Senate Recognizes Need to Support Agriculture for Biofuels Production
Senator Mike Waugh (R, York) and the Senate Agriculture and Rural Affairs Committee have voted out the Pennsylvania Farms to Fuels Initiatives Act (SB 1317.) The bill is the first piece of legislation in the two-year energy debate which takes state action to provide incentives to farmers for production of bioenergy crops in the Commonwealth.

Pennsylvania farmers and agribusinesses should be supported in building more capacity alternative crops - and for oilseed crushing and production. ERG has been recommending farm and agribusiness incentives as part of the energy independence debate since early February last year. Pennsylvania farmers and forest owners can become a key part of the development of new biofuels feedstocks, and for development of both cellulosic ethanol and other advanced biofuels.

It only makes sense to consider programs to promote and support farmers in producing and processing crops as feedstock, because these are the single largest cost component in biofuels production. Soybean oil, for example, can make up as much as 85% of the total cost of biodiesel production. Beyond biodiesel and corn based ethanol, other crops like switchgrasses, fast growing willow and poplar, sweet sorghum, sugar beets, canola, camelina, sunflowers are all possible feedstock for this industry. And reclaimed mineland acreage can provide an environmentally sound yet fertile source necessary to grow many of these crops.

Waugh noted that the next generation of ethanol production will provide a natural conservation tool, as the grasses and fast growing woody plants that would be the feedstock can be grown with a reduction in nutrient losses - while keeping corn in the system as an animal feed.

Under SB 1317, the PA Department of Agriculture will approve energy crops to provide incentives for farmers producing these crops that not only preserve the soil, air and water, but also become the feedstock for production of cellulosic ethanol. For each acre of growing land upon which a bioenergy crop is harvested, an eligible farmer would receive a bioenergy crop transition incentive payment of $150 for the first year's harvest, $100 for the second year's harvest and $50 for the third year's harvest. No farmer could receive more than $100,000 over the three years, and ten percent of the funds would be transferred to the Conservation District Fund use in providing technical assistance as farmers implement best management plans for conservation, required under the act.

The estimated cost of Waugh's legislation is $10 million. Sen. John Wozniak(D, Cambria) this program may be better as a no interest loan that the farmer would pay off when the risk pays off. Committee Chair Mike Brubaker (R-Lancaster) noted that he is considering adding a sunset provision.

Senator Waugh said he introduced this bill anticipating budget negotiations, and hopes to get farm incentives on the table for energy/budget negotiations. Waugh said he wanted the bill to get farmers to consider switchgrass, which takes from 1 ½ to 2 years to reach maturity for harvest. Farm operators are normally reluctant to make significant changes in their crop planting decisions without significant economic advantages. He said the legislation would provide one small incentive.

Beyond the farm, serious investment must be made in the infrastructure to support the biofuels industry. Today, Pennsylvania produces only enough soybeans to produce 22 million gallons of oil - less than half the current capacity of operating biodiesel plants in the state. The state only has crushing capacity for seven million gallons a year. Introduction of new oilseed crops will create a need for increased crushing capacity, and costs for these plants are traditionally very high.

SB 1317 is one small step toward the General Assembly and the Rendell Administration considering further incentives for rural production of energy crops for biofuels - and not just ethanol.

PA-ERG commends Senator Waugh, Chairman Mike Brubaker (R, Lancaster) and the Senate Agriculture and Rural Affairs Committee for this action on SB 1317. Hopefully any final state plan to address the state's biofuels needs will provide incentives for development of the infrastructure, including harvesting, transportation, logistics and storage of these energy crops.

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