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Wind energy a winner for rural America

Editor's note: Dan McGuire, CEO of the American Corn Growers Foundation, gave the following presentation, 'Renewable Energy and Rural Economic Development: Wind Energy, Ethanol, Biodiesel and Biomass, A Win-Win-Win Strategy For Rural America,' on February 11 at Iowa Savings Bank in Carroll, Iowa.

by Dan McGuire

(Wednesday, Feb. 25, 2004 -- CropChoice guest commentary) -- It's great to be here today. I want to first thank Bill Hess, President of Iowa Savings Bank at Carroll as well as Vic Tomka, Howard Drees, Jerry Eckerman, Bill and Sue Shrad, the Carroll Area Develompment Council, the Carroll County Board of Commissioners, and all the other forward looking and visionary-type economic development leaders in the Carroll community and this area.

Bill Hess asked me to talk about renewable energy here today. Since that was a primary topic of our American Corn Growers Association national convention that Vic Tomka and I just returned from, it's an easy message to get right back into. First, since I'm in Iowa, I want to mention that the ACGA gave our Friend of The Farmer award to Iowa U.S. Senator Chuck Grassley. He's a real trooper for farmers and rural America on a range of issues, including Country of Origin Labeling (COOL as it's known). And he's in step with the fast majority of farmers. An April 2003 national farmer survey that we conducted showed that 92% of U.S. corn farmers support COOL as passed by the U.S. Congress and they want USDA to implement that law. Senator Grassley is surely in step with the majority of Iowa farmers, especially given the fact that the largest number of the farmers surveyed were from here in Iowa.

Along with Congressman Leonard Boswell, Senator's Grassley and Senator Harkin are also leading the charge on the issue of wind energy and the production tax credit that must be reinstated into federal law as soon as possible in order for Iowa farmers and rural communities to capture one of the most dynamic rural economic development strategies that has ever presented itself. We cannot let this opportunity slip through our fingers. Wind energy is great as an economic and environmental energy source..but it's so much more than that. It's fine from an environmental perspective to have large-scale wind farms but it provides so much more rural economic development and farm income if it's farmer and locally- investor-owned. I'll talk more about that concept later but I first want to again salute Congressman Boswell and Senator Grassley and the members of Congress from Iowa for all they do to support wind energy and renewable fuels policy in general. They do a great job for Iowa. You're lucky to have them representing this state.

As we think about the future of our farm and rural economy it's important to acknowledge the current market condition and why corn and soybean prices are higher than they were a year ago. The simple answer is drought and reduced crop production here in the U.S. and indeed, in other parts of the world. According to USDA, world ending grain stocks-to-use is the tightest it's been on record in recent history. In other words, we don't have $2.50 corn and $8.00 soybeans because of current U.S. farm and trade policy. We don't have these prices because of the 1996 'Freedom to Farm' law or it's stepson, the 2002 farm law that we're living with today. We have those prices because of drought, not something any of us want to count on as a price driver for the future. Were it not for the reduced supply of grains we would be back to $1.80 corn and $4.00 or less soybean prices. That is the basic plan of current farm & trade policy -- excess production and low grain prices. Exports are not getting the job done as promised either. Corn exports are flat at about 1.9 to 2.0 billion bushels. We exported 2.4 bil. bu. back in 1981. Soybean exports are up because of growing population around the world but if we had normal production last year prices would be in the tank anyway. As many of you may be aware the U.S. has transferred our production technology around the world which has created export competitors in Brazil for our soybeans and in China for our corn. Eastern Europe, the Ukraine and other countries of the former Soviet Union are the next frontier of new crop production. The same multinational companies that export U.S. grain are already in all those other regions of the world helping create your competition. Wheat exports are in the dismal range of less than a billion bu. compared to the nearly 1.8 billion bu. we exported back in 1981. In other words, we have to count more on Mother Nature than on farm policy to push grain prices to the current levels. That's not much of a national farm policy and we need alternatives.

