Home / News / Policy news / EconomistEnergy bill overshadows farm bill in its ag implications

EconomistEnergy bill overshadows farm bill in its ag implications

Agriculture.com Staff 01/02/2008 @ 8:32am

Two weeks ago, President Bush signed into law an energy bill that will have a larger long-term impact on U.S. agriculture than the pending farm bill, says a Purdue University specialist in a university report.

By increasing the Renewable Fuels Standard (RFS) to 36 billion gallons by 2022, the bill provides a road map for the production of renewable fuels from our nation's farms and forests.

"This is not market driven," says Chris Hurt, Purdue Extension agricultural economist. "It's policy driven with billions of dollars and it's really going to change America.

"If you step back and look at it, that’s called leadership. Congress has a vision. This new energy bill is going to have huge impacts for agriculture and forestry. It's not like throwing a pebble in a pond and having a few ripples. This is a boulder and it's going to create mega waves."

Hurt highlights the most important facts from the energy bill.

  • Cornstarch ethanol will contribute 15 billion gallons per year of the total.
  • About 13.5 billion gallons of this capacity per year will be in place by the end of 2008.
  • Cellulosic ethanol will be the dominant portion of the industry to grow after 2010. Total cellulosic ethanol is expected to grow from zero to 21 billion gallons by 2022.
  • In the Midwest, existing cornstarch based ethanol plants will focus on adding cellulosic ethanol production to their capacity at existing sites. The cellulosic portion of the plant will use cornstalks or other crop residues.

Two weeks ago, President Bush signed into law an energy bill that will have a larger long-term impact on U.S. agriculture than the pending farm bill, says a Purdue University specialist in a university report.

Implications from the energy bill are numerous, says Hurt.

  • More than likely, it will not be until 2009 before U.S. corn producers can meet the demands of the rapidly expanding corn ethanol plants.
  • A much slower growth rate in cornstarch ethanol may occur from 2010 to 2015 with annual growth rates of two to three percent per year.
  • Grazing lands will be targeted to shift to fuel crops such as prairie grasses, which may develop in areas such as the mid-South and the western portion of the Great Plains.
  • Conservation Reserve Program (CRP) acres may largely shift toward cellulosic energy crops in areas of the country.
  • Forests and woodlands may be shifted to energy crops in portions of the country.
  • A large search for new energy crops will be under way. Some of these may be nontraditional crops such as sweet sorghums or tropical maize, or advancements of crops such as sugar cane.
  • A large amount of research, development and experimentation will occur to discover the most economic ways to produce, store and transport these new cellulosic energy crops.

CancelPost Comment
MORE FROM AGRICULTURE.COM STAFF more +

Farm and ranch risk management resources By: 07/07/2010 @ 9:10am Government resources USDA Risk Management Agency Download free insurance program and…

Major types of crop insurance policies By: 07/07/2010 @ 9:10am Crop insurance for major field crops comes in two types: yield-based coverage that pays an…

Marketing 101 - Are options the right tool… By: 07/07/2010 @ 9:10am "If you are looking for a low risk way to protect yourself against prices moving either higher or…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Cool Tools Christmas Edition: Part 2