Senate Testimony on REAP Benefits for American Agriculture

The Senate Agriculture Committee recently held a hearing on Rural Development and Energy Programs: Perspectives for the 2018 Farm Bill. Senators heard from USDA staff and rural development experts and got important perspective on the value of the Rural Energy for America Program (REAP) to agriculture and rural America.

Mark Olinyk testifies in front of the U.S. Senate Agriculture Committee on Energy Issues in the Farm Bill (PRNewsfoto/Harvest Energy Solutions)

Mark Olinyk, President and CEO of Harvest Energy Solutions, based in Jackson, Michigan, shared his direct experience with REAP, which provides incentives to farmers and rural businesses to invest in renewable energy and energy efficiency. Olinyk strongly endorsed REAP and urged the Senate to increase funding for REAP in the next Farm Bill, along with other recommendations.

Olinyk, who has a farming background himself, praised REAP for helping American agriculture; “Put simply, the farmers and small businesses we work with could not afford the renewable energy systems we provide without upfront financing provided through the REAP program.”

Harvest Energy Solutions serves the agricultural community with help from REAP, by providing means to lower and stabilize energy costs: “REAP allows our clients to save electricity, save money, achieve greater efficiencies, and make their operations more stable, less risky, and more profitable,” Olinyk pointed out.

Senator Debbie Stabenow (D-MI), ranking member of the committee, pointed out that REAP is “consistently over-subscribed with more interest than funding” and asked Mr. Olinyk for his views on this.

Olinyk responded that “the more available REAP money, the more benefit to farmers and businesses. Period. It produces jobs.” “That means more clean, renewable energy, and more jobs and economic growth in rural areas,” said Olinyk.

Benefits to Farmers

Kris Green Farm, Wakeman, Ohio

REAP’s benefits are visible, dependable, and necessary.

Mr. Olinyk emphasized the benefit provided by REAP for farmers, and especially poultry growers, struggling with low commodity prices and high input costs. In some cases he said these farmers are being stretched thin and their continued operation could be in doubt. REAP alleviates increasing energy costs, allowing farmers to concentrate their expenses on improving and expanding agricultural production.

Said Olinyk, “Farmers (who were already making slim margins) are being stretched too thin. REAP grants have allowed them to invest back in to their operations with solar energy, insulation, lighting, and other energy efficiency upgrades.”

Rural Economic Development and Job Growth

Alexander Pork – Promise City, IA

Not only does REAP offer direct financial benefits to farmers, it additionally provides rural economic development by leveraging private investment. Olinyk described a number of projects where the REAP grant made a decisive difference in the investment, providing an economic domino effect that helps the whole community. Studies have shown that REAP has great impact on job creation.

“In total, we have completed hundreds of successful solar and wind installations in the states of Iowa, Illinois, Indiana, Michigan, Ohio, Kentucky, Tennessee, Missouri, Wisconsin and Pennsylvania. In these states we are providing clean, renewable energy while creating economic growth and wealth in rural communities,” said clean energy entrepreneur Mark Olinyk.

Business Opportunities

Tripp Furches – Murray, KY

From farmers in Kentucky to Iowa, REAP’s impact is evident. One example is Tripp Furches, a Kentucky grain operator. Furches was hesitant to build solar on his farm, even though he knew of the long term benefits it would have. As with so many farmers, Furches’ input costs were not going down, but the sale price of his corn was.

Furches secured a renewable energy grant through REAP and was able to build a beautiful, cost-saving solar array on his land.  These fiscal limitations made Furches hesitant to build solar on his farm, even though he knew of the long term benefits it would have. Mr. Furches freed up enough income to expand and diversify his farming operation. In September, 2014, Senate Majority Leader Mitch McConnell visited Furches’ family farm to see this success story first hand.

You can download Mr. Olinyk’s Senate testimony here (PDF).

 

Congressional Appropriators Finish Work on FY18 Funding

The 2018 funding picture for farm energy development programs came into sharper focus after the appropriations committees of both houses of Congress passed fiscal year 2018 agricultural appropriations bills.  However, it’s not at all clear what happens from here.

The Senate bill cut or rescinded a total of $64 million from farm energy programs. Overall, the House bill cut farm energy funding far deeper than the Senate, and targeted REAP in particular. The House cut or rescinded a total of $213 million from farm energy programs. In some cases rescinding funds carried forward from previous years, as provided in the 2014 Farm Bill

Rural Energy for America Program (REAP): The Senate bill protects REAP from cuts in mandatory Farm Bill funding and even adds a small amount in discretionary funding. This comes as a relief given the Trump budget would cut all mandatory funding, plus rescind all carryover funds – which would have been the worst cuts in the history of the program. Historically, the Senate leads in protecting Farm energy programs, including REAP.

The House Agriculture Appropriations Subcommittee cut REAP from $50 million in mandatory funding to $9 million. Unfortunately, during the full Appropriations Committee consideration of the bill,  Subcommittee Chairman Aderholt sought to cut REAP even further, to a mere $1 (one) million, in a manager’s amendment. This cut would essentially kill the program. However, an error in the amendment the committee passed may spare REAP the second round of cuts. We will continue to monitor the House if this bill moves to the floor after the summer recess.

Biomass Crop Assistance Program (BCAP): Appropriations Committees in both chambers capped BCAP, from an original $25 million in mandatory funding to zero.

Biorefinery Assistance Program: Under the 2014 Farm Bill this program did not have any mandatory funding for FY 2018. The Farm Bill, however, provided for funds to carry over from previous years to support the program. There were $178 million in carryover funds in the program’s account. The House Appropriations Committee rescinded all but $31 million while the Senate committee left $139 million in the account.

