The Farm Bill Can Cultivate New Growth

Jake Caldwell outlines how the Farm Bill can strengthen energy security, boost the economy, help the environment, and reduce global poverty.

Congress begins formal consideration of the 2007 Farm Bill this week with markups in the House Agriculture Subcommittees on Conservation and Livestock. This will give Congress a critical opportunity to improve the competitiveness of our nation’s farmers, spur innovation, and reward rural communities at home and abroad.

The Center for American Progress’ report “Fueling the New Farm Economy” gives Congress a blueprint for a bold strategy that would use the 2007 Farm Bill and other legislation to expand the benefits of our agriculture policy to more farmers; promote clean, renewable energy produced in a sustainable manner; and create fair and open markets for U.S. products at home and abroad.

Strategies that enlist agriculture to diversify our energy sources and promote technological innovation are gaining fresh momentum from rising public concern about the increasing global demand for oil and the costs and consequences of global warming. Farm-based renewable energy, particularly sustainably produced biofuels, may offer a way forward. But we must proceed with caution.

Biofuels—liquid fuels produced from agricultural crops and wastes—have the potential to deliver a secure and stable supply of fuel to supplement our growing energy demands. Yet for homegrown fuels to be most effective, we must move rapidly and deliberately toward the commercial development of the next generation of biofuels—advanced cellulosic biofuels derived from bulk plant matter, such as corn stover, grown in sustainable dedicated energy crops.

Advanced biofuels can make a key contribution to diversifying our energy sources and meaningfully reducing greenhouse gas emissions that contribute to global warming. According to a recent study by the University of Tennessee, advanced biofuels could supply 25 percent of U.S. petroleum needs by 2025 and pump $700 billion into the economy, including a $180 billion boost to farm income.

Yet biofuels are not a silver bullet solution to all of our diverse energy needs. We still have a long way to go to increase dedicated energy crop yields and reduce biomass conversion and transportation costs. Nonetheless, investment in advanced biofuels combined with improved fuel economy, cleaner cars, and stronger conservation efforts, will have a profound effect on our energy security, environment, and economy.

Congress can use the 2007 Farm Bill to meet these ends by expanding the modern safety net to serve more farmers and reinvesting a modest portion of commodity-based subsidies into green payments for conservation programs on working lands. This would encourage producers to sustainably grow value-added dedicated energy crops such as switchgrass, miscanthus, and fast growing trees. The result: More farmers from different regions of the country will be able to produce new feedstocks for biofuels and have a more diversified income stream on their farms.

As demand for biofuels increases on a global scale, we will need to enhance environmental safeguards, monitoring, and access to information regarding production processes, carbon management, and land use practices. It is essential that we provide incentives for biofuel producers to conserve land and water resources, maximize lifecycle greenhouse gas reduction methods, and grow energy crops in a sustainable manner. Any consideration of utilizing land currently enrolled in conservation programs for biofuels production must ensure the primary conservation goals of the programs are not compromised. The use of transparent certification and labeling criteria to encourage sustainable production of biofuels deserves further attention. Farmers must have a central role in this effort.

Congress should strengthen our commitment to rural communities—at home and abroad—by supporting such initiatives as:

Growing Clean Energy from Farm-Based Renewable Energy and Biofuels

  • Establish mandatory financial incentives, direct green payments, and low-interest loans to encourage farmers to grow dedicated energy crops.
  • Reinvest $5.2 billion in commodity-based direct payment subsidies into green payments for farmers performing environmental services on their working lands. In a “green payment” system, all eligible farmers would be rewarded for providing measurable environmental services on their land including, growing dedicated energy crops, carbon sequestration, soil conservation, and preservation of wildlife habitat.
  • Support carbon sequestration. The agriculture sector has the capacity to offset 15 percent of total U.S. carbon dioxide emissions via carbon sequestration in a relatively short period of time. Farmers deserve credit for their efforts to combat global warming and U.S. farm policy should reward farmers who are actively engaged in carbon sequestration practices, including the cultivation of dedicated energy crops, with their capacity to store carbon and improve soil quality.

Building a Smarter Safety Net for American Farmers

  • Increase funding and support for Title II Conservation programs, including the Conservation Reserve Program and the Conservation Security Program. In the past, farmer interest and demand for conservation programs has consistently outpaced available funding, with $2.9 billion in unfunded projects in 2004 alone
  • Fully fund rural development grants and programs and enhance renewable energy programs.
  • Strengthen the Food Stamp Program to improve benefits, eligibility, and access.
  • Encourage new investment in education at land grant universities and rural colleges to ensure a highly skilled rural workforce can lead U.S. agriculture in biotechnology and renewable energy.
  • Encourage farmer cooperative and locally-owned-and-operated biofuel plants and cooperatives by ensuring direct payments and producer credits are limited to smaller-scale biofuel facilities. Technical and financial assistance to encourage farmers to pool resources and enter into larger marketing alliances to enable locally produced biofuels to enter the market efficiently should be utilized.
  • Provide tax incentives for expanding critical biofuel storage, transportation, and distribution infrastructure throughout the nation to ensure access to biofuels in the retail market and the creation of jobs for rural communities must also be established.
  • Enact stricter payment limitations to ensure that assistance goes to actual producers and reduce payment limits to $250,000 per farm from the current $360,000.
  • Reinvest savings from deferred subsidy payments into the research, development, and commercialization of sustainably produced biobased fuels and products through the development of fully-functioning integrated biorefineries capable of producing biofuels and numerous other valuable co-products.

Opening New Markets

  • Diversify into energy crops to improve agricultural prices by slowing the oversupply of traditional agricultural commodities on global markets. Better prices for corn, soybeans, and wheat, such as we are currently experiencing, increase income and flexibility from a variety of sources. Ensure that a rapid ramp up in prices does not lead to increased price and supply volatility or irreversible damage to the land and our conservation practices.
  • Improve commitments to agricultural subsidy and tariff reform to open up one avenue for progress in the World Trade Organization Doha round of multilateral trade negotiations and contribute to modest global poverty reduction. This will diffuse international trade challenges to our farm policies, such as Canada’s recent complaint regarding our agricultural support programs and the ongoing cotton subsidy dispute with Brazil.
  • Give a competitive global market in biofuels a chance to grow, with the United States leading the way and many developing countries also in position to reap the gains.

The 2007 Farm Bill gives policymakers and the private sector an opportunity to enlist more farmers in renewable energy and conservation, strengthen the links between large and small producers at home and abroad, and reach out to our key trading partners to make progress on global trade negotiations. And it can mobilize greater investment in innovation and the development of exciting new markets to revitalize our historically strong commitment to the support of our farmers and rural communities.

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