A Renewable Crop To 'Power Up' Rural America
DAN MCGUIRE / CropChoice 7mar03
Dan McGuire, director of the American Corn Growers Foundation's Wealth From The Wind program, delivered the following presentation yesterday at the "Growing the Rural Economy with Renewable Energy" conference in Columbia, Missouri.
It’s great to be here today with so many renewable energy promoters to discuss the American Corn Growers Foundation and our Wealth From The Wind program. I want to first thank Rick Anderson and the Missouri Department of Natural Resources for inviting us to participate. I also want to mention the support our program receives from the U.S. Department of Energy and the National Renewable Energy Laboratory, the W.K. Kellogg Foundation, The Energy Foundation, the South Dakota Corn Utilization Council, The John Merck Fund, The Greenville Foundation and the Whole Systems Foundation. We appreciate all of those entities for their support of our educational work relative to the promotion of various forms of renewable energy, especially wind.
I’ve occasionally been asked why corn growers are interested in wind energy. The answer to that question is much more clearly understood today than just a few years ago. The simple answer is that the agricultural and rural economy is not in good shape and needs new and positive means to help itself. Wind power is an ideal option.
Commodity prices are very low on an historical basis and extremely low when compared to the full cost of production. U.S. farm policy has been based on a so-called "export orientation" since 1985, but those export quantities have not materialized as promised. The domestic market has been the real success story and wind energy will further that success as an exciting new, positive strategy.
Even when export volumes are high farm level corn prices remain low. And, of course, except in very rare cases, farmers don’t export anything anyway, they sell their corn, soybeans, wheat, etc. at the local or regional level and receive that market price, not the export price.
Both the American Corn Growers Foundation (ACGF) and the American Corn Growers Association (ACGA) have been long- time leaders in the promotion of renewable energy, whether it’s ethanol and ETBE, biomass, the use of corn in corn-burning stoves and of course, wind power. The ACGF is always looking for ways to improve farm income thereby enhancing the rural economy. That’s our mission. We determined a few years ago that wind power generation offered such an opportunity. That’s why as a national farm entity, we took the lead and developed the Wealth From The Wind program as a vehicle to develop and deliver information to farmers and rural leaders about the benefits of wind power and the related rural economic development that goes hand-in-hand.
We are absolutely convinced that wind power is one renewable energy crop, that will truly "power up rural America" through sustainable, economic development, while offering farmers and landowners new income streams. Wind power is the real technology that yields. Once wind turbines are planted, the powerful crop they yield is harvested year round and year after year. Wind generation technology has improved tremendously in terms of efficiency, and continues to do so. As we know, farmers adopt new technologies at a relatively fast pace. However, I place wind power technology in a much different category than other new technologies. I’m going to discuss various technologies, including ag technology transfer and then show the relationship between wind and our ultimate market, consumers of the world and how wind power stands out as a strong link with urban America.
Wind power ranks higher, more positive and certainly on a different scale than, for instance, biotechnology that we here so much about, or in fact, the international transfer of U.S. agricultural production technology in general to competing foreign countries which has transpired for about 30 years. Why do I compare wind to these two other major technological developments? I do this because technologies can have both positive and negative, both intended and unintended consequences. Biotech crops (GMOs as they’re known), for instance, may or may not increase yields, but they also increase input costs and there’s no doubt that they have cost the U.S. farm sector major losses in export sales…as much as a billion dollars in value lost, by one Iowa State University estimate. So that new technology has actually given our foreign competitor exporting countries inroads into traditional U.S. markets, which of course, forces corn and other commodity prices lower than they otherwise would be. It may have been an unintended consequence but it is a market reality for farmers. It’s not just us expressing concerns. The Grocery Manufacturers of America, the National Grain and Feed Association, the American Bakers Association, foreign millers, processors and importers have all expressed concerns about biotech and consumer confidence in the products.
