“Imagine if the refineries found a magic bullet that could squeeze ten percent more gasoline out of a barrel of crude oil,” says Professors Dermot Hayes. “We have found a magic bullet, and that is we produce an amount of ethanol equal to about ten percent of the gasoline that we consume.”

That is one reason that Hayes, with lead author Xiaodong Du of the University of Wisconsin, found in an updated study released by the Center for Agricultural and Rural Development (CARD) this week that the growing use of American ethanol reduced wholesale gasoline prices by an average of $1.09 per gallon in 2011, up from an average impact of $0.89 per gallon in 2010. The study also found the between 2000 and 2011, gasoline prices have been reduced by an average of $0.29 per gallon, thanks to ethanol.

“Those numbers are large,” said Professor Hayes during a conference call on Tuesday during which he explained his hypotheses for the big impact of ethanol. “Think about the world before ethanol occurred. Every time a gasoline refinery would shut down, the price of gasoline would go up 10-20 cents because the U.S. was at its refinery capacity. What ethanol has done is increased refinery capacity.”

The savings are even more significant in the Midwest, where the study found pump prices would actually be $1.69 more per gallon without ethanol.

Listen to Hayes’ explanation of the study here: ISU Professor Dermot Hayes

During a telephone press conference this week promoting USDA’s Rural Energy for America Program (REAP), Vilsack was asked by a reporter what can be done to help the struggling ethanol sector right now.

“If you take a look at the long term history of ethanol, you’ll see that there are peaks and valleys in this commodity,” Vilsack noted. “Our focus is primarily on encouraging blenders to embrace E15. EPA has authorized the use of E15 and this obviously would be a God send.”

Vilsack added that they want blenders to register with EPA to get E15 in the market and they are looking for ways to encourage distribution. “At the same time, we’re also looking at alternative ways to produce ethanol through non-food feedstocks so we can spread the good work this industry’s doing in keeping gas prices down further than they would otherwise be.”

The secretary referenced an Iowa State University study that concluded ethanol helps save motorists up to $1.30 per gallon. “So we obviously need a robust biofuel industry,” he said.

Listen to of download Vilsack’s comments here: Secretary Vilsack on E15

Last week, the Environmental Protection Agency (EPA) approved the Misfueling Mitigation Plan (MMP) developed by the Renewable Fuels Association, which RFA president and CEO Bob Dinneen means the regulatory process is now essentially complete.

“The job now is largely the industry’s to make E15 a commercial reality and we are working hard to make sure that happens,” said Dinneen, and once the marketers receive their approvals, many consumers will be seeing a new, money-saving alternative at the pump. “Given the concern today of skyrocketing gasoline prices, with ethanol being $1 cheaper than gasoline today, any gasoline marketer wanting to utilize E15 is going to be able to offer that product less expensively than E10 or any other fuel that’s available.

Vice President of Technical Services Kristy Moore says RFA spent months developing the MMP. “The plan includes not only requirements for the label and appropriate use, it also includes tools and resources to insure that proper wording appears on shipping and product transfer documents and the development of a fuel survey,” she said.

To get clear information out to retailers, RFA also developed an E15 Retailer Handbook to explain the technical details of offering E15 to consumers. Director of Market Development Robert White says they are already taking the handbook to the streets. “As of today, we will have the new E15 retailer handbook in the hands of more than 13,000 retailers,” White said on Monday.

He added that they are advancing the commercialization of E15 through the BYO Ethanol campaign, a joint venture between the National Corn Growers Association, state corn grower groups, the American Coalition for Ethanol, and RFA.

Listen to or download an audio report about the latest developments toward E15 commercialization here: Ethanol Report on E15 Plan

Dr. Wally Tyner with Purdue University recently addressed the latest developments in GHG analysis at the 2012 National Ethanol Conference. Dr. Tyner presented actual data from the U.S. Department of Agriculture showing that in the last six years the world has added 105 million of crop land – mostly corn, soybeans, rice, rapeseed and wheat. “So, markets work – that’s basically the bottom line,” said Tyner.

The question is, how much of that can be attributed to biofuels? “Our estimate is that of that 105 million acres, 5.9 million is due to U.S. soybean and corn ethanol,” he said – or about 5.6%. “So, yes we’ve had a lot of land use change, and some of it’s been due to biofuels, but the lion’s share of it’s due to a lot of other things,” such as growing global population and increased income in countries such as India and China.

Tyner also presented some new estimates of carbon footprint, or land use versus biofuels production capacity for various feedstocks. “Our current estimate for corn is .18 hectares per thousand gallons of ethanol,” said Tyner. “That’s about a fifth of what the original Searchinger estimate was.” A hectare is approximately 2.5 acres.

