Corn Commentary

Energy Independence No Greased Pig Fantasy

There is an old saying…”make hay while the sun is shining.” Dating back to at least 1546 this traditional farmer logic translates into grab opportunity while you can. This has never been truer regarding the nation’s energy situation. A new report by the Energy Information Administration makes that abundantly clear. EIA says the greased pig fantasy of energy independence in the US is real.

We’ve reduced our dependence on foreign oil from 60 percent to 45 percent in the last few years. This is real, quantifiable progress brought on by smaller, high mileage vehicles, less driving due to a sagging economy, 15 billion gallons of ethanol capacity and domestic oil production on steroids.

Net oil imports to the U.S. could fall to zero by 2037 because of robust production in areas including North Dakota’s Bakken field and Texas’s Eagle Ford formation, according to this Department of Energy projection released this week.

Most days I am just numb about government studies and gasoline prices. I pull up to the pump, try to ignore the price and move on about my day. But there are other days too when I am angry about being held hostage by oil companies, and especially about their cavalier approach to crushing any real competition.

And that is exactly that they are trying to do with ethanol today.  So, here is a novel thought. Let’s take this time of energy abundance to think big and invest in a more sustainable energy future rather than waiting until the wolf is at the door. Because, rest assured petroleum remains finite and the next generation will wonder why we squandered this brief respite from oil piracy.

Oil imports have fallen to about 5 million barrels a day from a peak of almost 13 million barrels in 2006, thanks in part to advances in techniques such as hydraulic fracturing and horizontal drilling in shale rock. Despite this, we continue to spend $1 billion a day protecting our assets in foreign oil. And there is no getting around that gasoline is bad for our health and the environment.

make-hayNow would be a great time to call your Congressman and Senator and ask them to show some vision regarding biofuels and our energy future. The rapid growth in ethanol production has shown us the promise of a bio-based fuel future. It’s time to make hay!

 

 

 

Water is Life and Drought Equals Higher Food Prices

drought 

Food prices are on the rise again and you probably already noticed. Thankfully, the mainstream media thus far is covering it in a balanced way and pointing out the primary drivers behind the increase. Those include things like drought in key growing regions, and an anticipated cut in planted acres in the Ukraine due to political unrest.

But as surely as the birds outside your window are a precursor to Spring, before this is over someone will find a way to blame high corn prices and ethanol fuel by default. Prodded on by Big Oil, who is losing market share to ethanol, and abetted by folks who prosper when corn is cheap, they will once again try to make 2 + 2 = 9.

According to today’s Wall Street Journal federal forecasters estimate retail food prices will rise as much as 3.5% this year, the biggest annual increase in three years. This should provide a real kick in the pants for American consumers who are still dealing with the lingering effects of sluggish economy.

But rest assured the corn industry is doing its part to provide the corn the nation needs. In fact we grew so much corn in 2013 that corn prices have been hovering at levels that barely cover the cost of production for many farmers. Some analysts in the Wall Street Journal article hint that the lingering effects of a drought that hit major corn growing regions in 2012 might be another factor in inflated food prices.

Don’t buy into this for a second. Despite the 2012 drought farmers grew the eight largest corn crop in history, providing a testament to modern farming technology in use on family farms.  And as we all know there is nothing tentative about food manufacturers when it comes to raising food prices. Even a hint of any issues in the supply chain and they react by jacking prices like Usain Bolt leaving the starting block. I wish they were as efficient at lowering prices when normalcy returns to the market place.

Scratch the surface a little harder and you will find the real reason many products we often take for granted are seeing major price bumps.  Beef prices are up and it is directly linked to years of drought in the Texas and the south western US. Cattle need lots of water and when it’s not available ranchers reduce heard size. Initially this results in a big supply of beef hitting the market at great prices. However, that window has closed and now the public will pay more until kinder weather and a rebuilding of the nation’s beef herd which takes time.

Ditto on dairy prices where growing demand from Asia is putting upward pressure on prices. Add a brutal drought in California which supplies much of the dairy products we love and you get the picture. Cows eat lots of grass and hay, both of which are in short supply on the west coast. And I don’t even want to mention how much of the fresh produce you consumer comes from the big CA. There are similar tales behind other rising food items but I think you get the idea.

And remember being skeptical of what you hear is a virtue.

Farmers Continue Fighting Cynical Snark with Open, Inclusive Conversations

Last week, Corn Commentary ran a post on how CommonGround volunteers have begun answering Chipotle’s claims and explaining why they are farmed but not dangerous. Click here to view.

This week, more volunteers answered the call, creating fantastic content. In addition to the original post by Maryland farmer Jennie Schmidt, four Iowa volunteers also took the initiative to tell their side of the story. The inside chatter suggests that even more may be on the way soon.

Take a moment to find out what these farmers have to say as they open the farm gate and foster conversation.