At the same time U.S. farmers face these new market concerns, we also face the reality that the years of U.S.-assisted transfer of modern U.S. agricultural production technology in general (hybrid seeds, upgrading roads and waterway export infrastructure, development loans, etc.) to South America, China and other export competitor countries that have much cheaper fixed and variable input costs, is coming home to roost. South America is producing and exporting more soybeans and products this year than the U.S…for the first time ever, and China continues to export about 10 million metric tons of corn in direct competition with the U.S., instead of buying U.S. corn. So today, we have to be concerned about grain and processed products being imported into the U.S. and the quality and purity of those commodities and food products. These concerns stem directly from technology.
Wind power generation, on the other hand, is a technology that the U.S. has largely transferred from Europe, one of the largest and most important export markets for U.S. commodities for many years. U.S. farmers can really appreciate a technology being transferred our direction for a change, and from one of our best export customers. It helps offset the impact of other technologies that either cost us markets or create export competitors for us and our commodities.
So now it’s time to upgrade U.S. infrastructure, including the farm-to- market energy roads…the power transmission lines and the ability for on-farm wind systems to connect to the grid. Through these improvements and with net metering and directly supplying energy to their own farms, wind power technology offers farmers a means to lower on-farm production input costs while selling a new commodity…power into the grid. Plus, wind energy is clean and green…a very positive message to send urban consumers. Unlike the other technologies I mentioned, wind power creates consumer allies for farmers. It offers sustainable power…one more reason to for the urban sector to be supportive of farmers. For those of concerned about national energy security and national security in general, along with various global energy concerns, wind power offers a powerful, positive message to send on a worldwide scale.
As a renewable energy crop, and after the initial investment, wind energy has the potential to yield sustained economic benefits for the long term. We need to think long term with wind energy. Consider, for instance that in Buena Vista County, Iowa, a wind farm with 232 generators has brought $254,000 in tax revenues since the generators were built in 1998, according to the county assessor and that’s while the tax abatements are still in place in the early years. The assessor said the taxes paid on one wind tower will equal the taxes paid on 200 acres of Buena Vista County farmland once the tax abatements end.
In Hancock County, Iowa one of the earlier established, 200-generator wind farms produces enough electricity to power 40,000 homes, with the company selling the electricity to Aliant. In this case, there are land leasing agreements with 60 landowners involved in the Hancock County and Cerro Gordo County wind farms where the turbines are placed. The article reporting this story said that the landowner could earn about four times as much off the wind turbine leases as the $400 per acre from growing crops. Other, more recent projects report that farmers are being paid $2,000 to $3,000 per turbine per year as lease payments. Leasing is one type of approach for farmers and landowners to get involved in wind power generation projects.
Our Wealth From The Wind program wants to help farmers also have the opportunity to own or invest in wind power projects either on their own land or through farmer-owned cooperatives and to consider small wind power systems to help power their own on-farm electric needs. The smaller systems may well be a good fit for many farmers in terms of supplying all or a portion of their power for dairies, hog farrowing operations, grain drying, farm shops and their general farm residential needs.
The ACGF and ACGA uses events and conferences, like this one here today, to promote wind power and deliver our message of support. Your conference packet has our Wealth From The Wind brochure in it. We’re also developing a National Wind Resource Guide and will be developing a small wind system guide to provide farmers and rural residents with the latest information and updates on wind project developers and other sources of information on wind power. We believe the more groups that are getting the word out on wind power, the better. Our program has also conducted a national survey to gauge the level of interest and support among corn growers and farmers overall for wind power. We’re in the process of developing another survey. Here are the results of our 2001 survey:
- 88% said that they support the development of wind energy. That is truly a powerful level of support.
Additionally, the survey found that:
- 85% of the corn farmers surveyed said that farmers, industry and public institutions should promote wind power as an alternative energy source to help reduce greenhouse gases.
