TESTIMONY OF JACK HUTTNER, VICE PRESIDENT, BIOREFINERY BUSINESS
DEVELOPMENT, GENENCOR, TO THE SENATE COMMITTEE ON ENERGY AND NATURAL
RESOURCES HEARING: "THE RELATIONSHIP BETWEEN US RENEWABLE FUELS POLICY
AND FOOD PRICES"

June 12, 2008

I would like to thank the committee for inviting me to testify today. I
am here on behalf of my company, Genencor, a division of Danisco A/S,
and the Industrial and Environmental Section of the Biotechnology
Industry Organization -- BIO, of which Genencor is a long-standing
member.

Genencor is a leading industrial biotechnology company with over 1500
employees around the world. Our specialty is the development and
production of biotech enzymes for the ethanol, detergent, textile and
feed industries.

BIO's members include enzyme producers, like Genencor, as well as
agricultural seed companies, oil companies, first and second generation
biofuels companies and dedicated energy feedstock developers. Each is
helping to deliver technologies that enhance agricultural productivity
and energy security, boost the rural economy and deliver a cleaner
environment.

I wanted to start by thanking you and your colleagues in Congress for
your continued support of the emerging biofuels industry in the US. The
Renewable Fuels Standard included in the 2007 energy bill and the
biofuels provisions in this year's farm bill are essential to the shared
vision of a strong, sustainable future in which America's farmers
continue to produce abundant supplies of food and feed while also
helping to meet our growing energy needs. We at Genencor, and our
colleagues in BIO, are working hard to help make this vision a reality.

Recently, the media has been full of stories linking food price
increases to ethanol production. This is a false debate. We have the
ability to produce both food and biofuels in abundance. Many
commentators have noted the various factors driving global food price
increases, including dramatically rising oil prices, booming demand for
animal feed in China and India, drought in agricultural producing
regions and the weak US dollar. And yes, biofuels production, although
experts have repeatedly pointed out that biofuels production is a
relatively minor cause of food price increases. I would note that the
prices of agricultural commodities that have little or no relationship
to biofuels, such as rice and wheat, have risen right along with corn
and soybeans. As Dr. Otlaw has testified, the study recently released by
Texas A&M University found that the primary underlying force driving
price increases in the agricultural industry, as with the economy as a
whole, is higher energy prices -- \$100 + per barrel oil in particular
-- and that somehow freezing, rolling back or eliminating the RFS would
not result in significantly lower corn or food prices. In fact, Merrill
Lynch estimates that without ethanol, gasoline prices would be at least
50 cents higher than they are today, further exacerbating the pressures
on food and commodity prices.

There is another story that the media has not been telling so
effectively \-- the story of steadily increasing agricultural
productivity. We have seen a decade's long year-on-year crop yield
improvement. And, we are about to see a dramatic increase in that rate
of improvement in the near future. New plant varieties are steadily
becoming more drought and pest resistant and more efficient in their use
of fertilizer. Yields, the amount of corn, soybeans, or other product
per acre, are rising steadily. This is partly why we believe there is no
long term food and fuel tension. In the last decade global production of
corn has risen almost 35%, and soybeans over 50%. That increased
production was achieved with only a 6% increase in planted acres -- that
is the power of increasing yields, which act like compounded interest
adding more production each and every year. In the mid-1970s America was
producing about 90 bushels of corn per acre. Today, just 30 years later,
that number has increased to 150 bushels per acre, and we are on our way
to 200 bushels per acre in the next decade. In fact, McKinsey & Company
estimates that if current biotech-based yield trends continue, no more
additional acres will be needed to meet the 15 billion gallons of
conventional starch based ethanol required by the RFS.

Improving agricultural yields have not been uniformly achieved, however.
Many parts of the world are still using agricultural practices that are
many decades old, and have agricultural yields one quarter that of the
US. Indeed, the world wide average corn yield per acre is 50% of the
yield in the US. In some countries, corn yields are below 30 bushels per
acre, just one-fifth of ours. On Tuesday, the Wall Street Journal
featured a story on the food crisis. The story reported on new thinking
by development agencies that have refocused attention on the need for
increased investment in seeds and fertilizers in the developing world.
The real policy focus should be on how to help other parts of the world
such as Africa, Eastern Europe and Asia, expand agricultural
productivity. There is huge upside opportunity in agricultural
productivity from the existing acreage. We can grow our way out of this
if we can expand the distribution of agricultural progress.

