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USDA stands behind ethanol

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 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."

“The Iowa RFS Coalition will stand with your Administration and the Iowa Congressional delegation to defend the RFS from false attacks.  With your support, this vital policy will continue to thrive for the next decade unlocking cleaner, cheaper domestic fuel choices for American consumers," the group said.

Current members of the Iowa RFS Coalition are DuPont, Iowa Biodiesel Board, Iowa Biotechnology Association, Iowa Corn Growers Association, Iowa Farm Bureau Federation, Iowa-Nebraska Equipment Dealers Association, Iowa Renewable Fuels Association, Iowa Soybean Association, Monsanto and Syngenta.

The Renewable Fuel Standard has been under attack in the courts as well as in Congress.

Last Friday, January 25, the Court of Appeals for the District of Columbia, found in a lawsuit, American Petroleum Institute vs. EPA, that the EPA was promoting growth of cellulosic ethanol when it set a mandate of 8.7 million gallons of cellulosic ethanol for 2012.

However, the ruling isn't likely to weaken the Renewable Fuel Standard, according to an article published today in FarmdocDAILY by University of Illinois law professors Jody Endres and Bryan Endres.

"Although the court rejected EPA's approach favoring overestimation of projected cellulosic biofuel production, the RFS itself, and EPA's general methodology of establishing both advanced and cellulosic biofuel projections, both survived the API challenge," they write.

The ethanol industry may have bigger economic challenges, due to tight supplies of corn and high corn prices.

A Wednesday report of ethanol production from the industry trade group, the Renewable Fuels Association, said U.S. ethanol production has hit a low point in weekly data released by the Department of Energy's Energy Information Administration (EIA).

"According to EIA data, ethanol production averaged 770,000 barrels per day (b/d) — or 33.34 million gallons daily. That is down 22,000 b/d from the week before and is the lowest reported output since EIA began collecting data in 2010," RFA said.

"Expressed as a percentage of daily gasoline demand, daily ethanol production was 9.06% — the lowest rate since late August 2012," according to RFA.   

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