The Commodity Credit Corporation recently published a notice of proposed rulemaking to spur the production of biofuels such as ethanol, biodiesel and oxygenated diesel by providing incentive payments to producers that increase production. The initiative is consistent with Executive Order 13134 signed last year by the President to accelerate the development and use of biomass fuels, chemicals and products. Encouraging ethanol producers to increase production would expand agricultural markets and thus benefit farmers facing record low commodity prices.

The initiative would provide incentive financial payments to bioenergy producers who increase their purchases of agricultural commodities for the purpose of expanding production. Up to $100 million would be made available in FY 2000, and $150 million in FY 2001 and 2002. The Commodity Credit Corporation proposes providing higher payment rates to producers with less than 30 million gallons of annual production capacity, while limiting any one producer's payments to no more than 10 percent of the total amount available.

Comments were due August 28, and the agency is currently working on a final rule to be published this fall in the Federal Register.

Corn Growers Comment on Proposed Rule

In comments submitted by the National Corn Growers Association, the commodity organization applauded the Commodity Credit Corporation for its efforts to encourage increased ethanol production. This regulation "will help farmers by increasing the use of domestic corn and other agricultural commodities thereby raising the prices for these commodities," said National Corn Growers Association. "At a time of record low corn prices, this will be good news for farmers who want to see mere market opportunities for their crops." In addition, industry expansion "will assure supplies of ethanol will be available as methyl tertiary butyl ether is eliminated from the nation's gasoline."