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In addition to our contributions to increase yield, the US biofuels
industry is on the verge of commercializing second generation
technologies that will use non-food feedstocks, like corn stover, switch
grass and waste wood. Indeed, Genencor and DuPont have just formed a
joint venture to develop this technology and we hope to have our pilot
plant operational next year. Within five years, we expect to be
producing commercial quantities of cellulosic ethanol. Is there enough
biomass to produce a significant amount of second generation biofuels?
To answer this question, BIO recently produced a report on the
sustainable harvest of cellulosic biomass for biorefinery feedstock.
Based on published USDA data, it concluded that farmers could supply
over 200 million dry tons annually of corn stover, enough feedstock to
double ethanol production from America's corn acres. Much of this
biomass will be processed at existing ethanol facilities retrofitted to
handle cellulosic feedstocks in addition to grain. That's why the
infrastructure being developed for today's ethanol industry is so vital
to the next generation as well.

Everyone understands the impact of higher commodity input costs that we
all face. I am very concerned, however, that critics of biofuels and the
RFS are pointing the finger of blame at the wrong culprit. If Congress
over-reacts, our ability to bring next generation biofuels to market
could be badly damaged. We need the RFS to set the floor for biofuels
demand so companies like Genencor and DuPont will continue to invest in
second generation biorefineries. BIO's member companies believe the RFS
is the right standard, at the right time, for the right reasons.

Of course, we can't simply depend on corn alone. In addition to
agricultural residues, BIO member companies like Ceres and Mendel are
developing dedicated energy crops like switchgrass and Miscanthus as
biorefinery feedstocks of the near future. In fact, Ceres just
introduced the first commercial switchgrass variety that will be on the
market at the end of this year. These crops will bring new revenue to
farmers, increase biomass yield per acre with the lowest possible water
and energy inputs per ton.

Cellulosic ethanol is on the verge of becoming a viable industry. The
long standing support of the US Government for basic research, applied
R&D and demonstration facilities will soon be paying off. Congressional
authorization and funding of the USDA and DOE, for example, have made
the transition to cellulosic ethanol possible. These investments have
laid the groundwork for a new, low-carbon economy. This is an economy
that uses renewable carbon from plants to replace fossil carbon for the
production of fuels and chemicals in addition to food and fiber.

This is about more than just ethanol. Many BIO member companies are
working aggressively to commercialize other advanced biofuels, such as
the bio-butanol that DuPont is developing with BP. Existing ethanol
infrastructure can be retrofitted with this technology. Several
cutting-edge companies are developing "renewable hydrocarbons" to make
gasoline and diesel from carbohydrates and algae. In the future,
biorefineries will be scattered throughout the rural landscape
converting biomass into many different products, all with a reduced life
cycle carbon footprint. This is the promise of the biobased economy.

Perhaps the history of the oil refining industry is informative to the
current biofuels debate. It was in 1853 that the first petroleum product
-- kerosene -- was produced from seep oil to replace whale oil. It has
taken over 150 years for the modern oil refinery to evolve from that
point to where it can take in a barrel of crude oil and produce a myriad
of downstream products.

Modern biorefineries are at about that stage of development. We are at
the beginning of the biorefinery journey -- not the end. Twenty years
from now, modern biorefineries will use a variety of renewable
feedstocks and produce a variety of products and liquid fuels. But the
ethanol plants we are building today, and the infrastructure supporting
them, is the foundation we will build upon. Without a robust and stable
policy framework, the journey will be much more difficult, if not
impossible. We hope our Congressional leaders will not be stampeded by
the chorus of negativity that seeks to reverse the biofuels policy
Congress has worked so hard to develop and enact. We must keep the RFS
in place and stay on course to realize the great commercial and
environmental potential that a biobased economy can bring. Thank you.