company produced gasohol. more recently in the early 2000s we ventured into biodiesel production and in 2008 we began writing the next chapter in our renewable energy story, biomass n.2011 we took a major step forward and partnered were another company to form mma oil biomass, a separate small business with the mission of leading the cooperative into this new renewable energy field. i'll focus today on our experience with bcap but for more information about our innovation in this area please refer to my written testimony. when usda issued the final bcap rule they said, quote, bcap will address a classic chicken and egg challenge. if commercial scale biomass facilities are to have sufficient feed stocks, then an established large-scale energy crop source must exist. conversely, if profitable crop production is to occur, then a viable consumer base must exist to purchase the product, end quote. in our experience this could not

ring truer. it is a difficult process to educate farmers on a strange new plant. just two years ago it was a crop that was too expensive and planted by hand. usda's approval in 2011 to fund our project was our window of opportunity. it allowed us to leverage other resources to develop a four-row planter, prop ratergation efforts and to that end bcap was essential in bridging the gap to our producers to take that leap of faith. to date, 225 family farmers have dedicated acres to the new energy crop, and we anticipate this number will grow to over 2,000 as our combined projects scale up to maturity at 50,000 acres per region. all of this is occurring on land that had been underutilized or was earning very little. bcap's most important long-term influence on the renewable

energy market is to drive down the cost of the best perennial crops and increase the efficiency of which they are marketed. no other federal program has this broad effect on america's biomass renewable energy industry. bcap is a game-changer and only if administered properly and funded consistently. while usda committed resources to fund our first year of a seven-year model, we had to adapt our model and the pace of implementation cue to the drastic funding cuts of 2012. despite our significant successes, the absence of a clear direction in federal policy is forcing us to scale back in each of our project areas. we are in a situation where it was impossible to plan six months out, let alone the three to five years necessary to run a business. consistent funding is the story here. expanding a renewable energy industry cannot be done in a laboratory or in theory. farming is advanced by doing.

you cannot ferret out all the complexities of such a unique crop and independently scale up to 200,000 acres in four project areas after only one year of funding. the bcap program that is funded one day and cut another will ultimately do more harm than good. it will set the biomass industry back years as farmers will lose faith in the industry. i strongly support reducing our nation's deficit and tackling the rising debt. in fact, u.s. farmers have led the way. establishing a fiscal record that is unique among federal policies. i understand tight budget constraints will be amajor issue in the 2012 farm bill and encourage careful review of all the programs. in doing so, i believe you'll find that bcap is worthy of continuing and should any funding be available for the energy title, i strongly encourage you to direct it towards this game-changing program. beyond reauthorization and the potential for funding, my

written testimony offers suggestions related to the program's functions. most importantly, usda needs to have the flexibility to see existing projects through to maturity. in closing, mfa biomass is looking to enhance opportunities to our farmers and we're overcoming the chicken and egg problem by successfully leveraging bcap the way it was intended. again, i look forward to the chance to testify and look forward to your questions. >> thank you, mr. taylor. now i'll recognize mr. haer for five minutes of testimony, please. >> thank you. >> chairman thompson, ranking member holden, members of the subcommittee and full committee, on behalf. national biodiesel board, i'm grateful for the opportunity to testify today regarding the farm bill energy tight. i'm gary haer, vice president of sales and marketing for renewable energy group, a

leading u.s. biodiesel producers headquartered in ames, iowa. our company has biodiesel production facilities in minnesota, texas, iowa, illinois, and we're working to reopen biodiesel facilities in louisiana, new mexico and kansas. our focus is on converting natural fats, oils and greases into advanced biofuels, and currently i have the privilege of serving as chairman of the national biodiesel board, the u.s. biodiesel trade association that i'll refer to as mbb. biodiesel is a renewable low carbon replacement fuel. like diesel fuel, it's used in trucks, trains, agricultural equipment, mining operations, generators and heating oil. biodiesel is used in existing diesel engines without modification, and it's made from a broad diversity of feed stocks, including recycled cooking oil, agricultural oils

and animal fats. there are approximately 200 biodiesel production facilities across the country, and last year those plants produced a record 1.1 billion gallons of advanced biofuel breaking the billion-gallon mark for the first time in our industry's short history. by comparison, the u.s. uses approximately 55 billion gallons of petroleum diesel fuel each year. our trade association, the mbb, works closely with a number of diverse feed stock organizations including the national renderers association, the american soybean association, the united states canola association and the national restaurant association. our industry has production facilities in all but a few states across this land. in fact, 13 of the distinguished members on this subcommittee have at least one plant in your districts, including

