Ethanol Still Needs Government Help

Visiting an Iowa ethanol plant, USDA's Mike Johanns says biofuels business needs programs and incentives to help meet U.S. energy needs.

Published on: Aug 10, 2006

Despite the fact that the ethanol industry is booming, the renewable fuels business still needs assistance from the government to help meet our nation's energy needs, Secretary of Agriculture Mike Johanns delivered on his tour of northwest Iowa this week.

The biofuels industry must keep growing, says Johanns. At a stop at Siouxland Energy and Livestock Cooperative at Sioux Center, Iowa, he discussed a 31-page position paper USDA has released outlining the importance of bioenergy to farmers. The paper suggests several ways to encourage continued development of ethanol and other renewable fuels. 

The paper, prepared by USDA economists and intended to advise Congress in writing the next farm bill, suggests special incentives to stimulate production of fuel ethanol from crop residues in addition to grain. USDA is offering policy ideas for development of ethanol made from cornstalks and forage crops such as switchgrass and for making ethanol from trees. The paper also presents ideas to encourage further development of wind and solar energy.

"In the past we've always talked about farm policy in terms of food and fiber," says Johanns, who released the paper in Sioux Center, where he visited the farmer-owned ethanol plant. "I really believe the next farm bill is going to be a farm bill that talks about food, fiber and energy."

Food vs. fuel argument re-surfaces

Some commodity analysts are saying the rapid expansion of the ethanol industry and soy biodiesel production are setting us up for a man-made food shortage in 2008, because of the increased demand for corn to make ethanol and soybeans to make biodiesel fuel. Johanns says farmers are up to the test.

"First, if you look at the productivity of the American farmer, it has grown year after year for decades. Farmers today do things a lot better and more efficiently than when I grew up on the farm in Mitchell County, Iowa," he says.

Another consideration is "seed, fertilizers, weed control, water management - all those things now are just light years better and continue to improve. No doubt about it, the market is asking for more corn for fuel. But we're also seeing the ability of science and the American farmer step up to the new demand and make up the difference."

U.S. Senator Tom Harkin, D-Iowa, accompanied Johanns to Sioux Center. Harkin assured farmers that corn would not be "crowded out of ethanol production. We are going to need all the ethanol we can get in this country." Tax subsidies for ethanol and biodiesel have long helped provide financial support for the biofuels industry but are set to expire in 2010.