The next steps in the appropriations process are not clear. Under the regular order of business the bills would go to the full House and Senate and then a Conference Committee would work out differences. At this point the House may be bundling packages of appropriations bills for consideration; the Senate process is moving more slowly. Some  observers expect that FY 18 appropriations will be covered by an omnibus bill (or bills) just as we had for FY 2017 and FY 2016 before that.

 

Trump Budget Eviscerates Rural Clean Energy Programs

On May 23, 2017, the White House released their recommended fiscal year 2018 budget, reflecting their priorities and policies for the nation. And the message clearly states they do not support farm-based clean energy production as a way to invest in rural America. This budget would unravel the legislative deal struck in the 2014 Farm Bill.

The Trump budget eliminated funding for the most effective programs of the Farm Bill Energy Title. Additionally, for several programs the budget eliminated funding that had been carried forward from previous years, which means they went beyond cutting annual funding to even eliminate residual funds.

The Rural Energy for America Program (REAP) has supported over 15,000 energy saving and clean energy producing projects in rural areas in every state. The 2014 Farm Bill provided mandatory funding of $50 million per year. The Trump budget would eliminate all of that funding, and also remove $8 million carried forward from previous years, essentially killing REAP.

The Biorefinery, Renewable Chemical and Biobased Product Manufacturing Assistance program provides loan guarantees for plants that can use agricultural residues and other forms of biomass to produce a range of energy and non-energy projects. The Trump budget claws back the $175 million in accumulated program funding.

The Biomass Crop Assistance Program (BCAP) would be get the same treatment as in previous years – capped at $3 million.

A statement from the Chairs of House and Senate Agriculture Committees indicate they will pursue a more independent path on appropriations, though they did not specifically mention energy programs.

The following chart provides an over view of changes. Note that the negative numbers mean mandatory funding would be eliminated and reserve funds would be taken away.

President’s FY2018 Farm Bill -Clean Energy Programs with mandatory funding
Section Section name 2018 Mandatory President’s 2018 Request
9002 Biobased Markets 5  No change
9003 Biorefinery Assistance Program  $           –  $    (175.0)
9004 Repowering Assistance Program  $           –  No change
9005 Bioenergy Program for Advanced Biofuels  $        15.0  No change
9006 Biodiesel Fuel Education Program  $         1.0  No change
9007 Rural Energy for America Program  $        50.0  $        (8.0)
9010 Biomass Crop Assistance Program  $        25.0  $         3.0

 

Explanation of appropriations terms

Mandatory funding — The amount authorized in the five-year Farm Bill by Congress is available unless limited to smaller amounts in the annual appropriations process; if appropriators do not act, the amount that was authorized is provided to the program.

Discretionary funding – Programs that require annual funding to be passed by the Appropriations Committees.

 

 

New REAP Funds for FY2017 Now Available

(October 18, 2016) The USDA released a notice of solicitation of applications (NOSA) for the Rural Energy for American Program (REAP). The funding notice for fiscal year 2017 provides guidance for applicants including to online resources at FarmEnergy.org and from the USDA.

This notice includes grants and loan guarantees for renewable energy and energy efficiency projects. Eligible recipients for these projects include agricultural producers and rural small businesses. Residences are not included.

Awards are made on a competitive basis, as determined by the point scoring system also described in the NOSA. Applications can be submitted at any time but the following deadlines apply:

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Rural Areas Benefit from new REAP Awards

The USDA announced another round of awards for the Rural Energy for America Program (REAP) in mid-July, bringing benefits to 56 states and territories and to a wide range of agricultural sectors. REAP continues to help reduce costs, protect and increase jobs and to produce homegrown clean energy.

Flagshooter hybrid wind/ solar project.The July 2016 round of awards reflect broad interest in cutting energy costs with energy efficiency, the highest number and dollar value of grants. There were 470 awards for a total of $6.5 million in grants.

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REAP Grants for Energy Audits & Renewable Energy Development

On May 10th, 2016 the USDA announced the award of 26 grants, totaling nearly $2 million, to provide help to rural small businesses and agricultural producers to find ways to conserve energy and develop renewable energy systems.

The REAP grants  (pdf) were awarded to universities and state and local governments to provide energy audits and renewable energy development assistance to agricultural producers and rural small businesses. The services help these firms to invest wisely to cut energy waste and to find ways to generate renewable energy.

Agriculture Secretary Tom Vilsack said, “Nationwide, Americans are lowering their carbon footprint and energy bills by being more energy efficient and switching to renewable energy, and USDA investments make more of these options available. The Rural Energy for America Program also helps businesses create jobs in their communities through the development and installation of energy efficiency and generation projects.”

The 2014 Farm Bill allowed resource conservation and development districts (RC&Ds) to receive these grants. RC&Ds are regional groups created decades ago to provide direct assistance to farmers for conservation and other activities. Congress cut all funding to them in 2011 and many are struggling or are now defunct.

REAP provides grants and loan guarantees for renewable energy systems and energy efficiency improvements, grants for energy audits, and grants for renewable energy planning and development to service providers who work with farmers and rural small businesses. Thanks to investments like these, enough renewable energy has been produced to power more than 959,000 American homes annually, or more than 10.4 billion kWh worth of electricity. In addition, USDA has provided almost $345 million in grants and $430 million in loan guarantees to agricultural producers and rural small business owners from 2009 to 2015.

The list of award recipients is available here.