- 76% said they would be more inclined to invest in wind power generation knowing it helps clean the environment. When asked if the government should offer farmers financial incentives through government programs to take initiatives that will reduce greenhouse gases, 41% said it should be done through wind generation. The next highest number was 17% in support of nutrient management followed by 9% who said carbon sequestration would be their incentive of choice.
- 50% said they believe wind energy can provide additional farm income to their operation and 47% said they are willing to invest in wind power projects.
- In terms of the best way for farmers to reap the financial rewards from wind power, 30% chose leasing a portion of their land for wind turbine placement; 38% said investing in a farmer-owned wind cooperative and 16% said purchase of a small wind turbine.
- 62% wanted the government to provide financial incentives for farmers to become involved in the wind industry.
You can see, there is tremendous grassroots support for wind power. It’s also nice to know that we’re in-step with farmers and that they support our policies and the direction we’re going.
With that strong support and consistent with its existing policy, the American Corn Growers Association actively led the initiative that helped result in the Energy Title in the Farm Investment and Rural Recovery Act of 2002 (The 2002 Farm Law). That law, through Section 9006, The Renewable Energy Systems and Energy Efficiency Improvements program appropriated $23 million in annual funding but the Bush Administration’s budget eliminates all mandatory funding for that program. Section 9006 is the cornerstone of that new Energy Title and authorizes USDA to issue grants and loans to farmers, ranchers and small business to purchase renewable energy systems, including wind turbines. The ACGA, through its Washington, DC office is currently working to be certain that House and Senate Appropriations Committee members fully re-instate that funding. The ACGA is also working to get the $40 million in already-appropriated funds for Section 6401-the Value-Added Agricultural Product Market Development program re-instated as the Administration has totally eliminated it as well. The ACGA calls on all farm, commodity and rural interest groups to pull together and insist that Congress put this funding back in and that the Administration change its position and support this essential spending. The ACGA is also supporting extension of the production tax credit (PTC) for wind power that will expire at the end of 2003. We want to see a serious extension for at least five years, but ten years would be better so wind power developers and investors can better plan long term.
As a means to advance a positive wind power agenda, we announced the formation of the American Agricultural Wind Coalition (AAWC) last November at a wind energy conference in Dublin, Ohio, as a means for farm and commodity groups to work together on wind energy issues of mutual interest. The ACGA’s government relations representative in Washington, DC, David Senter, is heading up that initiative. David will be sending letters from the AAWC to a range of groups, inviting them to participate in the coalition.
We appreciate our close working relationship with DOE’s Wind Powering America program. I want to thank Phil Dougherty with DOE in Washington, DC for providing us with considerable quantities of information, including their Small Wind Electric Systems, A Consumers Guide, which we have disseminated at workshops in Washington, DC, Kentucky, South Carolina and at other meetings around the country. We have worked with DOE and NREL by co-sponsoring conferences or otherwise been involved in wind energy meetings in Illinois, Montana, North Dakota, Minnesota, Utah, Colorado, Ohio, Oklahoma and now, with this event today, we’re very pleased to add Missouri to that list of states.
Before I close, I want to put a few transparencies up on the screen to show you all the level of interest that was expressed from the farm, ranch and rural sector at an Agriculture and Wind Energy Meeting held at NREL’s office in Golden, Colorado on December 12th. The slides show the range of groups that attended and the audiences, messages and information plan we worked together on. Thanks to Roya Stanley and Susan Bilo, along with Larry Flowers at NREL and Phil Dougherty for that meeting.
In closing, I will add that through our Wealth From The Wind program we are also working directly with farmers who are interested in putting together new wind generation projects on their land. In the past two weeks I’ve been on such farms in Iowa and Minnesota and will be again next week. I will also be going to Illinois in the near future to meet with farmers there to provide information to them. The ACGF and ACGA is going to work to get as much power and "wealth from the wind" for farmers and the rural economy as possible. We look forward to working with all of you to achieve that success story for rural America. Thank you. It’s a real pleasure being here.
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