Energy Management and the Conservation Security Program

Remarks by Bruce I. Knight, Chief,Natural Resources Conservation Service at the Conservation Security Program Energy Management Dialogue

St. Louis Missouri
October 21, 2004

Thank you, Roger (Hansen). Thank you all for attending the Conservation Security Program (CSP) Energy Management Dialogue. I see a lot of familiar faces here today. I appreciate your willingness to help us make this dialogue a success. I especially appreciate the farmers who are taking a break from the harvest to be here today

I would like to thank Doug Lawrence, Acting Director of our Resource Economics and Social Sciences Division, and his staff for putting this session together. I would also like to thank USDA Chief Economist Keith Collins and Bill Hohenstein of his staff for being here to lend their expertise. We often look to Dr. Collins, Dr. Hohenstein, and the entire energy office for expertise on energy issues. Their presence here today shows the level of support the energy management issue has within the Department of Agriculture, as well as in the Administration.


First Year Successes

As most of you have heard, we are coming off of a successful first year for the Conservation Security Program: $41 million obligated; 2,200 contracts, covering 1.8 million acres; 18 watersheds in 22 States. Contracts in 15 of these watersheds included enhancement payments for energy management activities.

Implementing CSP was a major challenge for USDA. We conducted training in June, held the signup in July, signed the contracts in August, and made the payments in September.

Last year was the test drive. We are preparing for an even better, more robust year in 2005. The President’s Budget request of $209 million five times as much. We will have watersheds and sign-ups in every State and multiple watersheds in most. When you look at dollars obligated and contracts signed, this is much faster than the growth of previous conservation programs


CSP and Energy Management

CSP is unique among conservation programs in that it authorized payment for energy management. CSP recognizes that soil and water conservation are often integrally linked to energy conservation. CSP recognizes the progress that US agricultural producers have made over the past 20 years and intends to build on them.

Much of the energy management portion of the CSP program builds upon a whole-farm energy audit, which gauges the energy intensity of each operation and recognizes where cost-effective changes exist in three areas: 1) energy conservation measures in crop and livestock producing units, 2) on-farm energy generation, and 3) replacement of petroleum-based liquid fuel replacement with ethanol and soy bio-diesel.

The energy management component of CSP is designed to reward producers who have invested in these three areas. Such producers have reduced the country’s dependence on imported oil, encouraged energy conservation, and lessened the negative impact of energy use on the environment.

Several other energy management activities were eligible for enhancement payments in our 2004 contracts: 1) use of renewable energy fuels, 2) renewable energy generation, 3) reduction of energy use, 4) reduced tillage operations, 5) recycling on-farm lubricants, 6) reduced inputs and precision application of fertilizers, and 7) Use of alternatives such as manure and legumes, to supply crop nutrient needs.

Since my job today is to welcome you all to this energy management dialogue, I’m not going to do into detail now. Tom Christensen will go over the details of CSP and the enhancement payments later this morning.


Interest in Energy Conservation

America’s farmers and ranchers have long been interested in energy conservation – both from an economic standpoint and from and environmental standpoint. Energy costs are a major part of farm production costs. Energy conservation and incentives for use of renewable energy sources can make U.S. farmers more competitive in the world economy.

Interest in saving energy on the farm really began to grow during the mid to late 1970s when oil shortages drove energy prices through the roof. I was just starting to legally drive then, and I remember my dad telling me that gasoline could NEVER exceed 60 cents a gallon. Since then, we have cut fuel use by adopting energy-conserving tillage practices, shifting to larger, more efficient tractors, pulling lager, more efficient machinery, and adopting energy-saving methods of crop drying and irrigation.

One of the most notable changes in farm energy consumption over the past 30 years is the use of more energy-efficient diesel in place of gasoline. Diesel’s share of total energy use in agriculture rose from 13 to 28 percent from 1965 through 2001. Gasoline use has dropped from 41 percent of the total energy used on farms to only 8 percent. Diesel-powered equipment has become the standard on U.S. farms. President Bush regularly mentions conservation, ethanol, and biodiesel when promoting his energy plan.

Another change in energy use has been the rapid growth of bio-fuels such as ethanol and soy bio-diesel. Who would have dared voice the dream 10, 20, or 30 years ago that someday 10 percent of corn production would be devoted to ethanol production. The soy diesel industry is now launching similar rapid growth, with production at about 20 million gallons a year.

If CSP is to be a part of the President’s vision and the corn and soybean growers dream, we need your help. I know that this dialogue will produce many fresh ideas for improving and promoting the energy management aspects of CSP.

Thank you.