BusinessTN

No one, not even Al Gore, could predict the curve ball thrown by Mother Nature at Tennessee farmers last year. In April, a frost wiped out most of the wheat crop in the state. What remained was nearly annihilated by the severe summer drought. Most affected were the nursery, fruit, cotton and soybean crops, with farmers losing more than half of what they planted. "People have called it freeze-dried farming," says Joe DiPietro, UT-Knoxville's vice president of agriculture. "Conditions couldn't be much tougher than last year."

For most of 2007, all it took was a glance at the Tennessee map on the Department of Agriculture's Web site to realize how tough the farmers had it. All 95 counties were declared disaster areas, most of them marked in red through October due to extreme heat and the lack of rain. The Tennessee Farm Bureau estimates that 80,000 of the state's 90,000 farmers took a hit from the weather. Because of that, many farmers started off 2008 in a financial pinch, the consequences of which could extend beyond 2008, says Tim Cross of the UT Institute of Agriculture. Nationwide, farming has become a riskier venture due to rising production costs, which are tied to increasing fuel costs, as well as the tightening of financing for next year's crops. Climatologists had plenty of weird weather at their disposal in 2007 to hone their craft, but alas—2008 predictions offer little assurance as they run the gamut between "wetter than normal and drier than normal," Cross says.

On the bright side, UT scientists say they have sufficient funding to figure out how to use 1.5 million acres of under-utilized Tennessee farmland in the name of securing America's fuel supplies. Having won the $135 million grant from the Department of Energy and $62 million from the state to research mass production of cellulosic ethanol, UT's executive vice president, David Milhorn, says the school, in partnership with Oak Ridge National Laboratory, is on track to start building its first biorefinery in the spring. "The science is coming along really well," Milhorn says. "This time last year, we didn't have any money. Now we're engaging the farmers, getting contracts from them to grow the biofuels feedstock—switchgrass." To run the first demonstration of cellulosic ethanol production, UT needs 8,000 acres of farmland, while commercial production requires hundreds of thousands of acres. "[Switchgrass] is economically very advantageous to the farmer. They just have to harvest it once or twice a year," Milhorn adds. "We're trying to create a whole new industry in the state that doesn't displace other crops. We're talking about growing it on the land that's unused right now."