Obama's plan would eliminate direct payments to producers with high sales revenues. Currently, the subsidies are paid to farmers regardless of crop prices or crop yield.
Harkin said Friday he's more supportive of basing the subsidies on a producer's adjusted gross income, noting farmers could have high revenues but still face large input costs, hurting their profitability.
You needn't look further than the local ethanol plant for evidence supporting Harkin's claims. Last year, the U.S. ethanol industry produced and sold a record 9 billion gallons of the home grown renewable fuel. But margins are paper thin and ethanol has been blamed for everything from rice shortages to driving up the price of popcorn.
This week though, the industry received a much-needed shot in the arm in the form of favorable research.
By comparing data from Argonne National Laboratory and Informa Economics, the study concluded one major factor that should assist in keeping land use at current levels are Dried Distillers Grains, or DDGs. Each pound of the corn-based ethanol byproduct could replace up to one-and-a-quarter pounds of corn because of its higher protein and fat content. A spokesman for the U.S. Grains Council recently called last year's production of 27 million tons of DDGs "the one bright spot" for the ethanol industry. He went on to say that "if it wasn't for distiller's grains...there wouldn't be an ethanol industry."
And another factor helping to keep land use constant, which the RFA claims had been ignored in previous studies, was corn yield. According to the research paper, corn output should increase from its current average of 151 bushels per acre last year to an average of 183 bushels per acre by 2015. This rise in yields will help the nation meet its increased demand for corn.
Researchers also made a point of refuting work presented in several other studies critical of corn based ethanol. Among them was Tim Searchinger's 2008 white-paper that concluded more greenhouse gasses would be released because more land would be needed for increased corn planting to meet rising ethanol production. RFA scientists said Searchinger failed to take into account DDGS, potential productivity of marginal lands, or trends in corn yield growth outside the United States.