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looks like help is on the way
by: recruiterplus
10/31/00 6:17 pm
Msg: 1664 of 1664
Tuesday October 31 5:26 PM ET
Biodiesel Production Subsidized
By PHILIP BRASHER, AP Farm Writer
WASHINGTON (AP) - Companies that make ethanol, biodiesel and other
fuels from farm products will be offered direct government subsidies to buy
crops such as corn and soybeans.
Payments will be capped at $7.5 million per company, under the two-year
program announced Tuesday by the Agriculture Department. The subsidies
will range from 29 percent to 40 percent of the cost of the crops, depending
on the size of the company.
``This program will help us tap into a huge domestic energy reserve, our
family farmers,'' said Agriculture Secretary Dan Glickman. ``Encouraging the
use of bioenergy benefits America's farmers, while improving our energy
security and helping to protect the environment.''
Although the payments would be aimed at small firms, any farmer-owned cooperative or
company would be
eligible for the payments, including ethanol industry giant Archer Daniels Midland Co.,
USDA officials said.
Ethanol production, which already is subsidized by a 5.4 cent-a-gallon federal tax break,
currently consumes
about 600 million of the more than 9 billion bushels of corn grown annually in the United
States. Production of
biodiesel, which is made from soybeans, does not have a similar tax break.
The new program, which could help as many as 58 facilities in 18 states, is set to last two
years at an annual
cost to taxpayers of $150 million.
Among the plants that could benefit is one near Albert Lea, Minn., owned by Agra
Resources Cooperative.
The plant, which opened last year, is tripling its capacity at a cost of $18 million to about
45 million gallons
annually, said Charles Pyatt, an Iowa corn grower who helped found the farmer-owned
cooperative.
``Our goal and our purpose in building this was primarily to help us weather these
downturns in the market
cycle, when corn gets exceedingly low-priced. Ethanol becomes profitable when corn is
as cheap as it is now,''
said Pyatt.
Sen. Tom Harkin, D-Iowa, said the program ``will encourage smaller plants and
farmer-owned co-ops that
produce ethanol and other renewable fuels to expand production.''
The Agriculture Department also is soliciting proposals for pilot projects that will use
harvested vegetation to
produce energy. Grass and other plants can be burned and converted into combustible
gas or used to produce
liquid fuels.
The pilot projects will be limited to vegetation from land enrolled in the government's
Conservation Reserve
Program, which pays farmers to take acreage out of production. None of the projects
will be allowed to
exceed 50,000 acres.
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