The really good news Tyner’s research found was that using corn stover for cellulosic biofuels production showed zero land use change. “So in terms of greenhouse gasses, global warming, all of that, it’s golden,” he said, adding that miscanthus also shows great promise with .06 hectares per thousand gallons, but switchgrass did not show up much better than corn at .15.

Tyner is the first to admit that all of this can change and every economic is uncertain, so the debate over land use change could continue “forever.”

Listen to or download an interview with Dr. Tyner here: Dr. Wally Tyner

“This is an amazing difference from just five years ago,” said Purdue agricultural economist Dr. Chris Hurt. “The hog industry was largely set up with $2-2.50 corn going into 2006. After that we saw major increases in those corn prices.” Dr. Hurt spoke to swine veterinarians on the topic of “Global Feed Economics in a Biofuel World” during recent seminar put on by Boehringer Ingelheim Vetmedica (BIVI).

Hog producers initially absorbed those higher costs by reducing margins, which meant big losses and ultimately resulted in reduced supplies. “You reduce the supply enough, you bring those hog prices up. That’s where we are today. Hog producers can pay $6-7 for corn with the prices they’re getting for hogs,” he said. “That up to $7 is higher than ethanol plants can pay for corn and still cover all their costs.”

Dr. Hurt is certain that the days of $2 corn are over, but he does expect prices to moderate around $5-5.50 a bushel.

Listen to an interview with Dr. Hurt here: Dr. Chris Hurt

Dr. Steve Pollmann, President of Western Operations for Murphy-Brown, LLC also spoke at that same seminar about how the world’s largest pork producer has adapted to higher corn prices. As the live production part of Smithfield Foods, Murphy-Brown has about 850,000 sows located in 12 different states and produces about 17 million pigs a year.

“We all know that feed is the biggest single cost of production,” Steve said. “A 25 cent change in corn price per bushel, with that comes a $20 change in soybean price, all of the sudden you’ve got a $1.60 a hundredweight cost of production (increase).” He says the higher feed costs in the last five years or so have meant feed as a percentage of total production costs has risen from 60% to 70%.

Dr. Pollmann says Murphy-Brown adjusted to the higher feed costs by becoming more efficient. “When things get difficult, you’ve got to get better and if you don’t, you die,” he said.

Listen to my interview with Dr. Pollmann here: Dr. Steve Pollman, Murphy-Brown

Increased efficiency in hog operations has meant diversifying feed sources, and that has included adding more distillers grains (DDGs), the animal feed by-product of ethanol. Listening to the speakers at the BIVI seminar made me feel very hopeful that the days of animosity between the livestock and ethanol sectors over corn may actually be coming to an end.

The annual commemoration of the importance of agriculture is traditionally celebrated on the first day of spring to recognize the start of planting season, but the event in the nation’s capitol is held a little earlier in the month when Congress is in session so lawmakers can attend.

Among those who attended the festivities on Thursday was Congressman Collin Peterson (D-MN), Ranking Member of the House Agriculture Committee, pictured here chatting with National Corn Growers Association Chairman Bart Schott of North Dakota during the Ag Day Meet and Mingle Luncheon.

During brief remarks, the Congressman talked about his desire to do what he can to support the effort to communicate the importance of agriculture to the general public and those who implement policies in the nation’s capitol. “People think that they know better than farmers how to do things. Most of them have no clue what they’re doing,” he said.

Peterson also talked about how the agriculture committee worked together across party lines to try and get a farm bill as part of last year’s “super committee” process. “Unfortunately, we were the only committee in Congress that did what was required and that is to come together with a bill that would actually reduce our budget,” he said. “No other committee even tried to do it and the super committee fell apart.”

He says the farm bill process will begin in earnest over the next few weeks. “Our goal is to try and get this done by May or early June. It will not be easy, given the climate around here.” the congressman said. “We’re determined to work together and try to do what’s best for agriculture and for America.” He added that agriculture is “the only part of the economy is working.”

Listen to remarks from Congressman Peterson here: Remarks from Congressman Collin Peterson

2012 National Agriculture Day Activities Photo Album

It was an indication of the optimism in the agriculture industry right now as commodity prices are good and spring planting season is just around the corner. “Right now, if the recent past is any indication of the future, corn growers have a brilliant and bright future,” said National Corn Growers Association president Garry Niemeyer of Auburn, Illinois during the general session of the Classic with emcee Mark Mayfield.

The excitement and enthusiasm was in the air at the annual meeting of corn, soybean, wheat and sorghum growers who are all interested in working together for the good of the agriculture industry. Niemyer noted several initiatives that are joint projects between various commodity groups, such as the CommonGround program and the U.S. Farmers and Ranchers Alliance (USFRA).

