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Saving Family Farms--Ethanol Production or Wind Power?

December 2, 2003, Issue #308
Monitoring Corporate Agribusiness
>From a Public Interest Perspective

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AMERICAN CORN GROWERS FOUNDATION: It may seem hard to believe, but according to the U.S. Department of Agriculture's 2003 farm income forecast, 94% of total farm household income comes from off-farm sources. Many rural families work off-farm jobs in addition to farming to make ends meet.

Dan McGuire, chief executive officer of the American Corn Growers Foundation (ACGF), said that low commodity prices combined with high production costs are responsible for this. McGuire said that the farm income forecast is a compelling reason for farmers and ranchers to support wind energy because it provides a source of income and fosters economic development in rural communities.

"Wind farming does pay," he said.

McGuire cites a Minnesota project that demonstrates why farmers, ranchers, and rural communities should get involved with wind energy as a new source of income. The Kas Brothers' Wind Farm at Pipestone, completed in 2001, is the first farmer-owned commercial wind farm in the United States. Developer Dan Juhl installed two NEG Micon 750-kilowatt (kW) turbines with an estimated annual electricity production of 4.5 million kilowatt-hours (kWh). That wind farm now yields $30,000-$40,000 annually for the first ten years of operation and is expected to yield $110,000-$130,000 annually thereafter, depending on the level of electricity production.

McGuire said that this project is an excellent example of community-based economic development. Local contractors Olsen Electric and K-Wind participated. Xcel Energy contracted to purchase the electricity. Local banks provided the financing. The wind turbine, the power contract, the maintenance agreement, and insurance allow the banks to make the loans with little risk. Local ownership also keeps the electricity revenue circulating in the community. This wind farm model is so successful that Juhl has several new projects in the works this year.

Although Minnesota has emerged as a leader in implementing wind energy in rural communities, Texas is also setting an example for states to follow. After the Texas legislature passed a renewable energy requirement, utilities and wind companies invested $1 billion in 2001 to build 912 megawatts (MW) of new wind power projects. The results? According to a report published by the SEED Coalition and Public Citizen's Texas office, "The completed plants created 2,500 quality jobs with a payroll of $75 million, will deliver $13.3 million in tax revenue for schools and counties and pay landowners $2.5 million in royalty income in 2002 alone. The multiplier effect of this new investment activity will stimulate another 2,900 indirect jobs in Texas. Wind power is bringing relief to rural Texas and creating jobs statewide."

Wind power also is providing "a nice kick" to the local economy of Milton-Freewater, Oregon, according to Mayor Lewis Keys. The new 41-MW Combine Hills Turbine Ranch wind farm in his district will provide wind power for area residents, who also will benefit from the infusion of construction dollars.

"Having been a farmer of wheat, barley, and peas for 35 years, it was hard to imagine the surrounding land being used for anything other than farming, but now I can see the diversity of its uses," Keys said.

Leroy Ratzlaff, a third-generation landowner and farmer in Hyde County, South Dakota, agrees. Ratzlaff and his family used a homemade wind generator in the 1930s before rural electrification reached their farm. In 2003, he leased his land to a wind developer that installed seven wind turbines, providing a much-needed economic boost.

"It's not as risky as farming," Ratzlaff said.

The American Corn Growers Foundation commissioned a nationwide, random, and scientific survey of 500+ corn farmers in the 14 states representing nearly 90% of the nation's corn production. The poll found that 93.3 percent of the nation's corn producers support wind energy; 88.8 percent want farmers, industry, and public institutions to promote wind power as an alternative energy source; and 87.5 percent want utility companies to accept electricity from wind turbines in their power mix.

Because much of the nation's wind energy potential is found in rural areas, wind energy offers an unprecedented opportunity for rural economic development. Wind energy can offer:

Rural landowners who lease their land to wind developers typically receive about two percent to four percent of the gross annual turbine revenue ($2,000 to $4,000 for each turbine), which can help compensate for a downturn in commodity prices. The Union of Concerned Scientists estimates that typical farmers or ranchers with good wind resources could increase the economic yield of their land by 30% to 100% Wind turbines have a small footprint and do not occupy much land, so farming and ranching operations can continue.

"It's almost like renting out my farm and still having it," Ratzlaff said. "And the cows don't seem to mind a bit."

Wind power projects bring new tax revenue to rural communities. Payments generally range from one percent to three percent of the project's value. At one 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.

