Corn Commentary

Thank You America’s Farmers

National Agriculture DayIt’s that special day of the year when we have a chance to thank America’s farmers and ranchers for all they do to help feed us and the world. You can find lots of good facts and figures on the National Ag Day website which is coordinated by the Agriculture Council of America. For example:

From a team of horses in the early 1900s to tractors with the power of 40 to 300 horses today, American farmers provide consumers with more and better quality food than ever before. In fact, one farmer now supplies food for about 144 people in the United States and abroad compared with just 25.8 people in 1960.

The efficiency of American farmers pays off in the price American consumers pay for food as well. U.S. consumers spend roughly 9 percent of their income on food compared with 11 percent in the United Kingdom, 17 percent in Japan, 27 percent in South Africa and 53 percent in India. This great value is due in large part to improved equipment efficiency, enhanced crop and livestock genetics through biotechnology and conventional breeding, and advances in information management.

Today’s farmers understand the importance of improving the quality and quantity of food available to the world. According to the US Census Bureau, it is estimated that there will be 7.5 billion people in the world by the year 2020 (we’re currently at 6.2 billion). It’s agriculture’s job to find a way to feed those people. Advancements in crop technology, equipment technology and information management will make that possible. American farmers and others involved in the agriculture industry have met and will continue to meet this challenge again and again.

Guess what? American farmers will continue to improve and increase food production while improving the environment and helping fuel the world.

Thank you America’s corn growers and farmers of all commodities for all you do!

Deconstructing Walter Williams

For an economics professor, Walter E. Williams should be pretty smart — and he often is. But his recent unprovoked attack on ethanol showed he’s not above taking up a few myths without the usual fact checking. At the risk of repeating negatives, let’s take a look under the hood of his column which you can read here in all its glory.

  • Ethanol “can cause major damage to automobile engines not specifically designed to burn ethanol.” All automotive engines can safely run E10 gasoline, which is 10 percent ethanol, and more and more automakers are producing flex-fuel vehicles that can run E85. And just recently, the state of Minnesota released research that found that many car engines can also run well on E20 gasoline. Automakers are investing a lot of money in promoting ethanol as a greener fuel. See here, here and here for examples.
  • “It takes 450 pounds of corn to produce the ethanol to fill one SUV tank. That’s enough corn to feed one person for a year.” There is no real practical comparison here. We’re talking about two different types of corn, yellow dent field corn versus sweet white corn. And ethanol is most commonly used as an E10 additive, so 450 pounds of corn (8 bushels) would produce enough ethanol to blend into a total of 224 gallons of E10 gasoline. But further, for all its benefits, that amount of sweet white corn (the equivalent of 1.25 pounds a day for one person over the course of one year) simply does not provide the calories or nutrition required for a stand-alone diet.
  • “It takes more than one gallon of fossil fuel — oil and natural gas — to produce one gallon of ethanol.” Actually, most of the research (including that done by the federal Department of Energy) demonstrates ethanol to be energy positive, resulting in more energy that it takes to produce it. Click here for more details.
  • “It takes 1,700 gallons of water to produce one gallon of ethanol.” Williams here is talking about how much water is also required to grow the corn from which ethanol is produced. But he ignores the fact that the bulk of this water is naturally occurring rainfall. Only a small percentage of corn acreage is irrigated. Ethanol production itself requires about three to four gallons of water per gallon of ethanol. Click here for more on this.
  • “Ethanol is so costly that it wouldn’t make it in a free market.” Perhaps it would have a better chance if the oil industry wasn’t spending so much money to perpetuate the myths we keep seeing. In reality, ethanol producers in 2007 helped support more than 230,000 American jobs, put more than $12 billion into the pockets of American consumers, and generated more than $8 billion in tax revenue – far more than any tax credits received. And higher demand for corn has been credited with reducing federal payouts to farmers by up to $12 billion. Details here and here.

You get the picture. Frankly, we’re tired of swatting away the same old myths that keep coming up, and the American public seems to agree with us.

Consumers Benefit From Ethanol

Americans are feeling the pinch of high gasoline prices, but the fuel could cost as much as 5 cents to 10 cents more a gallon if it was not routinely blended with ethanol. Overall, U.S. consumers and taxpayers benefit from saving $7 billion to $14 billion in lower gasoline costs as a result of increased ethanol use, according to Terry Francl, senior economist at the American Farm Bureau Federation.

