A Publication of WTVP

Both chambers of the Illinois General Assembly passed the state budget on the final day in May. Going past the May 31 deadline would have required a three-fifths approval from legislators on the budget. Reaching an agreement before the June 1 deadline only required a majority.

One important item with the passage of the fiscal year 2002 appropriations was the creation of Illinois AgriFirst—with a $3 million appropriation for this package.

Illinois AgriFirst establishes a multifaceted grant program to develop value-added opportunities for Illinois commodities. The new grant program will provide basic technical assistance, feasibility competitive assessments, and infrastructure development of value-added processes that benefit farmers, agricultural cooperatives or agribusinesses.

The technical assistance grants are up to 75 percent of the cost, not to exceed a maximum of $25,000, for technical assistance to develop a project to enhance the value of agricultural products or to expand agribusiness in Illinois. The feasibility competitive assessments are up to 50 percent of the cost of undertaking feasibility studies, competitive assessments, and consulting productivity services the Ag Department determines may result in the enhancement of value-added agricultural products.

After June 30, 2003, a grant of up to 10 percent of a value-added agribusiness total capital costs (not to exceed $5 million) could be awarded for construction or remodeling, land, labor and other working capital. So just what specifically could this money be used for? One possibility would be toward a feasibility study and business plan for new ethanol processors. With the recent cheap corn prices and increase in crude oil prices, ethanol plants have been popping up throughout the Midwest, especially west of the Mississippi River. With Illinois consistently one of the top two states for corn production, it just makes sense to build plants in Illinois that will add value to our corn.

Another possibility for AgriFirst dollars would be toward pork processing plants. One of the reasons hog prices dipped below $10 a hundredweight back in 1998 was processing plants were running at capacity, so they had no reason to bid up prices. More processing plants will create greater capacity and should create more competitive bidding. Once again, this seems to be a common sense approach, as hogs eat a tremendous amount of Illinois-grown corn and soybeans.

On the national scene, June 11 marked the date the Bush administration denied California’s request for a waiver from the oxygenate requirement in federal reformulated gasoline. This is good news for the farm community. The decision creates certainty for the expansion of the bio-based renewable ethanol industry and also validates the scientific arguments regarding the pollution reduction benefits of ethanol and oxygenates.

This pro-ethanol decision is expected to increase corn demand by 500 million bushels and could add between 10 and 75 cents to a bushel of corn. High-efficiency ethanol plants are able to produce 2.8 gallons from each bushel of corn. IBI