ARLINGTON, Virginia (March 1, 2007) Indiana's focus on agriculture will continue to be central to the state's economic strategy, Governor Mitch Daniels said today, and among new initiatives, the state has issued a challenge to encourage commercial development of cellulosic fuel production technologies.

"Others may be giving up on agriculture, but we're not in Indiana. Ag is a pillar of our economic strategy," said Daniels, speaking at the U.S. Department of Agriculture's 2007 Agriculture Outlook Forum. "We believe, as a business matter, there is a big upside to agriculture."

Since early 2005, Indiana has come from behind to gain a significant share of corn-based ethanol production. Now, Daniels wants Indiana to lead the way in the next generation of biofuels initiatives.

"The technologies in development can give states like Indiana an advantage, and we look at biofuels production as a tremendous opportunity," said the governor.

Indiana has created the Cellulosic Fuel Production Challenge and will issue one or more awards of up to $2 million for the commercial development of cellulosic fuel production technologies. Any entity may apply for the award, but the production must take place in Indiana. Cellulosic ethanol is made from a wide variety of plant material including corn stover, wheat straw, grasses, wood and others.

The Indiana Economic Development Corporation and its 21st Century Research and Development Fund, the Indiana State Department of Agriculture (ISDA), and the Indiana Office of Energy and Defense Development are sponsoring the Cellulosic Challenge. Information and proposal submission are available at this Web site: www.21fund.org.

ISDA also is partnering with Purdue University on how to better use distillers grains, the most substantial by-product of corn-based ethanol production. ISDA has committed $200,000 to Purdue for research on the use of distillers grains in animal rations. Improved use of distillers grain in livestock feed rations could significantly benefit Indiana's growing ethanol and livestock industries.

The initial phase of the research will focus on the processing, storage, handling and digestibility of distillers grains; animal performance and product quality; and the environmental impact of rations using distillers grains. This work is expected to be completed by the end of 2007 and results will be made widely available to livestock producers.

The governor also is pursuing legislation in the current session of the General Assembly to create $20 million in tax credits for the production of cellulose-based ethanol.

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