representatives lucas, peterson, thompson, holden, stutzman, gibbs, holz camp, macintyre, walls, owens, pengory, fudge and nome. the other nine members of this subcommittee have bowe diesel production facilities in your states and mbb estimates that those plants and others like them across this country supported more than 39,000 jobs in all sectors of the u.s. economy in 2011. this generated household income of more than $2.1 billion and created more than $3.8 billion in gdp. many of our production facilities are located in rural america, where in many cases they are the primary economic engine for the local community. in addition to creating direct manufacturing jobs, our diversified feed stocks and co-products represent expanding markets for u.s. farmers, livestock producers, renderers

and restaurant owners. given this overview, you can understand why programs supporting biodiesel are a critical piece of the next farm bill. in particular, we have a strong interest in two existing farm bill energy title programs, the biodiesel fuel education program, section 9,060 and the biodiesel energy program for advanced biofuels. first, the education program plays a vital role in helping to expand marketplace and acceptance in use of biodiesel, and we urge you to continue modest funding for the program. with the help of the biodiesel fuel education program. industry has conducted market outreach, industry coordination, fleet and trucker outreach, petroleum supply chain educat n education, biodiesel research, and we work cooperatively with the petroleum marketers association of america, the pmaa, the international liquid terminals association, the ilta,

and the society of independent gasoline marketers or sigma on key infrastructure. we also garner support from manufacturers, currently u.s. automakers and engine manufacturers warranty their engines to accept the use of b-5 or b-20, biodiesel blends of 5% or 20%. many manufacturers are now actively promoting their biodiesel capacity and capability, and, for example, ford has recently begun featuring a b-20 emblem prominently on the side of every new ford super diesel truck. finally because this agriculture committee we should talk about tractors, boy diesel blends are covered under warranty for use in john deere, new holland and international navistar equipment as well as lawn equipment such as ferries and toro. many now tractors are warrantied up to b-100. the mbb is urging the committee to reauthorize the biodiesel

energy program for advanced biofuels. this program has helped the industry expand a stable manufacturing base as we work to establish ourselves in a competitive marketplace with the everyone trenched petroleum industry. biodiesel is a part of the all of the above energy strategy and a recent oil price spike should remind us why this is important. we can reduce the influence that global forces such as opec have over our economy, a concept that is well understood by consumers who purchase gasoline and diesel fuel. recent gallup poll found that rough tie two-thirds of americans including majorities from political parties support continued incentives for developing american-made alternative fuels. in conclusion, the u.s. biodiesel industry is proud to produce the only domestic commercial-scale advanced biofuel that is readily available and accepted across the country. we have both the capacity and

available feed stocks to increase production and further expand markets for agricultural feed stocks, and the farm bill programs that we've discussed will help our small but growing industry gain a presence in the growing u.s. fuels marketplace. again, i appreciate the opportunity to testify. we look forward to working with you on the development of the farm bill and the continuation of the programs that support the growing u.s. biodiesel industry. thank you. >> thank you, mr. haer. we were -- there were votes on the house floor called just a minute or so genoago. my intention is that we will get through ten minutes of questioning, which will be -- and then we'll -- we're going to have to recess until after this vote series it over on the house floor. so i -- so the plan will be that we will reconvene ten minutes from the start of the last vote on the house floor to give everybody a benchmark, and i appreciate everybody's patience

on that. so the chair would like to remind members that they will be recognized for questioning in the order of seniority for members who were here at the start of the hearing. after that members will be recognized in order of arrival and i appreciate the members' understanding. i now recognize myself for five minutes. mr. reinford, you mentioned that biogas can be utilized in existing natural gas infrastructure. can you elaborate and talk a little more about this and what kinds of future applications and opportunities might there be for this energy given your on-the-field, on-the-ground experience with -- on your farm that you've seen? >> that's good. yeah, i have accessed methane right now. we're looking at compressing it and using it in our farm pickup trucks and using it in some of our dump trucks. so you're thealizing that technology. there is a farm out in indiana.

they are actually hauling milk -- compressing and hauling their milk. there's other opportunities. we're actually self-sufficient. if we can bring something else in here, we can be fossil fuel-free if i can get something like that and other technology to come into our farm so that's kind of what we're looking at right now. >> when you're looking at the cng, with your trucks, tractor, that type of thing. >> that's correct. >> have you really looked at the numbers? is that economically something that works for you in terms of making that conversion? you obviously have the fuel readily available for flaring off the methane. >> that's good. the numbers about $1.60, $1.70 for me and my size. the larger i get the better the numbers come down. right now that technology needs to be improved yet. i still think they are working at it to make it more affordable for dairy farps. the technology is there. it's about making it more affordable. >> thank you.

