One of the biggest problems facing farmers is one they can help solve, according to USDAUndersecretary Mark Rey.

Rey told an audience of about 200 in the Bismarck Civic Center on Tuesday that rising energy costs, blamed on the country's dependence on foreign oil, could be the single biggest problem farmers face.

President Bush, who said the country is addicted to oil, has set a national goal of replacing more than 75 percent of oil imports from the Middle East by 2025.

"The best way to break this cruel addiction is to stop or significantly reduce imports of foreign oil,"Rey said.

Some of the reliance on foreign oil can be reduced by using more ethanol and biodiesel, fuels that are seeing increased production and use in North Dakota.

The president's goal is to use 7.5 billion gallons of ethanol annually by 2012, a goal Rey said can be beat.

In 2005 there were 4 billion gallons of ethanol produced, but there are currently 93 ethanol plants producing 4.2 billions gallons annually and enough plants under construction to add another 1.7 billion gallons of ethanol production annually.

In North Dakota, there are a few new ethanol plants and a biodiesel plant currently under construction.

A biodiesel plant that will be built near Velva will be the largest in the world, producing 50 million gallons a year.

Gov. John Hoeven said North Dakota is leading the way in finding new ways to process the alternative fuels, including using coal or waste steam from power plants to make ethanol. An ethanol plant in Richardton will use coal to heat boilers and the one near Underwood will use waste steam from a coal-fired power plant.

"All these things are coming when we're helping this country work towards energy independence,"Hoeven said.

Rey said the president's budget has put an emphasis on loan guarantees for development of new facilities and additional research money that will develop ways to use waste products to make ethanol.

The president's 2007 budget will include $150 million - a $59 million increase over 2006 - to help develop alternative fuels from agricultural waste products, such as wood chips, stalks or switch grass.

(Reach reporter Tom Rafferty at 223-8482 or tom.rafferty@;bismarcktribune.com.)