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Ethanol Producers Break Record, American Farm Bureau Calls for Farm Bill Extension

posted on September 1, 2006

Hello, I'm Mark Pearson. The U.S. economy continues to grow, but consumers aren't too bullish on the long-term outlook. According to the Commerce Department, Gross Domestic Product grew at an annual rate of 2.9 percent in the second quarter of this year. The Conference Board, a New York-based research group, reports Consumer Confidence tumbled in August to a nine-month low. Job-related worries were the major reason for the decline. Unemployment rose in July, to a five-month high of 4.8 percent. The August report came in slightly lower at 4.7 percent. Nevertheless, consumer spending rose by a healthy 0.8 percent in July, doubling its pace in June. Wall Street welcomed this week's economic news and despite some volatility, the Dow trended higher. Traders may want to take some of their profits to offset higher energy costs. While gasoline prices have retreated from record highs earlier this summer, they're still up more than 55 percent from January of 2005. And that's fueling a boom in home-grown renewable fuels. U.S. ethanol operations are expanding rapidly to meet a federal production mandate of 7.5 billion gallons by 2012, and it appears that the industry is will ahead of schedule.

Ethanol Producers Break Record, American Farm Bureau Calls for Farm Bill Extension

The ethanol industry has been claiming it can make the 7.5 billion gallons years before the 2012 deadline and new data indicates it is well on its way. In the first six months of 2006, production hit 2.3 billion gallons -- half a billion gallons more than this time last year.

Currently, there are 101 ethanol facilities in production with the capacity to produce 4.8 billion gallons per year. If the planned construction on 42 new plants, as well as expansion of 7 more is completed, the total output could reach 7.7 billion gallons by next year.

Bio-fuels are expected to be included the debate on the upcoming Farm Bill, but that isn't the issue at center stage. The persistent question continues to be whether or not the 2002 Farm Bill should be extended now that WTO talks have collapsed.

This week the American Farm Bureau reiterated its position by calling for a one year extension to the current law.

Dana Brooks, AFBF Farm Policy Specialist: "It's very important that we have WTO negotiations completed when we write a farm bill, we don't want to be out of compliance. It is also important that we have the leverage there, we don't want to have, we don't want to give away the farm."

The framers of the next farm bill continue to say they will write new legislation. With subsidies remaining near the top of the list of concerns, Senate Agriculture Committee Chairman Saxby Chambliss has stated that carrying certain programs over into the next law isn't out of the question.

Chairman Saxby Chambliss, R-Georgia: "I have said consistently that when I say we're going to write the farm bill next year that does not mean that we can't look at some kind of extension of all or part of the current farm bill as a part of writing that farm bill. I don't think it makes good business sense to extend this farm bill per say for one year or two years because farmers need to make plans."


Tags: agriculture biofuels Congress ethanol government industry news policy renewable fuels