mr. greenwood, you suggested that energy programs such as the bio-based market promise are fostering innovation and cited a biorefinery in louisiana. can you give any other examples of how these programs help drive innovation, especially innovation of new technologies. >> certainly. thank you for the question. the newest part of all of this is really the ability to convert cellulose into sugars that can be then distilled into ethanol. we've known how to take the starch part of the plants and convert it into sugar since they have been making corn and before then. the cellulosic part of the market, the stems, the stalks, the woody parts, they evolved over millions of years to be structural and to -- and to be hard to break down, and so the -- the challenge was how can we find, how can we use biotechnology to develop enzymes

and bacteria that can actually break down that -- that material, and that's what we -- that's what our companies have succeeded in doing now, and that's what we're moving towards commercialization with. the ability to then use -- for farmers to take two crops when they take their corn kernels and sell them the way they ordinarily would do and then to be able to use their corn cobbs and the cornstalks in the stover to be able to use by-products from the forestry industry, to be able to use miscant hy s and switch grass, all of that on land that might not be that usable for normal agriculture. this is -- this is the advanced biofuels which i think our nation is ultimately, if we succeed at this, is going to depend on which will give us all the benefits you've heard from others about energy independence and a more environmentally sustainable way of producing energy. >> thank you. mr. taylor, what kinds of policy

or eligibility changes would you suggest to help ensure that bcap dollars are being spent where they -- where they were intended? >> i think the -- as we all know, bcap got off to a rough start with matching payments, and i think that's a testimony to the difficulty of solving this chicken and egg problem, but the -- one recommendation that we would make would be that the -- the projects -- there's a tendency in the rule to try to spread the money among as many projects as possible. my suggestion would be to allow usda and fsa to see projects through to maturity would probably be the number one recommendation. >> okay. >> thank you. >> i now recognize for five minutes of questions mr. holden. >> thank you, mr. chairman, and mr. reinford, just to set the record straight, besides you and mr. thompson, mr. greenwood and

myself are proud pennsylvanians as well and we know your home county is pronounced junta and not juanita as it was pronounced in 1992. those of us on this committee in '02 and '08 are proud of the work that we've done. the super committee had no priority for funding. the ag committee has $800 million. we want to fund as much as possible, but we are in difficult waters right now. if we could only fund three programs, what three would you recommend funding, and where would you suggest we take the money from to fund those? neighbor? ryan used to be my neighbor. >> well, i think that's a fair question. it's a difficult question. >> yes. that's what we're facing. >> i know you are. clearly the budget situation here is very austere and you've got to make some tough decisions. i don't know that i can name

three. did i name four in my testimony that we are very supportive of as members of the ag energy coalition. we think that these programs, the energy programs, have demonstrated their value, and there's some real national interest here in finding the resources to keep this finding going. we're very supportive and appreciative of the work that the senate was able to do to find 800 million for these programs. it's less than the '08 bill had and still a significant investment. we think that there are environmental national security and nick benefits to doing this, and so with encourage the committee to do that. i don't know if i've got a silver bullet answer to you as to how to find that money, but we're here to make the case that these are very vital programs and we'll work with you it try to find that funding. >> anybody else? mr. greenwood? >> our priorities would be bcap and the markets-based program

and as one who has served with you for 12 years i understand the dire straits that this nation is facing in terms of our spending program and budgets. this farm bill as a well is a subsidy bill and it's a question of establishing priorities, and my message to you folks on this committee is to be very visionary in terms of -- of where is the future for our children, and i would argue that the future is going to depend upon our ability to make fuels in ways we haven't been able to before. the science has brought us to this point, and -- and shortly commercial -- the market will take us the rest of the way. what we need from this committee is a bridge, the bridge tone able these entrepreneurs out there to demonstrate the commercial ability of these -- of these technologies, and we're quite confident that once they do with these loan guarantees and -- and so forth, that the

commercial bankers will move in, and this country will be off under a grand adventure. >> okay. anyone else care to comment? yes. >> thank you. i think the priorities are not just amongst the decisions within within the subcommittee and the programs, but as well as national priorities. most analysts would predict that what we'll see in global btu or energy costs for the next decade are going to be substantially higher on an average level than we saw in the last decade. so a lot of these programs, particularly v-crap, this is made, i think the possibility of very successful results more possible because the bar is in essence been lowered because the price of energy being significantly higher. i think that's the one thing,

and when we try to set priorities that 75% of the oil in this country is transportation fuels, is used as transportation fuels. and that cellulosic fuel to be 36 billion gallons by 2022 is a very important goal. if that should be achieved, we're now just on the cusp of making the break throughs that we needed to make and largely because of higher prices in oil markets, there's a great deal of activity, of entrepreneurial activity to solve these problems to cut the legs out from these programs in my opinion would be bad timing because it's all starting to work at this point. >> your time has expired. >> i thank the gentleman and i ask your patience, we will recess, we'll reconvene for

further questions following the start of the final vote. >> thank you.

