US sending money to North Carolina, New York farmers for energy crops

Source: By Renee Schoof, Boston Herald • Posted: Thursday, June 14, 2012

WASHINGTON — Agriculture Secretary Tom Vilsack plans to announce Wednesday that North Carolina and New York each will receive about $4 million for farmers growing crops used to produce energy.

The expansion is part of a federal push to produce more non-food energy crops, used to make liquid biofuels or electricity from renewable sources.

“It’s about farm income, it’s about jobs, it’s about consumer choice and less reliance on foreign oil,” Vilsack said in an interview Tuesday.

Vilsack said that while it’s true that advanced biofuels from non-food crops today cost more than petroleum products, the cost will go down as the new fuels are developed.

“The more you produce, and the more experience you have, the more efficient you become, and the more efficient you become the easier it is to price a product competitively,” he said. “Obviously there are some significant benefits to this, not least of which is basically not exporting our hard-earned dollars to countries that don’t necessarily agree with us.”

The nation’s biofuels industry today cuts about 25 cents a gallon off the price of gasoline compared to what it would cost without biofuel blending, according to the Department of Agriculture. The department has financed more than 130 biodiesel and ethanol projects that produce about 3.7 billion gallons of biodiesel and ethanol per year.

The North Carolina program will pay farmers for five years to grow miscanthus, a grass that grows up to 12 feet tall, and switchgrass on up to 4,000 acres near Turkey, outside Fayetteville. The crops will be used for the production of bioethanol, chemicals and biogas for power generation at a refinery that Chemtex International plans to build outside Clinton, N.C.

The refinery is expected to produce 20 million gallons a year of bioethanol. The company plans to hire 65 people and support 250 jobs indirectly.

Under the program, North Carolina will receive nearly $4 million for the biomass crop assistance program. Farmers will receive money to establish the crop and five years of annual payments.

New York farmers will receive a total of $4.28 million to grow shrub willow on 3,500 acres. The wood is expected to generate more than 100 megawatts of electricity. The department also will announce a $1.2 million grant to Arkansas to expand its biomass crop assistance program.

Started with the 2008 farm bill, the biomass crop production assistance program helps farmers and forest owners start planting energy crops that can take years to reach maturity. The intent of the program was to reduce reliance on foreign oil and encourage rural economic development.

Congress reduced the biofuel crop assistance program last November to $17 million, a 96 percent reduction from the funding level last year.

The Department of Agriculture already has energy crop assistance for crops such as camelina, an oil seed that’s been used to produce jet fuel, as well as poplar, miscanthus and grasses. Besides Arkansas and the two new states, crop assistance for energy fuels has been established in nine other states: California, Kansas, Missouri, Montana, Ohio, Oklahoma, Oregon, Pennsylvania and Washington.

Nearly 50,000 acres have been enrolled. Some of the land is former pasture or other non-irrigated land that is considered marginal. The energy crops can be grown with less water and fewer chemicals than most commodity crops.