Opening Statement of Senator Tom Harkin

Senate Committee on Agriculture, Nutrition, and Forestry

Hearing on Energy and Agriculture

Mr. Chairman, I want to thank you for calling this important hearing on energy policy and the impact of high energy prices on American agriculture. I have been working on these issues for some time. In March, I sent a letter to Secretary Richardson and Secretary Glickman, and I am pleased by their decision to form a working group to examine the implications of high oil prices for farmers. I have also been very much involved in getting to the bottom of the exorbitant increases in gasoline prices in the Midwest.

Farmers have a lot at stake with respect to energy costs and our national energy policies. Even though farmers have greatly increased their energy efficiency, they are still highly vulnerable to energy price increases - especially when their financial circumstances are already very tight, as they are now. USDA estimates direct fuel expenses for farmers will increase by $2.5 billion, or 40 percent, this year compared to 1999. Higher energy prices are also reflected in greater costs for grain drying, fertilizer and pesticides. The Iowa Farm Business Association estimates that higher energy costs will add more than $1,300 to this year's expenses for a 660-acre corn and soybean farm. So any actions that can be taken to alleviate the impacts on farmers would certainly help.

Frankly, though, I see agriculture much more as a solution to our energy challenges than as a problem area. We have barely scratched the surface of the potential for agriculture to supply domestically produced, renewable and environmentally friendly energy. Renewable sources now constitute only 3 percent of U.S. energy supplies and only about 1.2 percent of our gasoline. But our reliance on foreign petroleum is growing dramatically, to the point that we now import around 60 percent of our petroleum. And we're now far more reliant on foreign petroleum than we were back in the 1970s when disruptions in oil supplies caused tremendous shocks to our economy.

Renewable fuels like ethanol and biodiesel enhance our energy security, improve the environment, increase farm income and create jobs and economic growth, especially in rural communities. Ethanol use already adds about 20 cents a bushel to the price of corn. Replacing MTBE with ethanol would add another 14 cents to corn prices and increase farm income by about $1 billion a year. There is tremendous potential also in biomass such as switchgrass and in wind energy, which is a growing industry in Iowa. Hydrogen used in fuel cells will allow efficient use of biofuels, and storage and transportation of wind and solar energy.

If renewable energy is going to have a chance to get a footing and grow, it will have to be given an opportunity to do so. That is why I was so outraged by the efforts to lay the blame for high Midwest gasoline prices on clean air rules and the use of ethanol. The facts now show that blame was unfounded and unfair. But this experience is a harsh lesson in how hard we will have to continue to fight for increased use of renewable fuels.

Thank you, Mr. Chairman.