Corn growers ask for expanded energy development

Southeast Farm Press

Dec 4, 2006 9:45 AM


The National Corn Growers Association (NCGA) has joined more than 100 growers and agribusinesses of the Agriculture Energy Alliance (AEA) in asking the U.S. Department of the Interior to allow development of energy resources in the Outer Continental Shelf (OCS). 


Noting that growers’ fuel expenses and input costs had increased nearly $5 billion from 2004 to 2005, NCGA and AEA called for expanded access to offshore oil and natural gas reserves in the Gulf of Mexico and off the coasts of Virginia and Alaska.

“Fertilizer is one of the products most sensitive to natural gas costs,” explains NCGA President Ken McCauley. “Prices for many types of fertilizer have more than doubled, and U.S. fertilizer manufacturers have had to cut back production and even close plants.”

“As the U.S. agriculture industry becomes increasingly dependent on foreign fertilizer production... a real threat to our food security has been created,” AEA said in comments to the Interior Department’s Mineral Management Service (MMS). “American farmers suffer every day the natural gas supply/demand situation remains unbalanced through lack of substantive policy changes.”

MMS is the federal agency that manages the nation's natural gas, oil and other mineral resources on the OCS. The agency also collects, accounts for and disburses more than $8 billion per year in revenues from federal offshore mineral leases. According to AEA, the oil and natural gas reserves in the OCS may be enough to maintain current natural gas production for 71 years and current oil production for more than a century.


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Top Issues

The Agriculture Energy Alliance (AEA) represents a broad-based coalition of growers and agribusinesses that depend on natural gas for food production, irrigation, crop drying, crop production chemicals and fertilizer production. AEA focuses on the devastating impact that the unprecedented high level and volatility of natural gas prices has had, and is having, on agriculture.

American farmers face a crisis because of public policies that artificially create demand for natural gas while restricting access to supply sources. Increased natural gas prices have already had an adverse effect on farmers in the form of higher production costs, and will continue to do so in the future if this problem is not addressed promptly.

The agricultural community can produce an abundant, affordable and healthy food supply, but we need the federal government to institute policies that enable access to cost-competitive natural resources. The current natural gas crisis has two solutions - increase supply and reduce demand. Our Nation faces the daunting task of finding ways to balance the limited supply of, and rising demand for, natural gas.

With regard to the issue of demand, Congress should continue to encourage the electric power industry to explore and invest in alternative technologies for power generation, including 'clean coal' and next-generation nuclear plants. These technologies offer the best hope for limiting increasing natural gas demand within the electric power sector.

With regard to the issue of supply, Congress should also take action to open up areas in the Outer Continental Shelf for exploration and development. In particular, opening Sale 181 area in the Gulf Coast would be a direct, positive action to increase the nation's domestic natural gas supply to help relieve the high prices now pressuring American consumers. Allowing exploration and development in the Sale 181 area is an essential commitment that our nation must make. We believe that opening the Sale 181 area would send a strong signal to natural gas futures markets and could increase the elasticity in North American natural gas markets.