AFBFFrancl said Americans will benefit in other ways, too. After farmers endured years of barely breaking even with corn priced around $2 a bushel, today’s relatively high market prices for corn, soybeans and other crops mean federal farm program payments will be reduced by at least $8 billion and possibly as much as $12 billion annually, he said. The overall gains to the economy from ethanol will more than offset any incremental food price increases associated with the production of biofuels.

25x'25These and other points about the emerging ethanol industry were shared by Francl during his presentation at a renewable fuels conference in Omaha this week. The aim of the 25 x ’25 Alliance, the sponsor of this week’s National 25x’25 Renewable Energy Summit. , is to advance the concept that by 2025, 25 percent of U.S. energy needs will be met by resources produced by this country’s farms, forests and ranches.

High crude oil prices are another contributor to today’s high crop and food prices, but Francl emphasized the extent to which increased use of ethanol and biodiesel may stem even higher gas prices.

“It’s easy to say the growth of the ethanol industry is leading to higher fuel and food prices, but that’s just not the case,” Francl said. “Complex and overlapping issues that developed over several years are at play, and the growing use of ethanol actually helps keep gas prices from going even higher.”

In addition, Francl said the U.S. benefits in other important ways from the burgeoning domestic ethanol industry. Besides a reduced reliance on foreign energy sources, the ethanol energy industry spurs new job growth and economic growth in rural areas. Ethanol also helps the environment because it is made from corn and other renewable resources.

Farm Bill Still Stuck

It appears as though another extension of the 2002 Farm Bill is inevitable, since the current extension is set to expire in just a few short days and Congress is still stuck on working out funding for a new bill.

Farm BillEven though key agriculture committee members from both houses and both parties expressed optimism last week that a compromise was in the works, virtually nothing was accomplished, and Congress is recessing this Friday for Easter, the day before the current extension expires. The latest word is that they are hoping for a compromise by mid-week so that staff can work over the recess on the details.

Meanwhile, the Washington Post editorialized on the farm bill Sunday, basically saying that because corn prices are high and net farm income is up, there is “no justification whatsoever for spending billions more on agriculture.” Here’s an excerpt:

“…in this flush time for farmers, House and Senate conferees are contemplating a farm bill that might cost $10 billion more over the next decade than the current law would have. The tentative $280 billion-plus price tag includes needed spending on nutrition and soil conservation programs — but also about $5 billion a year in cash transfers to corn, soybean, wheat, cotton and rice farmers over the next five years. So far, there are no meaningful limits on the amount each farm enterprise can receive. Thus, plenty of this federal largess will be showered on people much richer than the average American, who is struggling with higher food costs.”

There are about 20 comments so far on the editorial, many of which point out the importance of farm programs. This is another great opportunity to at least try to educate the general public.

Schafer Explains Bush Comments

Comments by President Bush this week that corn prices are affecting food prices required some explanation after the fact by Secretary of Agriculture Ed Schafer.

During a speech this week at the Washington International Renewable Energy Conference 2008, Bush said, “Corn ethanol holds a lot of promise, but there’s a lot of challenges. If you’re a hog-raiser in the United States, you’re beginning to worry about the cost of corn to feed your animals. I’m beginning to hear complaints from our cattlemen about the high price of corn. The high price of corn is beginning to affect the price of food.”

WIREC SchaferTalking to Brownfield Network reporter Peter Shinn afterward, Schafer said there is no inconsistency between the President’s remarks about the impact of corn demand from the ethanol industry on food prices and the long-held USDA position that higher energy prices play a greater role in food price inflation.

“Well, I think the President stated an obvious fact that everybody knows today that food prices are being challenged by fuel prices,” Schafer said. “But really, this is a consistent administrative policy and direction, and I was pleased the President pointed out the fact that, though corn prices are under pressure right now, the pathway is to cellulosic ethanol.”

Schafer addressed WIREC on Tuesday and hosted a ministerial luncheon at the event Wednesday. WIREC 2008 featured representatives from over 100 countries with attendance estimated at seven to eight thousand. The event wrapped up Thursday.

Read the Brownfield story here.

Corn Growers Can Help US Get Off Oil

President Bush had a pretty simple message Wednesday at the Washington International Renewable Energy Conference 2008 (WIREC).

“America has got to change its habits. We’ve got to get off oil.”

