Popularity of federal energy efficiency program amongst farmers puts it at risk

Solar panels are cropping up alongside corn on Timothy Ridgely's Illinois farm. Irrigation equipment powered by the sun is pumping away on Daniel Chin's third-generation Oregon potato farm. And manure is being converted to electricity on an Ohio hog farm.

Across rural America, thousands of farms and small businesses are turning to renewable energy to cut costs and boost their often uncertain bottom lines, increasingly with the help of a decade-old federal program that aimed to hasten change in a part of the economy that had been slow to embrace it — yet where the electric bill can mean the difference between hiring a worker or laying one off.

Some were skeptical.

"My wife thought I was crazy," said Ridgely, who at age 70 recently installed 90 solar panels on the 2,700-acre southeastern Illinois farm where he grows corn, soybeans and wheat and his son raises beef cattle. Last year, he said, he cut his $5,500-a-year electric bill by about 40 percent when he installed a batch of panels. After installing more panels with help from the Agriculture Department's Rural Energy for America Program, he figures he'll be 100 percent self-sufficient.

"It takes a lot of electricity to run the house and barns, and every little bit helps," said Ridgely, who also touts the environmental benefits of solar power.

But the program's growing popularity could be its undoing. Some conservative groups have taken aim at the program, which costs up to $300 million over five years, in the congressional debate over a new farm bill, saying the program unfairly undercuts coal and other traditional energy businesses.

"The last thing we need is the federal government injecting itself into the system," said Daniel Simmons, a representative of the American Energy Alliance. He says his organization doesn't oppose renewable energy, but believes the program amounts to a government subsidy.

The program illustrates a conundrum in the increasingly shrill political debate over how, or whether, government should offer aid to mold the economy.

Few areas of the country are struggling more than rural America, where poverty is growing, small businesses are closing and the children of many farmers are moving away rather than follow in their parents' footsteps. Resurgent oil- and gas-drilling is providing some income, but even conservative states, such as Kansas, are coming up with new tax breaks and incentives to bolster the rural economy.

In Washington, though, the climate is hostile for any program without stout political backing and with opposition from other interests.

The House version of the farm bill limits the program's funding to $45 million a year and designates it as "discretionary," meaning the program might or might not get it. The Senate version would provide $68 million annually in mandatory funds with a possible $20 million a year in discretionary money. The farm bill, which expired at the end of September, remains under discussion in Congress.

In the House, "everything took a cut; that's the nature of the environment in which we work today," said Tamara Hinton, a spokeswoman for House Agriculture Committee Chairman Frank Lucas, a Republican from Oklahoma. Lucas' support for farm programs has made him a target for the conservative Club for Growth, which is seeking a primary opponent to run against him.

If renewable and efficient energy is so economical, farmers should invest on their own "and don't need a push from Washington," said Dan Holler, spokesman for Heritage Action for America, the lobbying arm of the conservative Heritage Foundation.

Dale Moore, director of public policy at the American Farm Bureau Federation, said getting private loans can be difficult for farmers whose cash flow is uncertain. The USDA "understands the ag and rural community," he said, and offers partial loan guarantees and grants.

Ridgely's solar panels cost him about $100,000, but he got a $10,000 state grant for the first 70 and a $13,000 federal grant for this year's panels. He figures both systems will eventually pay for themselves.

Since 2003, the federal program has spent nearly $700 million on about 9,000 projects, ranging from energy-efficient grain dryers to solar panels to windmills.

Doug O'Brien, chief of the USDA's energy division, said there has been a conscious effort to diversify the projects. Recipients include rural electric cooperatives, vineyards, nurseries, dairies and stores. Gutting the program will make it hard for many farmers and rural businesses to get started, he said.

Chin, the Oregon farmer, said solar energy is helping him keep his production costs down. He began installing panels on his irrigation pumps and potato storage cellar when his electricity bills rose fivefold after the expiration of a rate agreement with a hydropower company. The federal program helped pay for three of the 12 solar systems he installed.

"If I wasn't doing it, I would have to charge you more for potatoes," said Chin, 59, whose family has been farming in the Klamath Basin since 1930.

It's unclear how hard agricultural interests will fight for continued funding if it means jeopardizing more important programs, like crop insurance, said Moore, whose organization has supported both the Senate and House bills.

"It's important but it's not something we're going to burn the barn down over," he said.