Our Perspective

Bioenergy and the 2012 Farm Bill

By Whitney Sparks, sustainability writer

Posted 6 months ago

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It's been almost four years since the 2008 Farm Bill introduced the Biomass Crop Assistance Program (BCAP). A lot has changed since then. We sat down with Dave Gustafson, Senior Fellow, Environmental & Ag Policy Modeling, to discuss the bioenergy issues that will have to be addressed by legislators as they draft the 2012 Farm Bill.

Q:            How did the 2008 Farm bill address bioenergy policy?

A:            Well, that's when the biomass crop assistance program (BCAP) was introduced. BCAP is intended to be a direct incentive for growers to grow dedicated bioenergy crops, and it provides a cost share, in terms of helping them plant the crops, and it also provides them assistance with regard to harvesting. It also provides matching funds when a farmer goes to sell that crop to approved facilities. It's the first time-that I'm aware of-that this sort of provision was part of the Farm Bill.

Q:            So, what are the big things that have changed since the 2008 Farm Bill was drafted?

A:            I think there are quite a few things. We now have roughly 10% of our nation's gasoline supply being produced from corn ethanol. Corn ethanol also provides a high-value feed ingredient in the form of dried distiller grains with soluble (DDGS).  Basically, DDGS are a direct by-product of corn ethanol production; it is not talked about a lot but farmers are getting quite a lot of value from DDGS. There really have been some huge successes in terms of displacing petroleum and therefore reducing greenhouse gas emissions. Not to mention that it's locally producing fuel instead of importing it from other countries. The other thing that's happened is there has been a lot of talk about these other crops such as miscanthus and switchgrass as potential bioenergy sources.

Q:            Can you explain the thinking behind the existing Conservation Reserve  Program (CRP)?

A:            The basic idea is that a farmer is paid to take certain lands-especially highly erodible lands-out of production for 10 years. Instead of crops, the farmer typically plants grasses or allows the land to become over-grown with native vegetation.  And these farmers are paid a contract price based on a formula that was established by the USDA, which is tied to lost income from not being able to produce crops, such as corn or soybeans, on that same ground. Obviously, as the prices of some grains have gone up, it's become more expensive, in terms of cost to the government and opportunity cost to the grower, to keep that land out of production.

The other thing is there are huge restrictions on what a grower can actually do with that land. For instance, the farmer can't harvest the biomass that's on it, even though that material could be very useful, either for energy or other purposes. Because of things like this, some new ideas are being considered.

Q:            The ideas that are being talked about now involve combining CRP with BCAP. How would that work?

A:            Essentially, it's a form of relaxation of the current rules of CRP to allow for some harvesting of biomass and conceivably adding some measure of the cost-sharing benefits of BCAP to CRP to make it a little more attractive economically to a grower, but still keeping the overall costs to a manageable level for the government. Those types of conversations are ongoing. In that type of scenario it's possible that BCAP would go away but you would add some elements of the BCAP program to the CRP program. The goal would be to keep costs flat or even reduce them, and hold onto as much CRP land as possible while allowing a grower to harvest biomass from that land.

Q:            How about the cost benefits of harvesting biomass from CRP land? Does it compare with corn or soybean production?

A:            Well, it's closer. But it's not likely to be commensurate with what you'd get from corn or soybeans. In terms of input costs, it's a lot lower. So, the revenue at the end of the year would be less than with row crops, but the upfront costs would be lower, too. And the farmer would be contributing to the overall environmental benefits that CRP is trying to achieve.

Q:            What are the biggest obstacles to combining these programs for the 2012 Farm Bill?

A:            The biggest challenge is the financial pressure of the USDA. They'll be looking to cut costs and a program that's brand new, like BCAP, is certainly going to be at the top of the list. I think the biggest threat is that it will simply be lost and there won't be any money left to do anything to enhance CRP. It would take some new alliances between conservation groups and some of the bioenergy start-ups who would really like to see something in the bill to encourage planting of these alternative feedstocks. It remains to be seen how that will all play out, but dramatic changes seem likely.

Q:            It sounds like now is a time for a lot of different groups to collaborate on new solutions.

A:            That's correct. There's definitely going to have to be new alliances formed. Specifically between bioenergy and environmental groups that don't traditionally talk to each other. They're going to have to come together, and the entire ag sector is going to have to agree to keep those sensitive lands out of crop production because they're too close to rivers, or they're essential to biodiversity, etc. We need to keep the most productive land working as hard as it can, in a sustainable manner, while keeping the highly erodible land out of production because of the environmental benefits that brings.

Q:            We don't have much time left before the bill needs to be hashed out and finalized. If you could advise the committee that's drafting it, what would that advice be?

A:            I think it makes all the sense in the world to simplify the overall number of programs we have. This one step of taking the desirable elements of BCAP and merging them with a revitalized CRP really does go a long way in that direction. It simplifies things while maintaining the conservation benefits that would be realized by placing these perennial bioenergy crops in the portions of the landscape where they can increase our source of biomass. So I really think it's a potential win-win.