To view Steph Essick’s post, click here.

To view Katie Olthoff’s post, click here.

To view Nicole Patterson’s post, click here.

To view Jennie Schmidt’s post, click here.

To view Jill Vander Veen’s post, click here.

Moms who grow food sharing stories with moms who buy it. The concept seems simple, but it can make a world of difference for a concerned consumer with real questions about how their food is grown and raised. Helping everyone enjoy food without the fear may be more revolutionary than the snarky marketing campaigns created to generate unnecessary concern in the first place.

Farmers Explain Why They Are Not Farmed and Dangerous

Have no fear, real farmers are here. And they want to tell you why Chipotle’s new TV series, “Farmed and Dangerous,” does not sit well with the farming community. For starters, the series, created for the online video-streaming service Hulu, mocks modern agriculture and warns viewers that today’s farming practices are dangerous and cruel.

The new series features Buck Marshall, an image consultant for Industrial Food Image Bureau, which spins and covers up negative behavior in the agriculture industry. In a recent New York Times article, Chipotle executives say the show intends to raise sustainability and animal-welfare concerns.

Farmers like Jennifer Schmidt would argue that the depiction of modern or, as the show refers to them, “industrial,” farmers is not accurate. Schmidt challenges Americans to go to the source with questions about food and to not believe everything you see on TV or the Internet.

“‘Farmed and Dangerous’ is intended to be a comedy, but I think the show is anything but funny,” says Schmidt. “As farmers, we want to open doors to open minds. And CommonGround volunteers like me want to invite consumers to take a peek behind our barn doors and see what really happens on our farms.”

The 100-plus CommonGround volunteers across the United States really want to help bridge the gap between farmers and those disconnected from farms. Americans can connect with CommonGround volunteers in multiple ways.

  1. Through blogs like Schmidt’s The Foodie Farmer
  2. Through social media – get a real-time glimpse of the farm. Check out which volunteers are on popular social media sites by heading over to our state page.
  3. Face to face – many CommonGround volunteers host farm tours. Connect online or through a state contact if you would like to visit a farm near you.

Growing Global Food Security through Growing Acceptance Modern Ag

A Reuters news story released today confirmed that the advanced tools and practices used by modern American farmers can have a massive positive impact in reducing global hunger if more widely adopted. Assuming the idea of reducing human suffering holds near universal appeal, this finding demonstrates how arguments for a return to the farming ways of yesterdays and against the use of tested, proven technologies would actually have a negative impact on anyone financially unable to pay the high price of adherence to these pseudointellectual ideals.

The study, conducted by the International Food Policy Research Institute, concluded that widespread adoption of an array of technologies, including biotech seeds, could cut commodity prices in half and reduce global food insecurity by as much as 36 percent by 2050. Noting that no single technology alone can produce this impact, the researchers found that used together practices such as no till farming, irrigation and biotech seed technologies can substantively change the future of global hunger.

For an infographic summarizing the findings, click here.

An over-fed, under-questioned segment of the population is pushing to take away the very tools farmers need to feed a growing world. With full stomachs, they use misinformation and empty rhetoric to launch a full sail assault on scientific advancement in agriculture. Whether for personal profit or out of sincere short-sightedness, anti-GMO activists and their anti-ag allies fight for misguided movements that would directly result in a future where more poor children go hungry.

The fight for modern farming is a fight to feed the world.  Eschewing science in favor of foolish fanaticism has repercussions that reach far beyond U.S. borders and far into the future. Don’t let those born tomorrow suffer for the ignorance ignited today.

Would Someone Please Tax Me Like Big Oil?

oily bird picIt’s tax time again. You know that short window during the year when it’s ok to complain about being taxed. Given the number of people who remain unemployed it really is kind of bad form to complain the rest of the year.

So as you belly up to do your part to keep the skids of government greased here is a whopper of a tax tale to help you really get the bile out and make your complaining count. I am guessing that it will come as no shock to you that each year the average American pays more than 20 percent of their income in federal taxes. This does not include state and local taxes.

So this begs the question; shouldn’t an industry that makes $175,000 per minute pay at least that much? This is a real number reflecting the profits of the five largest oil companies. Together they earn more in one minute than 95 percent of Americans earn in a year.

However, Reuters news service estimates that Chevron, ConocoPhillips, and ExxonMobil pays effective federal tax rates of 19 percent, 18 percent, and 13 percent, respectively. Reuters noted that this is “a far cry from the 35 percent top corporate tax rate.” Likewise the tax bracket for the most successful Americans is 35%.

The petrol industry has prospered over the past decade, thanks to high oil and gasoline prices. The five largest companies — BP, Chevron, ConocoPhillips, ExxonMobil, and Shell — earned more than $1 trillion during this time. In the first nine months of 2013, these five companies realized a combined $71 billion in profits. Certainly, these companies can prosper without $2.4 billion in annual special tax breaks.

