According to Penn State Crop and Soil Sciences Department, the recent interest in biofuels could be one of the most significant developments in agriculture in a long time. We will likely see many impacts on how we do business. We have already seen a dramatic increase in crop prices and will likely see shifting uses in crops, different cropping systems evolve and lots of opportunities for those who understand the issues.

One issue is to understand the basis for the boom in biofuels. Biofuels, like grain and cellulosic ethanol and biodiesel, have fairly broad political support that was especially spurred by the spikes in gasoline prices this summer. But even before that, government policy was shifting to provide significant support to biofuels development at both the national and state level. The Energy Policy Act of 2005 was passed by our federal government.

Biofuels are a new market for our grain crops and provide some basis for higher prices and, in some situations, can provide relief for high prices of imported oil. It is also important to understand the impetus for biofuels goes beyond grain prices or gas prices at the pump. Rural development due to biofuels is an important consideration and has had a major impact in some states like Iowa and South Dakota. Reducing our dependence on foreign oil is another issue. Still another issue is global warming and the need to reduce carbon emissions to the atmosphere.

None of these is a simple topic and there is no silver bullet solution. Many people are suggesting that only with a long-term vision that includes biofuels, other alternative fuels and energy conservation, can we address this issue.

Many new issues will surface as a result of the biofuels issue. One is the competition between feed and food. An excellent backgrounder on the biofuels and ethanol issue was recently released by the Council for Ag Science and Technology. It is titled "Convergence of Energy and Agriculture: Implications for Research and Policy" and is available at www.cast-science.org/cast/src/cast_top.htm/.

It discusses the value of grain for energy versus feed, the economic opportunities of biofuels, and the potential impact on the livestock industry and proposes some policy changes that are needed to move forward on this issue.

In this region, each potential biofuels crop has a different set of management issues and opportunities. Summarized below are a few examples.

Corn is a major crop in the region and can be used for ethanol production or for direct combustion in grain stoves or furnaces. Both of these areas have been experiencing rapid growth. Corn yields have been increasing in the U.S. by about 2 percent per year, causing surpluses and low prices.

Corn is often undervalued based on its energy content. For example, a bushel of corn at $2.50 per bushel could be converted into 2.7 gallons of ethanol valued at $2.50 per gallon and 17 pounds of distillers grains. An average Pennsylvania corn yield of 122 bushels per acre could produce 329 gallons of ethanol per acre. In addition, the corn stover could be collected and used for cellulosic ethanol, or electricity, as some Penn State researchers recently showed (http://live.psu.edu/story/18683).

As a home heating fuel, corn is worth about $7 per bushel when propane is $2 per gallon.

The Ag and Biological Engineering Department at Penn State has a good Web site that describes the relationship between fuel prices and the equivalent price of shelled corn as a home heating fuel. (http://energy.cas.psu.edu/burncorn/shellcorn.html).

Barley is an alternative energy crop that is used as a substitute for corn. It requires less fertilizer and also grows over the winter, protecting the soil. In addition, many farmers can grow a crop of soybeans after they harvest the barley. Barley markets have been low as many feed companies prefer corn, so barley is often undervalued compared to corn. This has not stimulated barley production or research, but there is great potential for this crop to be a low cost alternative ethanol or home heating fuel crop.

Soybeans are a major mid-Atlantic crop and are targeted as a key crop for biodiesel development.

Soybean acreage has been increasing in Pennsylvania recently.

Soybeans contain about 20 to 22 percent oil and 40 percent crude protein, so they contain much more protein than oil. The protein is used for animal feed. Oil yield per acre for a typical soybean yield of 41 bushels per acre is about 58 gallons. Historically, soybean processing has been limited in Pennsylvania, so most soybeans were sent to Ohio or Virginia for processing. Now more interest has developed for processing soybeans in the region and for biodiesel production.

One issue that is developing now is increasing demand for soy oil. Some new biodiesel plants are planning on the capability to use multiple feedstock to have the flexibility to deal with a shortage of soybean oil.