Budget Talk

Cindy Zimmerman

USDA Agriculture Secretary Mike Johanns unveiled details of the administration’s proposed FY2007 budget for USDA in a press conference today. The $93 billion budget is down $3 billion from ’06, as Johanns stressed that agriculture needs to do it’s part to reduce the deficit.
Energy was named by Johanns as one of the department’s priorities for ’07.
Now moving on to another USDA priority, which is energy. I recently announced a comprehensive energy strategy to help producers with high energy costs. I am pleased that this budget continues to provide tools that help producers manage the impact of high energy costs. This budget also funds the development of renewable energy resources and new energy efficient technology.
For 2007 we will have at least $345 million available in loans, grants and other support for energy projects. Within this total, USDA’s core investment in energy-related projects increases to $85 million in 2007 and that’s up from $67 million in 2006.
This includes resources available to support renewable energy research and demonstration projects as well as additional efforts to support energy development and transmission across public lands.
In addition, and not shown on the chart, we are targeting renewable energy and energy efficiency projects through Rural Development Loan and Grant Programs. We anticipate investment in excess of $250 million each year in Fiscal Years ’06 and ’07.
Throughout ’07 USDA will continue its many successful energy partnerships with the Department of Energy, the Department of Interior, and the Environmental Protection Agency. USDA’s efforts will be coordinated by the newly formed Energy Policy Council.

Johanns noted that some of the $3 billion in budget reductions is coming from programs that are ending this year and one of those is the bioenergy program – which was started three years ago to “expand industrial consumption of agricultural commodities by promoting their use in production of ethanol and biodiesel.”
Authority expires for the CCC bioenergy program in September 2006, so these dollars are no longer included. Having been an advocate for ethanol now for over 20 years, I can tell you that the strength of the industry today is really nothing short of remarkable. We are projecting that commodity prices for feed grains will increase in the ’07 due to the need for more ethanol production.
The program paid out nearly $100 million to producers last year.
Here’s a link to all the info about USDA’s budget proposal.

Biodiesel, Ethanol