Wisconsin Ag Connection - Farm Subsidy Program Could Help Aid State's Paper Industry

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Farm Subsidy Program Could Help Aid State's Paper Industry
Wisconsin Ag Connection - 11/04/2009

A new farm subsidy program could help more than just farmers. According to officials with the USDA, the 2008 farm bill has certain funds available to subsidize the harvesting, storage and shipping of biomass products, such as corn cobs, grasses and wood waste that could be used to make fuel or generate electricity.

The program, which was originally estimated to cost taxpayers $70 million over five years, is now expected to pay out hundreds of millions of dollars just over the next year because of demand from paper companies and wood-burning power plants. Gannett Newspapers reports that the program placed no limits on how much any individual player can get, the number of participants, whether they are doing new work or getting subsidies for existing work, or the total size of the program.

Meanwhile, not everyone is happy about the program. Some complain that its bad policy to take funds away from farmers in order to subsidize mature industries and pay for harvesting that's already taking place without government assistance.

The USDA has yet to finish writing rules for the program but announced this summer that it would start paying the subsidies as part of an effort by the Obama administration to promote bioenergy.

The department has been swamped with applicants, the vast majority from power companies that use wood residue to produce electricity, manufacturers of stove and furnace pellets, and forest-products firms that use wood scraps to fuel their plants.

Canada has also raised concerns with the plan because it could give the U.S. forest products industry an unfair advantage.

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