Blog for Rural America

The Center for Rural Affairs, a private, non-profit organization, is working to strengthen small businesses, family farms and ranches, and rural communities. Permission to reprint items from this web log is hereby granted, on the condition that clear credit is given to the original source of the material. If the blog provides information for a story, please let us know by sending an email to johnc@cfra.org.

Saturday, November 25, 2006

Focus on Critical Ethanol Issues Now

Focus on Critical Ethanol Issues Now: Profit, Conservation, Hunger

by Chuck Hassebrook, chuckh@cfra.org, Center for Rural Affairs

Now is the time to ask critical questions and set farsighted strategies to develop ethanol production in a way that serves the common good. High oil prices are driving a dramatic increase in ethanol production that will reshape agriculture and rural economies (see article front page). We need to steer it in the right direction.

>> PROFIT – We should help beginning farmers, family farmers, and workers in ethanol plants become the owners. Keeping the profits in rural America in many hands will increase the benefit to rural communities.

Ethanol production is capital intensive. Small and beginning farmers struggle to come up with the capital to share in the ownership. Meanwhile, potential profits are attracting capital from large investment funds.

One solution would be to provide the 51 cent per gallon ethanol tax credit only to plants that are majority locally owned and provide assistance to workers and small farmers to buy in.

>> CONSERVATION – If land is removed from the Conservation Reserve Program (CRP) to feed ethanol plants, will the conservation benefits be maintained? There should be incentives to leave parts of fields in contour grass strips, grass windbreaks, grass waterways, and buffer strips.

Ethanol production will eventually come from biomass – grasses, crop residues, etc. That could encourage stripping land of crop residue and widespread destruction of wildlife habitat. But with forward thinking public policies, it could enhance the environment.

We should focus some research on producing ethanol from alfalfa, to give farmers a market for a resource conserving rotation crop. We should condition tax credits on leaving sufficient crop residue to maintain organic matter and prevent erosion. And we should develop new approaches to the Conservation Reserve Program (CRP) that allow grass to be harvested for ethanol production only if timed to maintain wildlife and erosion control benefits.

>> LIVESTOCK PRODUCTION – Ethanol production has already contributed positively to the reemergence of farmer cattle feeding in states like Iowa, prompted by availability of feed byproducts.

However, one proposed model for ethanol production would do just the opposite. Some propose co-locating ethanol plants with big feedlots and using the manure to power the ethanol plant while feeding the byproducts on site. Publicly funded research institutions should focus on developing models that integrate ethanol production with dispersed family farm based livestock production.

>> FOOD SECURITY – There is no direct tradeoff between hunger and ethanol production. Hunger is largely not the result of insufficient grain supplies. Nonetheless, extreme shortages prompted by increased ethanol production could contribute to world hunger. USDA projects much more volatile markets in which a severe drought could prompt severe shortages.

Congress should consider reestablishing farmer-owned grain reserves and other policies to hold grain off the market for use at times of severe shortages.

Agree? Disagree? Post a comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

1 Comments:

  • At 9:58 AM, Anonymous Anonymous said…

    I want to remove the ethanol tax credit but need a politically correct way to accomplish this agenda.

    How about we "..provide the 51 cent per gallon ethanol tax credit only to plants that are majority locally owned and provide assistance to workers and small farmers to buy in."

    That should essentially eliminate the tax credit.

     

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