Listen to Gary’s comments here: Comments from Gary Niemeyer

Check out all the photos from the Classic here – 2012 Commodity Classic Photo Album

“We owe ethanol producers in this country a debt of gratitude because we’re paying less at the pump because of what you do,” Vilsack said, noting that prices are about $1 less than they would be without ethanol.

Vilsack also thanked ethanol producers for providing jobs, contributing to a record trade surplus in agriculture and helping to increase net farm income. “In 2011, net farm income for the first time exceeded $100 billion,” he said. “Even adjusted for inflation, this is the best farm economy we’ve seen in four decades and one of the principal reasons is because you all have figured out this new value-added opportunity called renewable fuels.”

Vilsack said getting 15% ethanol in the marketplace will do even more for our national economy and energy security. “If we’re worried about the Straits of Hormuz, if we’re worried about Iran, one way we can be less stressed about this is getting E15 in the tanks of cars across this country,” he said.

The secretary did caution producers that they need to do all they can to protect the Renewable Fuel Standard. “Make no mistake about this. Just because it’s in the law doesn’t mean it will always be in the law.” Vilsack says the success of the ethanol industry has gotten the attention of the oil industry which is trying to modify or eliminate the RFS. “We need to make sure we maintain the Renewable Fuel Standard. It is important to the security of this country that we move toward that 36 billion gallon mark.”

Listen to or download Vilsack’s great speech here: Secretary Tom Vilsack at 2012 National Ethanol Conference

Looking forward to seeing the Secretary again later this week at the Commodity Classic in Nashville.

“If we’re going to be a dynamic progressive, productive country we have to have our own source of energy at a reasonable price,” Hastert said during an appearance at a GROWMARK, FS System event in East Peoria this week. “Whether it comes from Iran or Iraq or Saudi Arabia or Nigeria or Venezuela – those are countries that we don’t necessarily have the ability to trust.”

Hastert is adamant about the importance of renewable fuels and ethanol in particular. “We need to use ethanol,” he said. “I fought for ethanol from the time that I was in Congress for 15 years and finally got through the Ways and Means Committee along with a guy named Nussle from Iowa and we got ethanol with the tax credits so it could be a viable product. If we sit back and don’t do anything about it, we’re going to lose it.”

Listen to Speaker Hastert’s comments about ethanol during his address: Speaker of the House Dennis Hastert

I also had the opportunity to interview Hastert after his address and he expanded on his comments about the importance of domestic energy production to agriculture. “I always believed that farmers were best off when they sold more than a commodity, if they could sell something that has value-added,” he said. “When you look across our corn fields in the Midwest and see one out of every four rows of corn that goes to ethanol, you know that you’re securing a price that farmers can put a crop in the field and make a living.”

That ties in with what the former speaker thinks will happen in the next farm bill. “I think you’ll see some of the subsidies that farmers have grown to rely on are going to be gone just because of the shortage in the budget,” Hastert said, noting that he has two farms himself. “What we need to do in the farm community is to make sure we keep those markets for our products that we have and can be independent of government subsidies.”

Hastert served as Speaker of the House from 1998 to 2007, the longest-serving Republican Speaker in history.

Listen to the interview here: Dennis Hastert Interview

Dr. Below talked about his seven wonders of corn yield research at a recent meeting of growers pursuing the dream of consistent maximum yields. He says of the seven factors, only one is really beyond the control of growers. “The largest factor affecting corn yield is obviously the weather,” he said, adding that his research has assigned a value of 70+ the impact of weather on bushels per acre.

On the other hand, Below says good fertilizer nitrogen management can have almost as much impact as weather and it’s the one that farmers have the most control over. “70 bushels is the current average for getting it just right,” he said.

For much of the Corn Belt, 2011 was one of those bad years for weather, but we still saw some good yields. “The weather worked against us in 2011 and we were geared up to grow 300 bushels right out of the ground. It looked pretty good,” he said. “If our management had not made yield by the third week of June, we were pretty well done.” Still, over at his research plots in Illinois, Below says they managed to get better yields with high tech management. “Even under those poor conditions, by managing from the very beginning and planning for high yields, we managed to eke out an extra 26 bushels in a bad year,” he said.

Dr. Below has been researching how to get higher corn yields for a couple of years now and even has a website about the “7 Wonders of Corn” and this coming year is will be doing some complementary research on soybeans. With no nitrogen component to soybeans, there will only be six wonders for soybean success.

Listen to my interview with Dr. Below here: Dr. Fred Below Interview