will the subcommittee, agricultural subcommittee reconvene. i apologize for the recess we had to take. the only good news i can share is that votes are done for the day. so no more votes interrupt anyways on the floor. so at this time i'm pleased to recognize the gentleman from ohio, mr. gibbs for five minutes. >> i think i have always been excited by the agriculture being a major solution to our energy, make us move toward energy independence. mr. reinford, a couple of

questions, when you run your manure through it, what's left? what's the by product and what's the nutrient levels what's the material that's left? >> let's talk about that. we put it through a screw press. we actually use that for cow bedding and that's one of the biggest incomes that's comes off this technology now. we're actually bedding cows with that and getting a very good response. we're running rite around 120, the 120 mark and that's really a big plus for the dairy industry. the last year we have been getting a 60% bonus as far as good quality milk. it doesn't take the nutrients take, but it does change the form of nutrients, it's more available in the first year of planting, so that's good forrous

farmers. so we actually buy no commercial fertilizer, p and k, except for the nitrogen. so it's a big plus all around for us guys. >> you said the nutrient part for the first year is more available? >> that's exactly right. it changes the form of nitrogen to a hydrosulfur. that's through the penn state university studies. the guy's telling me in the first year you use up all of your nutrients and if you don't go through digestion you use up all of your nutrients. we do no -- we do all con investor -- so it's a win-win for pennsylvania. >> it's one reason i have been so excited about this digesting, because it's a great energy source and it also enhances the environment and you just said

that because let's use phosphorus, you put it on the crops and use it in the first year, so it's not sitting around there in the bank of the soil and if you have any erosion or washoff, it becomes soluble phosphorus. second question, mr. reinford. i know there's lots of divestitures over in europe, in germany, we're doing some in my area, but there's still only about 200 in the country. what do you see -- when you talk to other farmers, what's been the big road block for livestock operations to put in die ves churs? >> is that's a good question. the number one thing is for us farmers educating us. i'm throwing some of the pioneer work that's going to different places and educating farmers. and in some of the seminars, we actually sold some of -- just by seeing the efficiency of digestion.

in germany, there's 6,800 digest churs, they have 100 count dairies, they're telling us now we need 800 cows we can go with smaller farms with smaller digest churs. >> what would you think would be an initial capital investment for a small digester, how many cars would make it feasible? what you would have to have? >> well, that's a good question. if you allow us to put food waste in there, we can go down as much as 200, 300 cows. that's the thing that's making it so profitable. we're bringing other food stocks in here, like food waste from walmarts, there's one or two other food chains, they want me to come on board. so we can go down as low as 200, 300 cows. >> how much does that cost? >> my digester cost $1.1

million. that's the whole thing. i think with some of the regulators now, we're talking a million and a half, something like that, i'm proving that it can be done and it can also sustain itself, but we need more support to keep farmers encouraged. but yeah, it's good stuff. >> just a quick question, mr. taylor, on the b cap, what can we do to make it better? you know, on the b cap program? >> congressman, i think the one issue is this strong tendency to try to diversify and take as many projects into play as possible. and i think even though i can't commend the people at fsa and usda enough for sorting out the complexity of these different programs because they're very complex and i'm trying to understand them. but the emphasis needs to be on seeing programs through to maturity. not just shotgunning, they need

to have more of an emphasis on the whole mature ration process. so the money just doesn't fall down rat holes. >> thank you, mr. chairman. >> i thank the gentleman. i have a question i want to ask and extend to whoever on the panel would like to respond to it. obviously the initial goal of the energy title in the 2008 farm bill was to spur the development of commercially viable ethanol and advanced biofuels. however, i'm not sure the single gallon of commercial ethanol has been blended into the fuel supply. so it's a two-part question for the panel. anyone on the panel who would like to respond so it. what challenges need to be addressed in order to address that issue and does the current energy title provide the tools to move toward the advancement of