Here are some examples of states that are increasing their tax revenue because of wind energy projects: Pecos County, Texas, added $4.6 million to its property tax revenue in 2002 alone. In Iowa, 250 MW of wind development provide $2 million per year in property tax revenues for local communities. 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 the county.

Wind power projects create new jobs in rural communities in manufacturing, transportation, and construction of projects. Roads must be built. Towers must be erected. Once the projects are complete, jobs are created in the operation and maintenance of the projects. The wind power plant in Lake Benton, Minnesota, is now the second largest employer in town (after the school district). In Iowa, construction provided 200 six-month construction jobs and 40 permanent maintenance and operations jobs at an average wage of $16 per hour.

The U.S. wind industry currently contributes to the economies of 46 states. And according to a study by the New York State Energy Research and Development Authority, wind energy produces 27% more jobs per kilowatt-hour than coal plants and 66% more jobs than natural gas plants.

Not only do rural communities benefit directly from wind power projects, as demonstrated above, but they also benefit indirectly. When new jobs and additional farming income are created, the paychecks are spent in local stores and restaurants, boosting the local economy and creating additional jobs.

Of course, wind energy offers many benefits beyond rural economic development. Wind energy is "homegrown" energy that can extend non-renewable energy sources, helping to secure our energy future, reduce energy costs, and reduce our dependence on foreign energy. Wind power produces no air or water emissions, which improves the health of our environment.

But perhaps the greatest benefit of all is the hope that wind energy projects can offer to rural Americans who wish to remain on their family farms and make a living from them.

"We never dreamed this would happen," Ratzlaff said about the turbines on his land. "It's going to make for a merry Christmas!"

This article was prepared by the American Agricultural Wind Coalition with information provided by the Department of Energy's Wind Powering America Program. For more information, contact:

Readers can learn more about the foundation's Wealth from the Wind program at or write to the foundation at P.O. Box 18157, Washington, DC 20036

One can learn whether you have a strong wind resource in your area by






"We are from a farming community that grows a lot of corn. Ethanol (alcohol) and corn production are both heavily subsidized. My thinking is that they both are "pork barrel" projects. Doesn't it take as much or more fossil fuel energy to produce a given amount of ethanol energy? Maybe the ethanol lobbyists and producers aren't telling us the full story?" --Roger R., the Midwest

Cecil replies:

Maybe not, but who can blame them? The full story seems to be that ethanol subsidies are a complete waste. One can't expect a lobbyist to walk into a farm belt congressperson's office and say, "Sir or madam, ethanol subsidies don't reduce our dependence on foreign oil, alleviate air pollution, or benefit the country in any other demonstrable way.

A large portion of the money goes directly into the coffers of a single multibillion-dollar corporation. Some experts say that manufacturing ethanol consumes more energy than the fuel produces. In fact, all the ethanol industry dependably generates is profits for itself and campaign contributions for you. Can we count on your vote?"

Corn belt states began subsidizing ethanol after the Arab oil embargo of 1973. The federal government joined the party a few years later. The Energy Tax Act of 1978 authorized an excise tax exemption for biofuels, chiefly gasohol (a gasoline blend containing at least 10 percent ethanol). Another federal program provided loan guarantees for the construction of ethanol plants, and in 1986 the U.S. even gave ethanol producers free corn. It's estimated that the excise exemption alone costs U.S. taxpayers as much as $1.4 billion per year.

The immediate beneficiaries of ethanol subsidies have been corn farmers and, more significantly, the Archer Daniels Midland Corporation of Decatur, Illinois, better known as ADM. The world's largest grain processor, ADM produces 40% of the ethanol used to make gasohol. As might be supposed, the company and its officers have been eloquent in their defense of ethanol and generous in contributing to both political parties. The politicians have been generous right back. The libertarian Cato Institute estimates that every dollar of ADM's ethanol profit costs taxpayers 30 bucks.

One might not mind spending the money if it bought us something --- energy independence, say, or cleaner air. But based on current evidence, it doesn't. Ethanol contains only about two-thirds as much energy per gallon as gasoline, so cars using ethanol blends get lower mileage. Though ethanol can reduce carbon monoxide emissions, the fuel may well produce more of other air pollutants.

