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Harkin closing in on ways to promote cellulosic ethanol

Agriculture.com Staff 07/02/2007 @ 7:02am

Staffers for the Senate Agriculture Committee say that the committee is close to finishing up a draft of an energy title for the next farm bill. While visiting a farm in southern Iowa Saturday, Committee Chairman Tom Harkin shared some details from that part of the farm bill that the Senate will consider.

Besides technological hurdles that make ethanol produced from grasses and crop waste more expensive than grain ethanol, the industry faces another hurdle that Harkin has talked about. It's the difficulty of convincing investors to build ethanol plants that will use cellulose if farmers aren't raising crops like switchgrass. And farmers aren't interested in planting new cellulosic crops if there isn't a market for them.

So, for the plants themselves, Harkin will propose a federal loan guarantee program that would provide federal backing for a large percentage of private loans made to build new cellulosic ethanol plants. The guarantees would apply to loans up to $150 million to $200 million, he told Agriculture Online Saturday.

Harkin added that before a plant is eligible to get the guarantees, it will have to show that it has a source of cellulose, "which means, now you've got to go out and line up farmers."

He envisions new ethanol plants contracting with farmers who make a commitment to grow the new crops for five years.

Harkin would also like to have USDA programs that will help farmers with the cost of establishing a cellulosic crop. He hopes that USDA will be able to offer rental payments to farmers similar to Conservation Reserve Program payments, although they would be smaller. And he believes farms with those crops would also be eligible to enroll in a program like the Conservation Security Program.

"My goal is that five years from now we'll have a lot of farmers who--maybe their CRP has come up--and now they're into this energy program," Harkin said.

Staffers for the Senate Agriculture Committee say that the committee is close to finishing up a draft of an energy title for the next farm bill. While visiting a farm in southern Iowa Saturday, Committee Chairman Tom Harkin shared some details from that part of the farm bill that the Senate will consider.

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