The Congressional Joint Committee on Taxation estimated that three tax preferences provide $24 billion per decade in annual benefits to these five companies. The “limitation on Section 199 deduction,” designed to encourage domestic manufacturing to remain on shore, costs the Treasury $14.4 billion per decade for these five companies. The foreign tax credit deduction saves the big three domestic oil companies $7.5 billion per decade. The “intangible drilling costs” deduction saved the five companies another $2 billion, according to the Wall Street Journal.

It also seems the oil and gas industry has been the largest beneficiary of federal financial support in the entire energy sector benefitting from nearly 60 percent of all federal energy support since 1950.   Shouldn’t the lion’s share of these dollars be spent on new, alternative, renewable sources to make us less dependent on something as finite and as devastating to the environment as oil?

Big Oil will argue that these breaks are critical to job creation, but recent data from the Bureau of Labor Statistics shows oil industry employment is off 10 percent. This is not nearly as bleak as it sounds given that nearly half of the direct jobs touted by big oil are service station positions.

Simply put, it’s time to end special tax breaks for BP, Chevron, ConocoPhillips, ExxonMobil, and Shell.

Big Oil Labels Family Farmers Extremists

A true David and Goliath battle is under way between the nation’s family farmers and Big Oil in the form of the American Petroleum Institute (API). And farmers in recent weeks bounced a big rock off the head of the petroleum behemoth. At issue is American ethanol.

For months the oil industry has been involved in a well-funded campaign of both public and covert efforts to undermine the growing role of sustainable biofuel like ethanol. They capped this massive misinformation campaign by leaning on the White House and EPA to propose a change to the Renewable Fuels Standard (RFS) that would reduce ethanol use by 1.4 billion gallons this year.

The bad news is the most recent slap in the face, if successful, has the potential to hammer farmers and slappythe rural economy to the tune of more than 10 billion dollars.

Before this recommendation can be accepted EPA’s proposal must go through a formal public comment period. Thousands of corn farmers across the country have responded with a vengeance submitting comments urging the U.S. Environmental Protection Agency to retract its proposed 10 percent cut in the amount of corn ethanol in the 2014 Renewable Fuel Standard.

The volume of supportive comments coming from farmers as well as equipment dealers, bankers, school administrators and consumers who favor a fuel choice has been incredible so thanks to everyone who has taken the time to register your opinion.

The response has been so terrific that it tweaked API and in response they have launched yet another effort to remove any competition from the fuel marketplace. It takes the form of an annoying and deceptive “robo-call.”

On the pre-recorded action request API refers to those supporting ethanol as both a “special interest group” and as “extremists.” Since most those making the calls are farmers, I guess that means you. They also use the same old hackneyed and debunked arguments saying ethanol leads to higher food prices and damages car engines.

If being called an extremist makes you a little angry fight back. If having one of the world’s most prosperous industries try to increase their profits at your expense….fight back.

Corn growers: Click here to send a public comment to the EPA.

Non-farmers: Click here to customize and send a public comment to the EPA.

I wish it was a real person calling rather than some digital dweeb called Tom, because I would tell him to quit bugging hard working Americans and get back to cleaning up the their latest oil spill.

Oil Survey Shows Ethanol Is Clearly A Target

What was the second biggest policy story of the year in eyes of the petroleum industry? According to a recent membership survey by the American Petroleum Institute reconsidering biofuel (ethanol) blending. What was the second biggest transportation, storage and refining story of the year? The battle over biofuels blending. And what was listed 2nd on oil’s list of things they most want to see happen in 2014? Yep, reduction in EPA blending requirements.

Most of the public are too focused on their jobs, raising families and just paying the bills to have a deep understanding of the growing role of biofuels and renewable ethanol in our nation. However, years of education by supporters of the domestic fuel have generated a basic awareness of ethanol’s benefits such as job creation, reducing greenhouse gas, and providing a fuel choice that makes us less reliant on imported petroleum.

Because of this hard fought and well deserved perception that ethanol is good, many of my friends have been asking me lately what the heck is going on with the rash of negative information related to ethanol. How did proven ethanol suddenly become a bad idea over night? Most recently, the Environmental Protection Agency’s proposal to reduce the amount of ethanol to be blended in our fuel supply has been getting a lot of media attention.

Put simply, the oil industry has always been ok with ethanol as long as the market share didn’t get too large. In fact they need a certain amount of ethanol because it allows them to provide a high octane product at less cost…meaning more margin for them. Without ethanol they would be forced to do more extensive and costly refining in order to produce a product that won’t leave your car sputtering curbside.

