September 30, 2004

Rockhold Testifies Before Congressional Hearing

WASHINGTON, DC - On September 22, Brent Rockhold, a corn farmer from Arbela, testified before the U.S. House Small Business Subcommittee on Rural Enterprise, Agriculture and Technology on the effect of high natural gas prices on corn production and profitability.

Congressman Sam Graves (R-MO) serves as chairman of the subcommittee. Rockhold is a past president of the Missouri Corn Growers Association (MCGA) and member of the National Corn Growers Association (NCGA) Ethanol Committee.

Increased natural gas prices have already had an adverse effect on farmers due to higher production costs, and will continue to do so in the future, said Rockhold, adding high natural gas prices affect the cost of producing important fertilizers that farmers rely on for crop development.

Fertilizers account for more than 40 percent of the total energy input per acre of corn harvested, Rockhold said, and most of that energy is consumed in the production of nitrogen fertilizer. Retail prices for fertilizer rise sharply when natural gas prices increase.

Nitrogen fertilizer is a key input for the bountiful yields achieved by U.S. corn farmers, Rockhold said.

Nitrogen fertilizer in northeast Missouri has increased $25 per acre since 2000. For my 600 acres of corn, it cost me $15,000 more in 2004 to use nitrogen fertilizer on my crops. My total fertilizer costs have increased $24,000 since 2000.

According to the U.S. Department of Agriculture (USDA), farm gate prices for fertilizer have jumped to near record-high levels. The largest cost component of making all basic fertilizer products is natural gas, accounting for more than 90 percent of the cash cost of production.

Rockhold noted growers rely on affordable natural gas as feedstock for fertilizer, but also energy for irrigation, powering farm equipment, drying grain and producing ethanol.

Whether used directly as a feedstock or for heat and power generation, reasonably priced natural gas is essential to grower profitability, said Rockhold.

During his testimony, Rockhold also highlighted the volatile relationship between natural gas and the production of ethanol. He said natural gas accounts for nearly 65 percent of the energy costs for ethanol production.

More than 10 percent of the expected corn harvest will be converted to ethanol, noted Rockhold. Higher natural gas prices will negatively impact this countrys growing ethanol industry. The corn industry becomes more energy efficient every year, but we still must have adequate, reliable and affordable natural gas to fuel the industry.

In a statement, Congressman Graves acknowledged the important role of agriculture in the lives of Americans.

We rely on our farmers three times a day. Farmers have been forced to decrease production by 25 percent causing adverse financial damage to the agricultural industry, which has been hard hit over the years, and causing additional challenges to our slowly recovering economy, said Graves.

Rockhold concluded his Congressional testimony by thanking Congressman Graves for convening the hearing and encouraging the subcommittee to continue working toward a sound, comprehensive energy policy.

Your decisions impact my farming operation and simply, farmers need access to reliable sources of energy and raw materials so they can use the fertilizers necessary to produce an abundant, affordable and healthy food supply, he said.

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