World Grain - April 2007 - 43

BIOFUELS QUARTERLY

Acreage decisions
U.S. agriculture secretary says he may
consider easing penalties on farmers
wanting to plant corn on CRP land

by Arvin Donley

ith the fast-growing ethanol industry driving demand for corn higher, Secretary of Agriculture Mike
Johanns said he is weighing the possibility of easing
penalties for farmers eager to plant corn on land that has been
set aside for conservation.
Speaking at the annual National Grain and Feed Association
(NGFA) meeting in San Francisco, California, U.S. on March
19, Johanns said a decision on early withdrawal from Conservation Reserve Program (CRP) acres would be made after
the U.S. Department of Agriculture (USDA) released its 2007
Prospective Plantings Report on March 30.
As expected, the report forecast a significant increase in
corn acreage to 90.5 million acres, up 15% from 2006. If
realized, it would be the highest acreage since 1944 when
95.5 million acres of corn were planted.
Preliminary estimates released by the USDA on March 8
showed that 4.9 million acres are tentatively scheduled to be
released from CRP by Sept. 30, 2010, upon expiration of existing contracts. About 2.9 million of that total is expected to
be released on Sept. 30, 2007, which is when some of the current contracts expire. USDA estimates that about 1.4 million
of these acres are located in major corn-producing states.
"Not every acre that comes out of CRP is going to be suitable to raise an acre of corn," Johanns said. "Because of the
tightness in the corn market, there has been a lot of interest
in this area."
Johanns said he doesn't want to see farmers - tempted
by the high price of corn - planting corn on land that is not
suited to production.
"If the land is marginal, not irrigated, maybe raises a crop
two or three years out of five, we would prefer the land to stay
in CRP," Johanns said.
The CRP program encourages farmers to convert highly
erodible cropland or other environmentally sensitive acreage to
vegetative cover, such as tame or native grasses, wildlife plantings, trees, filterstrips, or riparian buffers.
During his speech to NGFA members, Johanns said the government believes there will be enough corn to satisfy energy,
food, animal feed and export needs in the upcoming years.
www.World-Grain.com / World Grain / April 2007

U.S. Secretary of Agriculture Mike Johanns, center, was the featured speaker
at the 111th annual National Grain and Feed Association Convention in San
Francisco, California, U.S. He is pictured here with NGFA Chairman Ron Olson,
left, and NGFA President Kendall Keith. Photo courtesy of NGFA.

"USDA economists calculated that annual ethanol production could rise to 10 billion gallons by 2010 without forcing
us to choose between corn for food and corn for fuel," he
said. In 2006, U.S. ethanol plants produced 4.9 million gallons of ethanol.
Johanns also outlined several of the renewable energy proposals contained in the Bush Administration's U.S. Farm Bill
proposal released on Jan. 31. They include:
* Reauthorizing the Renewable Energy Systems and Energy Efficiency Improvements loan guarantee program. The
Administration proposes a loan guarantee program funding
level of U.S.$210 million, which would support $2.17 billion
in guaranteed loans over 10 years. The loan cap for funding
cellulosic ethanol projects would increase to $100 million per
project, and these cellulosic projects would be exempt from
the cap on loan guarantee fees.
* Revising the Biomass Research and Development Act
of 2000 to increase the annual competitive grant funding
for biomass research, focusing on cellulosic ethanol, with
$150 million in mandatory funding over 10 years.
* Initiating a new Cellulosic Bioenergy Program that would
provide $100 million in direct support to producers of cellulosic ethanol.
* Reauthorizing the BioPreferred program, revising provisions to improve its effectiveness, and investing $18 million to
WG
expand and improve the program.
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World Grain - April 2007

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