By Tom Still
VISALIA, Calif. – This farming region south of Fresno in California’s San Joaquin Valley is one of the world’s most productive, a place where farmers grow everything from grapes to livestock, from almonds to dairy products, and from kiwi to corn. But the hottest “crop” in the San JoaquinValley these days is biofuel.
Like many farmers in Wisconsin, the California growers I met during a recent visit are happy that demand for ethanol and biodiesel has boosted long-depressed prices for commodities such as corn and soybeans. While they’re also cautious about the side-effects of the biofuels revolution, San JoaquinValley farmers generally recognize a mega-opportunity when it hits them. Biofuels can add value to farming, make better use of agricultural waste, help the environment, create rural jobs and enhance national security – all without upending the balance between society’s need for food and fuel.
The biofuels revolution also presents the best chance in decades to reduce federal farm subsidies, a system that costs taxpayers billions of dollars each year while not necessarily helping the farmers it was designed to assist.
That’s the message behind FARM-21, a bipartisan bill being championed by U.S. Rep. Ron Kind, a Wisconsin Democrat who is making some of his “farm country” colleagues in Congress nervous by proposing sweeping changes to the subsidy safety net.
Kind, who represents the dairy-rich 3rd Congressional District that hugs the Mississippi River in western Wisconsin, would phase out subsidies and replace them with farmer-controlled risk management accounts funded by the government. Farmers could tap these accounts if their revenue declined or to buy crop insurance.
Cost savings are predicted at $55 billion over 10 years (the federal government spent $16 billion on farm subsidies last year), of which $20 billion would be applied to deficit reduction. The remaining $30 billion would finance biofuels development, nutrition programs, conservation reserves and rural economic development.
For more than 70 years, Kind argues, the U.S. farm safety net has been woven around subsidies, supply and price controls and import restrictions. Subsidies have encouraged too much production in some areas, which depresses prices, which in turn leads to more subsidies. Kind believes the system has primarily benefited large growers of corn, cotton, soybeans, rice and wheat – not small farmers – and invited foreign retaliation against American producers of all sizes and sectors.
Biofuels offer the chance to break the cycle. Whether it’s corn-based ethanol, biodiesel from soybeans or fuels from other emerging technologies, demand for biofuels will steadily rise in the United States and the world. Global energy thirst, the cost of oil, consumer worries about global climate change and demand for “green” products, federal and state mandates and incentives, and technology itself are combining to ensure the biofuels growth will remain high for decades.
For the first time in a generation, the demand for farm products has caught up with the supply. Not every farmer will produce the grain that goes into biofuels, of course, but most farmers will indirectly benefit if the commodity markets are paying more.
Subsidy reform is not yet an applause line with farmers, as I was reminded while speaking to about 100 growers, technology educators and energy producers in California. They worry that urban members of Congress will remove the current safety net without leaving anything in its place.
But that’s why the Kind proposal has potential, at least to spark a debate: It may take a member of Congress from Wisconsin’s largest subsidy district to persuade other farm-state legislators to embrace change without jeopardizing the livelihood of their constituents. A member of Congress from New York City or San Francisco could never pull that off.
The biofuels revolution presents a market-based chance to change how the federal government treats all farmers. It’s an opportunity that cannot be ignored.
Still is president of the Wisconsin Technology Council. He is the former associate editor of the WisconsinState Journal in Madison.