An 8-billion-gallon Renewable Fuels Standard, part of the energy bill (S.10) passed recently by the U.S. Senate, offers financial possibilities for Southwest corn and grain sorghum producers.
Even with this Senate action, a comprehensive energy bill remains a key but elusive goal for Congress. Currently, the House and Senate bills differ; a conference committee will work on a compromise sometime after the summer break. The Senate passed S. 10 by an overwhelming margin, 85 to 12.
Meanwhile, Texas farm and ranch association spokesmen say the Senate's action offers significant opportunities for improved profits as some of the regions' grain crops provide raw material for ethanol production.
Wayne Cleveland, executive director, Texas Grain Sorghum Association, says the RFS is a “strong positive for the grain industry across the United States. I feel that it will fundamentally change the industry.”
Changes could include increased acreage, new markets, and better prices.
“Even though we are growing more (corn) we know we will be able to use it,” says David Gibson, executive director, Texas Corn Producers. Corn is relatively cheap and with increased ethanol use the price could improve, he says.
The implications go beyond America's farm gates.
Steve Pringle, legislative affairs specialist, Texas Farm Bureau, predicts more home-grown fuels. “I think it (the RFS) will provide some solution to our current energy crisis,” he says. “Texas producers will play a part.”
“With consumer gasoline prices near the highest level in history, we feel it is imperative that Congress encourage production of fuels from farms and fields of the United States,” says Dave Frederickson, National Farmers Union president.
Increased production will require construction of new ethanol plants.
Cleveland says 80 ethanol plants currently operate in the United States. They produce about 4 billion gallons of ethanol in one year at full capacity. The RFS would require 80 more plants to be built to meet the 8-billion-gallon standard.
At least four new plants will be considered for Texas. Construction could be under way within 18 months for one plant in Dumas and two in Hereford, depending on RFS standards and status of state funding for ethanol incentive, says Cleveland. “The proposed plants could produce up to 250 million gallons of ethanol a year, the equivalent of all the grain grown in the Panhandle.”
Pringle says another plant outside of Fort Worth is being considered.
Farmers gain as producers and consumers. “Not only can we be suppliers of alternative fuels, but agriculture also is a major consumer,” says Pringle.
Distiller's grain, a by-product of ethanol production, also benefits farmers. “Distiller's grain can be fed to both ruminant and non-ruminant animals, in wet or dry form,” says Cleveland.
“It's a win, win,” says Greg Shelor, vice president, National Grain Sorghum Producers. “Ethanol is the most promising value-added market for sorghum producers with 1 out of every 10 bushels going through an ethanol plant. We'd like to see the Senate get something done,” he says.
“The Texas Farm Bureau is extremely supportive of the 8-billion-gallon RFS, and hopes the House and Senate will agree,” he says. “Bottom line, we need an energy bill on the president's desk ASAP.”
The Renewable Fuels Standard offers significant benefits to America's farmers as well as to the nation's energy security. Agricultural interests want to see something soon.
American Farm Bureau President Bob Stallman voices strong approval for the Senate's action.
“Americans are one step closer today to energy independence because of the Senate's passage of comprehensive energy legislation,” Stallman says. “The American Farm Bureau Federation is pleased the bill provides for an 8-billion-gallon renewable fuels standard by 2012, which is vital to U.S. agriculture and, ultimately, to passage of comprehensive energy legislation.
“The Senate energy bill will increase and expand our domestic energy resources, alleviate the supply and demand pressures on natural gas, diversify our energy portfolio, promote renewable energy resources and increase U.S. energy independence and national security.”
“The policy and tax provisions for the production and use of ethanol and biodiesel makes the Senate energy bill the strongest biofuels bill ever,” says Renewable Fuels Association (RFA) President Bob Dinneen.
“The Senate has once again supported renewable fuels in a strong, bipartisan fashion. This message will resonate from one side of Capitol Hill to the other. We applaud Senator Domenici (R-N.M.) for bringing people together to face our energy challenges.”
“I've always said, there is no silver bullet in the grain industry, but this would get pretty close,” says Cleveland.