To whom it may concern:

The North American Millers' Association (NAMA) appreciates this opportunity to comment on the Biomass Crop Assistance Program proposed rule. NAMA is the trade association representing the wheat, corn, oat, barley and rye milling industry.  NAMA's 47 member companies operate 170 mills in 38 states and Canada.  Their aggregate production of more than 160 million pounds per day is approximately 95 percent of the total industry's capacity. We would like to take this opportunity to comment on several areas of the BCAP proposed rule.

Oat hulls, barley hulls and other oat and barley processing byproducts represent an excellent source of renewable biomass fuel and have only just begun to be utilized for power generation. Despite their many health benefits, domestic production of oats and barley has declined rapidly in recent years. The BCAP program is an opportunity to expand domestic production of crops that are healthy and nutritious while also supporting the use of a byproduct as a renewable fuel source that otherwise has little value in the marketplace.

NAMA supports the inclusion of agriculture residue materials from Title 1 crops without a cap as a collection, harvest, storage and transportation (CHST) eligible material in the BCAP program. The use of processing byproducts, stalks, and silage in the BCAP program will encourage the continued planting of small grains in the United States which are currently experiencing a sharp decline in acreage despite their essential role in feeding the growing global population.

Although the current proposed rule allows for hulls to be considered a BCAP CHST eligible material, the milling process does not allow for the separation of hulls from other foreign materials that are also by-products of the milling process. We suggest that these materials known as screenings also be allowed as CHST eligible material as a processing by-product. Current US Grain Standards allow for up to 3% foreign material for oats graded U.S. Number 2. In reality, farmers are "docked" for foreign material on a tighter commercial standard.  Therefore, a farmer is not paid for the screenings that are part of a grain delivery to the mill.

The USDA indicates U.S. oat consumption for all uses is over two times U.S. oat production, on average, over the past ten years.  U.S. millers are forced to rely on imported oats from Canada or Scandinavia in order to meet their raw material needs. The proposed rule appears to require that all eligible products be stored and handled on an identity preserved (IP) basis to ensure that all eligible materials are domestic origin. Oats and barley, like many other grains, are fungible commodities and are stored on a commingled basis. An IP requirement would force millers to segregate both raw materials and post-process byproducts requiring massive capital investments to construct the requisite storage bins. This large-scale infrastructure investment is simply not practical in the marketplace today, thereby rendering the BCAP program ineffective for a wide range of potential participants.

Other USDA-administered programs currently recognize the commingled nature of commodities and provide the opportunity for U.S.-origin crops to be commingled with crops from other origins and yet still be eligible for inclusion within these programs.  For example, language within the USDA-FSA Kansas City Commodity Office's MASTER SOLICITATION FOR COMMODITY PROCUREMENTS EFFECTIVE AUGUST 13, 2009 (used for domestic school feeding programs) states:

"…..a commingled product shall be considered to be a product of the United States if the offeror can establish that the offeror has in inventory at the time the contract for the commodity or product is awarded to the offeror, or obtains during the contract performance period specified in the solicitation, or combined thereof, a sufficient quantity of the commodity or product that was produced in the United States to fulfill the contract being awarded…."

Incorporation of similar language within the BCAP program would allow hulls and other oat and barley byproducts from U.S. grown crops to be eligible for inclusion within the program without requiring the impractical IP requirements necessitating substantial and uneconomic infrastructure modifications. Inclusion of this language would provide a significant incentive for producers to increase oat plantings within the U.S.

As the domestic oat crop has dwindled over the past 25 years, the oat processing capacity in the U.S. has shifted, following the crop north over the Canadian border.  At least three oat mills (one in Minnesota and two in Iowa) have closed during this period, replaced by a similar number of new, larger mills in Canada. Not only has the United States lost the capital investments and the longer-term tax bases generated by these three oat mills, but also approximately 300 U.S. manufacturing jobs. If USDA were to clarify through its BCAP rules that oat and barley byproducts processed in U.S.-mills are eligible for BCAP payments without unnecessary investment in additional segregation equipment and storage capacity, we believe it would, over time, slow or reverse these trends by developing new market demand for growing and processing oats and barley in the U.S.

Thank you for your consideration of our comments.

                                                            Sincerely,

                                                            Jane DeMarchi
                                                            Director of Government Relations