not be as environmentally friendly as originally thought, sparked a letter from 10 United States’ ecologists and environmental biologists to Bush and House Speaker Nancy Pelosi, asking them to consider reforming biofuel policies.

Due to the effort to meet high demand for ethanol production, largely with corn and soybeans, some environmentalists have argued the increased land used for these crops, along with processing,  has offset any perceived benefit in the reduction of carbon emissions.

Craig Cox, executive director of the Soil and Water Conservation Society in Ankeny, Iowa, said these recent studies have shown we need to revisit the increased use of biofuels.

“Evidence is pretty clear that corn-based ethanol is not the future,” Cox said.

But corn continues to be used to produce ethanol at an increased rate, largely due to government mandates in the energy bill. The United States Department of Agriculture projects about 24 percent of the 13 billion bushels of corn yielded from September 2007 to September 2008 will be used to produce 8.6 billion gallons of ethanol. That’s about a 50 percent increase from 2006 to 2007 when about 2 billion bushels of corn produced 5.7 billion gallons of ethanol.

It appears the trend is not likely to change with the farm bill.

“There are some incentives in the farm bill in the energy title for the [ethanol and biodiesel production] programs, as well as many others with renewable energy,” said Chuck Spencer, director of national legislation and policy development at the Illinois Farm Bureau. “It’s beneficial not only to agriculture but to our increasing energy demands overall. Agriculture is a renewable resource provider. We have a very clear understanding that we must be caretakers and stewards of our land and water resources.”

While the incentives for biofuel production in the farm bill could still change, both the House version of the bill passed last July and the Senate’s amendments passed in December included increases in biofuel program spending over the 2002 bill. The two versions are now being reconciled in Conference.

The discussion taking place in Congress so far this week centers on a $2.5 billion package of agriculture-related tax cuts. One of the major beneficiaries of these cuts would be biodiesel plants.  Additionally, the House bill proposes funding for a program that will pay eligible bioenergy producers based on any year-to-year increase in the quantity of bioenergy that they produce.

A provision that would have called for the Environmental Protection Agency, or another government group, to examine whether biofuels are having an adverse effect on the environment — the very thing they were meant to protect — was talked about but not included in either version of the bill, according to Sandra Schubert, director of government affairs with the Environmental Working Group, a nonprofit group based in Washington, D.C. It wasn’t popular with ethanol producers, she said.

Most of the ethanol production mandates come from the energy bill but Schubert said Congress could have addressed some of the issues in the farm bill by adding requirements for soil and water quality in the commodities part of the bill.

“We’re hurting soil quality, water quality and we’re increasing green house emissions,” Schubert said. “And there’s nothing we can do about it because [ethanol production] is mandated.”

As the bill stands, the controversial direct payment program is set to continue providing payments based on historical crop production numbers at the same rate to farmers for covered commodities that include corn and soybeans, two of the crops often used for ethanol production. Originally designed to help wean farmers off heavy subsidies, direct payments offer increased income for farmers regardless of price.

Some have criticized the payments in recent years as high demand for some of the covered commodities has driven up prices while farmers have still collected the extra dough.

But farmers like Chris Hausman say the direct payments do not affect what they grow.  

“They’re not going to affect any farmers’ decisions of what they are going to be producing for years to come,” said Hausman, who splits his 1,300 acre downstate Pesotum farm 50-50 between corn and soybeans. “The market place will have the ultimate say in what we will produce out here on the farm.”

Since demand has been so high for grain farmers like Hausman, other price and production protections have not been necessary.

“We really don’t need any type of government support when you have prices [at] $5 per bushel of corn or $12 [per bushel] of soybeans,” Hausman said. “Actually, when you look at what has been spent because of these higher prices, there’s some substantial savings to the U.S. taxpayer because there have been some dollars that have not been spent that were originally earmarked [for farm subsidies].”

Still, farmers did collect direct payments, which now cost a reported $5.2 billion a year.

Schubert, who said some direct payments go to individuals living on historic farmland but not growing crops, would be in favor of devoting some of that $5.2 billion to other programs in the farm bill such as conservation and nutrition.

“It’s documented,” she said. “What people are doing is they’re taking corn land and soybean land [out of production] and they’re breaking it up into these 10-acre little ranchettes. Those ranchettes get my hard-earned taxpayer money every single year. It’s egregious.”

Like Schubert, Craig Cox would also prefer to see more money and attention paid to conservation to alleviate over-use of land. The Conservation Reserve Program, which pays farmers not to cultivate designated land, could decrease in size under the latest compromises, according to Cox.

The Environmental Quality Incentives Program, designed to assist farmers in implementing conservation practices to protect water, air and soil quality, is slated to receive greater funding and reform. Cox called it “a real step forward.”

But Cox does not expect to see Congress further examine biofuel incentives in the haste to get the farm bill done this week. Nevertheless, Cox agrees with most parties involved that they would like to see the bill passed this week instead of a third extension.

“We just don’t want to see [another] extension of the farm bill,” Hausman said. “We want to see something…that’s new and creative and is going to meet the needs of the 21st century farmer.”

Schubert would also like to see a bill passed.

“We just disagree on what should be in the bill,” she said. “The devil is in the details.”