NCGA Encourages Senate to Help Decrease Cost of Natural Gas, Pass Needed Legislation (5-4-06)

The need for more affordable natural gas led National Corn Growers Association (NCGA) Corn Board member Garry Niemeyer to Washington, D.C., this week, stumping for passage of legislation that will increase the supply of natural gas.

Niemeyer, participating as part of the Consumer Alliance for Energy Security coalition, made visits to Senate offices urging passage of S.2253, a bill that would direct the Secretary of the Interior to open 3.6 million acres in the 181 area of the Gulf of Mexico for oil and gas leasing. This action would amount to 6 trillion cubic feet of natural gas production.

Natural gas is used in the production of anhydrous ammonia, which is the main source of nitrogen for corn production.

The bill was introduced by Sens. Pete Domenici (R-N.M.), Jeff Bingaman (D-N.M.), Jim Talent (R-Mo.) and Byron Dorgan (D-N.D.). In addition to meeting with Domenici, Niemeyer and the alliance met with Sens. Dick Durbin (D-Ill.), Debbie Stabenow (D-Mich.), Carl Levin (D-Mich.) and White House Deputy Chief of Staff Karl Rove.

According to Niemeyer, the area called Lease 181 is an immediate source of natural gas because the pipeline infrastructure is already operational in the area. Natural gas could come online in as few as two to three years.

“We hope to get this legislation passed to help decrease the cost of natural gas and increase the volume of natural gas available for anhydrous ammonia production in the United States,” said Niemeyer. “Corn growers rely heavily on affordable natural gas, and, on my farm in Illinois, my costs are rapidly approaching dangerously high levels. Total fertilizer cost is nearing $80 per acre, of which nitrogen is the largest portion. Last year alone it was near $70 per acre with total variable costs equaling $210 per acre.”

Growers depend on natural gas as a feedstock for making fertilizer, energy for irrigation, powering farm equipment, drying grain and producing ethanol.

Niemeyer said farm costs are rising dramatically because of the rising costs of natural gas and anhydrous ammonia. Variable costs for corn production, he said, “have increased $55 per acre from 2002 to 2006, which is equal to a 33 percent increase in my costs related to corn production. In 2005, the cost of anhydrous ammonia on my farm equaled $39.42 per acre, and costs for 2006 are projected at a price of $51.21 per acre.”

According to Niemeyer, corn growers cannot continue to sustain the increased nitrogen prices when growers are seeing the price of corn stay at the same level for the past several years. This is one of the reasons why the U.S. Department of Agriculture’s March 31 planting intentions suggested farmers may only plant 78 million acres of corn versus the 80.6 million acres that was originally expected to be planted, he said.

“Hopefully, the increased demand for ethanol will increase the demand for corn, thereby increasing the price per bushel,” he said.