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USDA stands behind ethanol

DANIEL LOOKER 01/30/2013 @ 5:26pm Business Editor

Iowa's ethanol and biodiesel plant industry got a pat on the back Wednesday from the head of a key branch of USDA, Rural Development.

Speaking at the Annual Iowa Renewable Fuels Summit in Altoona, Iowa, Wednesday, Dallas Tonsager, Under Secretary for Rural Development, told the group that over the past four years the USDA has provided support to some 6,600 renewable energy project across the United States, including 98 anaerobic digesters and 380 wind projects.

Tonsager, who grew up on a dairy farm near Oldham, South Dakota, said that he has always been a strong supporter of ethanol.

From 2002 to 2004, he served as the executive director of the South Dakota Value Added Agriculture Development Center, leading efforts to develop farmer-owned agricultural facilities, such as ethanol plants.

"I remember getting engaged in these kinds of industries because we absolutely had to. Two dollar corn wasn't cutting it," he told the Renewable Fuels summit.

Rural Development is a corner of USDA that farmers may not use directly. It makes loans to rural businesses, for rural housing and for small town infrastructure, including water and sewage systems. But in recent years it has also made grants and loans to the biofuels industry.

It has a $172 billion portfolio of loans and is administering $20 billion in loans, loan guarantees and grants through its programs in the current fiscal year.

In the past four years, it has Used $1.4 billion in government funds to provide nearly $7 billion in loans and grants to help rural businesses. Its website has a state-by-state list of Rural Development investments.

Tonsager also challenged his audience to think further ahead, to a rural economy with many more businesses based on biological products. Maine, for example, is working to convert home heating from fuel oil to wood pellets.

"The challenges for rural America is not to be satisfied with the way things are but to be looking for more opportunities," he told Agriculture.com later.

Tonsager's boss, Agriculture Secretary Tom Vilsack, has challenged Rural Development to come up with at least one new bio-based business in all 50 states.

Although the agency faces the fiscal cliff spending cuts looming on March 1, Tonsager said it still has some money from the continuing resolution that is keeping the federal government going. But his staff has shrunk by 18% over the past 16 months, he said.

In order for Rural Development to continue its work  "our main goal is to get reauthorization of the farm bill," he said.

USDA's support for biofuels is appreciated by the Iowa Renewable Fuels Association (IRFA), as is President Barack Obama's support for the Renewable Fuel Standard. Last week, IRFA and other groups congratulated Obama on his re-election and announced they were forming the Iowa RFS Coalition.

In a letter to Obama, the group said, "Throughout your first term, you and key members of your Administration —including Secretary of Agriculture and former Iowa Governor, Tom Vilsack— have shown tremendous leadership in supporting policies, such as the RFS, which help crack open the door for renewable fuels to compete against the highly entrenched petroleum industry."

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