True, the ethanol industry drives corn prices up, which helps farmers --- but a 1986 USDA study found we'd be better off mailing the farmers checks rather than propping up an entire industry with tax dollars. (Ethanol has since been touted as a substitute for MTBE, an additive that makes gasoline burn cleaner but also causes groundwater pollution. However, skeptics claim that due to improvements in engine technology, it'd be better just to dispense with such additives altogether.)

The capper, though, is the claim that it takes more energy to make a gallon of ethanol that you get by burning it. One of the most vocal proponents of this view is Cornell University ecology professor David Pimentel. In an analysis published in 2001 in the peer-reviewed Encyclopedia of Physical Sciences and Technology, Pimentel argued that when you add up all the energy costs --- the fuel for farm tractors, the natural gas used to distill corn sugars into alcohol, and so on --- making a gallon of ethanol takes 70% more energy than the finished product contains. And because that production energy comes mostly from fossil fuels, gasohol isn't just wasting money but hastening
the depletion of nonrenewable resources.

These findings were denounced by ethanol producers and their allies. Michael Graboski, a professor of engineering at the Colorado School of Mines, published a rebuttal of Pimentel's paper, saying he used obsolete data, etc. Pimentel in turn rebutted the rebuttal.

The debate has gotten pretty technical. I make only a few observations:

(1) Pimentel seems to have tweaked his calculations --- in an August bulletin from Cornell, he says making a gallon of ethanol takes 29% more energy than it provides, not 70%.

(2) That conceded, the guy is no flake, among other things having chaired a U.S. Department of Energy panel that investigated ethanol economics (and reached similar conclusions) in 1980. Graboski, on the other hand, is a consultant to the National Corn Growers Association.

(3) Given that ethanol production involves the conversion of massive amounts of energy from one form to another, the contention that the process is an efficient way to make fuel seems to fly in the face of basic physics --- so much so that I'm inclined to regard the subsidy program, and the fact that it has survived for a quarter century, with something approaching awe. Money-wasting government schemes are hardly rare. But how many do you know of that flout the second law of thermodynamics?


NICHOLAS E. HOLLIS, AGRIBUSINESS COUNCIL: On November 21when six Republican senators joined a loosely cobbled coaltion of East and West coast liberal Democrats to block the energy bill --- it made front page news. Among the biggest losers in the derailed trainwreck of the legislation --- which had consumed Capitol Hill for more than a year --- was Archer Daniels Midland
(ADM) --- the agribusiness giant-- and its (latest) chief toady-in-arms Senate Minority Leader Thomas Daschle (Dem.-South Dakota)

Daschle has stepped ahead of Iowa colleagues, Tom Harkin(D) and Charles Grassley (R-IA), Richard Durbin (Dem.-Illinois) and Dick Gebhardt of Missouri as the biggest cheerleader for ADM's favorite subsidy, corn-based ethanol --- which would have doubled in use under the new energy bill/and forced down the motorists' tanks at the gaspump.

Ethanol has been heavily subsidized since the late 1970s and shows no likelihood of becoming self-sustaining. Corn farmers, far from being helped by ethanol, have gone down by the tens of thousands . And still the subsidy is kept growing, with new, media drive falsehoods, like a cancerous tumor, draining billions from the Nation's road/bridge construction/repair funds (so as no one will notice) and has become one of the worst scams in the country's history.

The media won't write or talk about the downside --- or provide any visibility for the opposing viewpoint on ethanol. Did you hear this discussed by the pundits on last Sunday's tv talk shows? Why not? Don't wonder when ADM advertising buoys each program and PBS/Lehrer as well. Daschle sure appears on those shows quite often --- just like the last old war horse for ADM --- Bob Dole. Hmmm.

The Wall Street Journal of November 21 ripped into Daschle and noted that other ADM thuggery via front groups (i.e. Renewable Fuels Association and National Corn Growers) which had been threatening Midwest politicians with a "thorough shucking" if they went against the energy bill --- and voted in the national interest. Doesn't anyone care that these groups were basically formed by ADM and that, over the years, executives in them have had curious ties with the agribusiness company?

Although the ethanol juggernaut was hurled back by the brave senators last week -
this is not time to rest --- but rather re-load. They'll be coming again --- and it's time we all let each and every elected representative in Congress know exactly how the citizenry feels about this corrupted charade that passes for public policy formation in Washington, D.C. There is no better litmus test for our times (and the future of our kids) than the handling of the energy fiasco by this Congress and the Administration.