I attended a U.S. Department of Agriculture/Department of
Navy forum yesterday called the Hawaii Renewable Energy and BioEnergy Industry Forum.

Goal of the sessions are to provide information to the public on the development of a biofuels industry in Hawaii, potentially utilizing the purchasing power of the USN as a “pull” for production.

This hearing was held at the Officers Club of the U.S. Marine Corps Air Station at Kane‘ohe. It was a high-level meeting, where
speaker after high-level speaker emphasized how committed they are to supporting biofuel production in Hawai‘i.

The Navy folks emphasized that they would commit to
converting most of their fossil fuel J8 and J5 jetfuel and their ship fuel to biofuels because it is a national security issue.  Someone said that by the time a gallon of fuel gets to the front lines in Iraq or Afganhistan, the gallon cost $40. And that gallon sometimes comes from people who do not even like us. They emphasized how serious this situation was. They said that they would commit to buying from local sources – big numbers in the millions of gallons.

Speaker after speaker talked about the commitment to make
things happen. From 9 a.m. to noon, everyone talked about how they were committed to cellulosic ethanol as well as biomass to liquid. The objective was to get the kind of biofuel that could fuel fighter jets and war ships. The USDA talked about programs that would help farmers get financing, etc.

Toward the end of the day, someone asked about the price a refiner could expect to get and the speaker said about $1.95 per gallon. I thought: $1.95 times 42 gallons in a barrel equals $82 per barrel. That is pretty near what it costs in the market today. This sounded to me like oil prices need to go much higher to get this industry up and running. Right now, there isn’t any stage 2 or 3 biofuel on the market that I know of.

There were just two small and three large farmers in the audience. None of us farmers are going to run out to see how we start growing biofuels. In total, there were nearly 300 people present. It was larger than I had expected. But no one had an answer as to how much the farmer could expect to get paid.

It feels like something is going to happen, though. The government wants biofuels to be the solution. So it seems to me that they need
to figure out what it will take to get farmers to produce feed stock for the biofuels.

Tim O’Connell, Assistant to the State Director of Rural Development with the U.S. Department of Agriculture, helped organize this forum. In closing remarks, he said he detected a tension in the room between the desire to produce biofuels and the price at which this would happen.

I’ve said before: If the farmer makes money, the farmer will farm. It is not easy to see just how farmers will make money in this scenario.