Given that reality we need to be looking to the domestic market to create more demand for our corn and soybean production. Ethanol and biodiesel (soydiesel) processing plants are one key answer. We can extract more ethanol from corn production.

We can extract more soy-diesel from our soybean production through more farmer-owned plants. And, consider this, the most exciting new extraction industry is wind energy. We can extract electricity from the wind as it moves across the surface of the earth. Unlike drilling for oil or natural gas or strip mining for coal, wind energy is extracted without any negative environmental impact, but with a heck of a lot of positive economic impact. Technology has made wind energy the lowest cost new energy source coming down the pike. Given today's natural gas prices and the fact that there's only 25 to 30 years of natural gas supplies left we need to be going after our most promising alternatives. That's wind energy, ethanol, soy-diesel and biomass from crops like switchgrass, with high celluose content. It can even be burned in a coal-fired plant. That offers the opportunity to reduce pollution while giving farmers another income stream without taking land out of production. And speaking of coal, a speaker from the Dept. of Energy's National Renewable Energy Lab reminded our ACGA convention that Nebraska exports about $100 million per year to buy coal from Wyoming and doesn't event get a Christmas card for it. It's important to remember that states like Iowa, Minnesota, Nebraska and others mostly import all of our energy because we don't have those resources in the traditional form. But we do have wind, corn, soybeans and biomass. Those are our homegrown energy resources and they offer and economic development bonanza for our future, not to mention the national security and energy independence benefits.

Wind power projects bring new tax revenue to rural communities. Payments generally range from 1 percent to 3 percent of the project's value. At 1 percent, property tax payments would provide approximately $10,000 per MW for rural communities each year. These revenues can be used to build new schools, roads, bridges and other infrastructure. Some examples include:

  • Pecos County, Texas added $4.6 million to its property tax revenue in 2002 alone.
  • Right here in Iowa 250 MW of wind development provided $2 million per year in property tax revenues for local communitities.
  • A 20 MW wind farm in Kewaunee County, Wisconsin will result in annual property tax payments of $200,000 to the county, or 50 percent of its annual budget.
  • And the development in Hyde County, South Dakota will result in $250,000 for that county.
It's important for us here in rural America to get as much economic impact from these projects as possible. The big projects are great for generating renewable energy and they do have a good economic development impact initially, but the locally-owned, community based projects keep more of the energy revenue circulating in the community rather than having it exported. We need to view wind energy projects as a value added opportunity and we don't want to be exporting all the profit. Just as with corn, exporting more bushels at prices below the cost of production does not have a good impact on rural America. And exporting greater quantity at a loss does not equal a profit! We need to capture the profit from wind energy.

I'm going to show a power point presentation now that was provided by Dan Juhl, a well known, successful wind project developer from Minnesota. Mr. Juhl is an expert and in demand all over for his expertise. Just last week he testified before two committees of the Iowa legislature on wind energy and how the Minnesota model has worked so well in that state. He and a John Deere Corporation representative also met with the leadership in the Iowa Legislature following those hearings to discuss wind energy opportunities. The American Corn Growers Foundation and Association are very pleased to be working with a wind energy pioneer such as Dan Juhl whose focus and priority is community-based, locally-owned wind farm development for the benefit of rural America. We're all fortunate to have such leaders on our side.

In closing I want to mention that I have a number of handouts including:

  • A presentation by Dan Johnson of USDA-Nevada describing the 2002 Farm Bill Renewable Energy Opportunities---Section 9006, etc.
  • A presentation by Larry Flowers, Team Leader of the NREL-DOE Wind Powering America program.
  • Some of our American Corn Growers WFTW and small wind brochures
  • A news release from our ACGA national convention mentioning the award to Senator Grassley.
  • An article from our American Agricultural Wind Coalition.

Thank you for this opportunity. It's great to be here and I'm sure I've used up my allotted time.