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Agricultural Industry to Reap Significant Savings if Natural Gas Tax is Eliminated

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Residents and smaller businesses will not be the only people to save money if the natural gas tax is eliminated. The farming and agricultural industry will reap a significant amount in savings, which makes Gov. Pat Quinn’s decision to abolish the natural gas tax practical.

During his budget address, Quinn mentioned how his plan to get rid of the natural gas tax would help families using gas to heat their homes and businesses that use it to manufacture products. This is a tax that he previously said was “unnecessary.”

Illinois is one of the nation’s manufacturing leaders relying on a great deal of natural gas to produce many products, especially agricultural commodities.

“Natural gas is the number one fuel for drying corn.  Some year’s corn drying costs are a significant portion of the total costs for corn production,” said Mike Doherty, senior economist and policy analyst for the Illinois Farm Bureau.

Marketing of Illinois’ agricultural commodities generates more than $9 billion annually. Corn accounts for nearly 40 percent of that total, according to the Illinois Department of Agriculture.

Mark Denzler, vice president of the Illinois Manufacturers’ Association said that natural gas is also used to dry grain when pulled from the field.

Energy costs are a huge part of the expenses needed to grow crops, produce chemicals, fuel as well as machinery used and or sold in Illinois, said Denzler. These facts alone have farmers and farming advocacy groups on board with the elimination of the natural gas tax.

It was reported this month by the farmer-owned cooperative Grow Mark, headquartered in Bloomington, Illinois, that the natural gas tax can cost a corn elevator company over $11,000 in a single year.

“The benefits that the agricultural manufacturing companies will gain will possibly be in the millions,” said Denzler.

Illinois is the leading producer of corn, soybeans and swine. The ideal climate and varied soil type enables Illinois farmers to raise more than nine other agricultural commodities as well as specialty crops, according to the Illinois Department of Agriculture.

“Corn is the number one crop in Illinois and much of the Midwest.  It is also the largest crop grown in the US,” said Doherty. “Corn has been termed a ‘nitrogen conversion machine’ by some agronomists.  The basic raw material for the production of nitrogen fertilizer is natural gas.”

“Natural gas is a significant source of energy used in the production of fertilizer…therefore the cost of fertilizer used by farmers is impacted by natural gas costs,” said Chris Magnuson, executive director of operations, news and communications for the Illinois Farm Bureau.

“It is safe to say that the production of the number one crop for Illinois is converted by using natural gas,” said Doherty.

The elimination of the natural gas tax would be beneficial in those years in which corn is harvested at high moisture rates, meaning the elevator for producing corn and or grain will not have to worry about the extra tax on gas for drying a moist harvest, Doherty said.

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