Agribusinesses want biodiesel tax credit, dairy help
By Jean Caspers-Simmet
simmet@agrinews.com
Date Modified: 05/13/2010 8:57 AM
E-mail article | Print version
DES MOINES —Quickly reinstate the biodiesel tax credit, implement dairy risk management not supply management, create policies that encourage pasture and in turn cow-calf herds, agriculture industry representatives said Friday during a House Agriculture Committee field hearing in Des Moines.
Jeff Stroburg, chairman and CEO of Iowa-based Renewable Energy Group, urged the ag committee to get Congress to act on extending the federal biodiesel blenders tax credit.
"Failure to extend the tax credit for biodiesel produced in the United States would have a substantial negative impact on biodiesel production and the consequent economic and environmental benefits made by the biodiesel industry," Stroburg said.
The biodiesel tax credit is necessary to offset the higher cost of producing biodiesel compared to petroleum diesel. The tax credit lapsed on Jan. 1.
Demand for biodiesel is extremely limited because customers aren't taking the risk of purchasing biodiesel without the tax credit, Stroburg said.
"Manufacturing plants have idled," he said. "This dire situation is occurring not only in Iowa, but all over the country."
House Agriculture Committee Chairman Collin Peterson said leadership has told him that the tax credit should pass by May 31.
Warren Erickson, executive vice president and chief operating officer of Anderson Erickson Dairy Company in Des Moines, asked the ag committee to create a dairy farm safety net and encourage greater use of financial tools to mitigate risk while getting rid of current dairy policies that aren't working.
"Supply management, in all its shapes and forms, is a threat to the future of AE and the entire U.S. Dairy Industry," said Erickson, who explained that his company has benefited from recent expansion in Iowa milk production.
"In the past decade, milk supply in Iowa has grown by more than 11 percent," Erickson said. "Today AE uses 100 percent Iowa farm milk — compared to just 65 percent three years ago. This growth in Iowa milk production would not have been possible if supply management polices had been in place."
Jim Schaben Jr., co-owner of the Dunlap Livestock Auction, said that in the past five years the number of producers leaving the industry has been unmatched.
"If marginal farmland could be 'setaside' with a program that puts the emphasis on encouraging cow-calf production along with conservation, I believe it could be a good situation for all involved," Schaben said.
Bob Skow, CEO of Independent Insurance Agents of Iowa, said the ag committee must keep in mind the strength and security that the Federal Crop Insurance Program has brought to. farmers, and the role independent insurance agents have had in the success of the program.
"Take into account the increased efficiency of the private delivery of the FCIP over direct government sales, the small business jobs produced in rural America through the crop program, and the extraordinary workload crop insurance agents face as compared to other property and casualty insurance lines," Skow said. "The strength of the FCIP rests upon the partnership that exists between the government, insurance providers, agents and farmers."