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 Mahamad Rodzi Abdul Ghani
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 Alternative fuels cited to reduce grain oversupply

Alternative fuels cited to reduce grain oversupply in USAUSA, 7/16/2001 (Western Farm Press) - The strength of the American dollarrepresents a "permanent handicap" in exporting American commodities;therefore, the only new market left to develop for buying what Americaproduces is the domestic one.That was the consensus of California producers testifying before the HouseAgriculture Subcommittee on General Farm Commodities and Risk Managementin Fresno, Calif., recently.How to expand domestic markets elicited several suggestions, including onefrom prominent Five Points, Calif., producer John Diener, who farmsprocessing tomatoes, iceberg lettuce, almonds, grapes cotton and wheat onthe west side of the San Joaquin Valley.Loan rates and acreage limitation programs have failed to bring suppliesand demand into balance, he noted.U.S. commodity loan rates, he said, have proven to be price thresholds atwhich competing countries often add production to their base, making itmore difficult for U.S. commodity prices to rise above loan rates.Alternative fuel sources Diener said could be a reliable mechanism toreduce oversupplies of corn, wheat and soybeans in the U.S. He recommendsselling surplus commodities to the government, converting them toalternative fuels to be sold on the open market.Diener recommended investing more research into making alternative fuelseven more cost effective.Even though he suggests more research is needed, "current alternativefuels make sense and can be competitive against conventional energysources."Burning corn instead of natural gas at 50 cents per therm translates into$2.50 per bushel corn. Ethanol needs a subsidy only as long as crude oilprices are above $22 per barrel.One of the biggest obstacles is increasing production of ethanol or otheralternative fuels.Diener said many potential alternative fuel manufacturing sites exist inrural America in the form of abandoned sugar mills. These sites, hecontends, often have 50 percent of the capital costs of an alternativefuel producing facility in place. Federal rural developing funds could beused to convert these plants.Diener suggests that the CCC purchase five to 10 percent of surpluscommodity stocks per month when prices are below loan rates and convertthese surpluses into alternative fuels sold monthly on a bid basis torefiners needing it to blend into gasoline to meet federal clear airemission standards.Diener said American agriculture is at its "breaking point." One way tosurvive is to invest in the research to develop economically competitivealternative fuels that consume excess agricultural commodities and convertthat surplus into much-needed energy.

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