But in today’s market things have changed. Increasing domestic oil production, more fuel efficient vehicles and a soft economy have shrunk the volume of fuel needed. Thus big oil finds themselves looking at the bigger market slice on ethanol’s plate and thinks “hey we want some of that back.”

The unspoken part of the previous statement is “and yes we will pay nicely to get it.” And they have done so in recent years. Their most recent onslaught has been sustained by millions of dollars of lobbying, advertising and poor pseudo-journalism.

You might be inclined to think the family farmers and independent businessmen that make up the ethanol industry are just paranoid but given the aforementioned high priority petroleum has placed on this issue, “it ain’t paranoia if they’re really out to get ya.”

 

In Defense of the RFS

defend-rfsAgainst a backdrop of golden distillers grains, a parade of speakers from state and federal government leaders to local corn farmers and ethanol plant owners spoke out Friday in Iowa against the EPA proposal to lower the volume obligations under the Renewable Fuel Standard (RFS) for 2014.

“The EPA proposal for 2014 guts the RFS which would lead to higher gasoline prices and lower farm income,” said Iowa Renewable Fuels Association (IRFA) Executive Director Monte Shaw at the “Protect the RFS” event held at Lincolnway Energy near Nevada, Iowa..

“The federal government made a commitment to renewable energy, and the EPA is undermining the commitment,” said Senator Chuck Grassley (R-IA). “All of us who support homegrown, clean-burning energy and forward-thinking energy policy need to speak out and let the Administration know that its proposal is short-sighted and irresponsible.”

“We all need to stand together in opposition to this EPA proposal,” said Iowa Governor Terry Branstad who started a website and petition drive ProtectTheRFS.com.

Others who spoke at the Iowa RFS Coalition event included Congressman Steve King, Iowa Secretary of Agriculture and former National Corn Growers Association president Bill Northey, Iowa Corn Growers Association President Roger Zylstra, Lincolnway Energy CEO Eric Hakmiller, Absolute Energy CEO Rick Schwarck, among others.

The EPA publicly announced the proposal on November 15, but it has yet to be published in the Federal Register, which must be done before comments can be submitted. What has been published in the Federal Register is a notice for a public hearing to be held on the proposal Dec. 5 at the Hyatt Regency Crystal City in Arlington, Va. “The event will begin at 9:00 a.m. and end when all parties present who wish to speak have had the opportunity to do so.” This could be a very long hearing.

Let the Public Convince Themselves of Farmer’s Value

In the maelstrom that is modern society, with a hyperactive media and a beleaguered work force,  I think many of us rarely have the time to do research or critical thinking related to the issues of the day. I place myself firmly in that ilk.

Today a very simple question set the wheels turning. The question came from a farmer who asked how  we can explain complex farm programs and support programs designed to keep family farmers producing food and raw materials to a well fed public.

Several thoughts immediately came to mind. First, farm programs have changed and today policy is moving toward a new paradigm, one that focuses on a safety net approach. At a fundamental level this insurance kicks in to assist growers only when developments beyond their control – such as a wide spread drought – put farm survival at risk.

This well considered and analyzed approach recognizes the intrinsic value of the small slice of our population that feed us and much of the world today. This small group is the receptacle of generations of irreplaceable farming knowledge that have made American agriculture the envy of the world. They have allowed generations of us to take food for granted, and miss a very simple fact…once a farmer calls it quits they don’t return.

Unlike a factory layoff, when a farmer moves on so does the complex storehouse of diversified skills that make farmers a productive juggernaut. There are no recalls when things get better. Likewise there is little incentive for another generation to return to the farm given the entry level investment and associated risk.

So I suggested rather than try to give someone a crash course in agriculture, we speak to the public with the goal of giving this issue a perspective that is undeniably powerful  and defies flippant responses and  misinformation.

So here goes. The next time you speak to a group or an individual ask them to name the industries that are the top contributors to the Gross Domestic product. Then add agriculture to the list if it isn’t already there. Now tell them they can only save one. In my experience, nearly without fail, they will universally select agriculture. This simple exercise puts the incredible necessity of a safe and abundant food supply under the bright light of reason.

Now take the next step in your thinking and consider the important role an agricultural safety net, and the stability it brings, plays in allowing us to spend less of our disposable income on food than any other nation. (About 10% in recent years).  Suddenly, that agricultural safety net, becomes an investment in consumers number one need…sustenance. Not a “farm subsidy.”

If you are wondering, the hottest industries in terms of contribution to the national Gross Domestic Product (GDP), according to the Department of Commerce:

  • Durable Goods/Manufacturing
  • Finance/Insurance
  • Wholesale Trade – raw and intermediate materials used to produce non-durable goods

Top Industries in terms of job creation:

Interestingly, five of the top ten industries in terms of job creation are social media and internet related. But when the rubber meets the road, social networks feed nobody, video games are not nutritious, and wires and processors have little to do with our immediate survival.

 



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