WIREC BushNo kidding. About the time he was making that statement, crude oil on the New York mercantile exchange jumped nearly $4 on falling oil inventories, trading over $104 a barrel and setting a new all-time record. The expectation is that gas prices will reach $4 a gallon by Memorial Day now.

Bush renewed his support for ethanol produced by the nation’s farmers to help us change our habits and get off that high-priced oil.

“The vast majority of that ethanol is coming from corn, and that’s good,” he said. “That’s good if you’re a corn-grower. And it’s good if you’re worried about national security. I’d rather have our corn farmers growing energy than relying upon some nation overseas that may not like us. That’s how I view it.”

He did express concerns about corn ethanol, however, and stressed the need for cellulosic technology.

“The best thing to do is not to retreat from our commitment to alternative fuels, but to spend research and development money on alternatives to ethanol made from other materials — for example, cellulosic ethanol holds a lot of promise. I’m sure there are people in the industry here that will tell you how far the industry has come in a very quick period of time.”

As to changing habits, Bush noted, “I probably didn’t help today when I rode over in a 20-car motorcade.” Some things may never change!

Read the president’s remarks here.

Getting the Genes out of the Bottle

The announcement last week that scientists at Washington University in St. Louis have completed a working draft of the corn genome holds tremendous potential to meet society’s growing demands for food, livestock feed and fuel.

The accomplishment, which was announced at the 50th Annual Maize Genetics Conference, is the result of a $30 million project initiated in 2005 and funded by the National Science Foundation, the U.S. Department of Agriculture and the U.S. Department of Energy.

Corn GenomeRichard K. Wilson, Ph.D., director of Washington University’s Genome Sequencing Center, says this is the first comprehensive glimpse at the blueprint for the corn plant. “Scientists now will be able to accurately and efficiently probe the corn genome to find ways to improve breeding and subsequently increase crop yields and resistance to drought and disease,” he said.

The draft covers about 95 percent of the corn genome, and scientists will spend the remaining year of the grant refining and finalizing the sequence. “Although it’s still missing a few bits, the draft genome sequence is empowering,” Wilson explains. “Virtually all the information is there, and while we may make some small modifications to the genetic sequence, we don’t expect major changes.”

According to plant biologist Ralph S. Quatrano, Ph.D., chair of Washington University’s Department of Biology, “The genome will help unravel the basic biology of corn. That information can be used to look for genes that make corn more nutritious or more efficient for ethanol production, for example.”

The team working on the endeavor included scientists from Iowa State University, among them corn geneticist Dr. Patrick Schnable who has been working on corn genetics exclusively for well over 20 years. Brownfield Network’s Peter Shinn did an interview with Dr. Schnable you can read and listen to here.

This is an exciting development that opens up a whole new world of possibilities for feeding and fueling the world.

NCGA CEO Tolman Receives Agri-Marketing Honor

Rick TolmanLeaders of the National Corn Growers Association (NCGA) said they are delighted and proud at the National Agri-Marketing Association announcement that NCGA CEO Rick Tolman has been named Agribusiness Leader of the Year. Here’s Rick at the NCGA booth at Commodity Classic.

The award honors outstanding leaders in agribusiness, education, government service or other agribusiness related areas who exemplify excellence in agribusiness by their significant contributions to the industry.

“We congratulate Rick on this prestigious award,” said NCGA President Ron Litterer. “His commitment and dedication is apparent in the many accomplishments that benefit agriculture, especially in the areas of ethanol, trade, transportation, biotechnology, and farm policy.”

Noting Tolman’s efforts to dispel prevalent myths about corn ethanol, NCGA Chairman Ken McCauley said, “We couldn’t be more pleased. Rick is an outspoken champion for agriculture and this honor is well deserved.”

NCGA leaders and producers are at Commodity Classic, the combined tradeshow and convention of corn, soybean and wheat producers. “We are celebrating one or most successful Commodity Classic events yet,” said Bob Dickey, NCGA first vice president. “This is one more reason to celebrate.”
Tolman will receive the award April 17 at the 2008 Agri-Marketing Conference in Kansas City, Mo.

Outlook Focus on Ethanol

Biofuels were in the spotlight last week at USDA’s 2008 Outlook Forum with the theme “Energizing Rural America in the Global Marketplace.”

The opening plenary session included Paul Schickler of DuPont/Pioneer Hi-Bred and Bob Dinneen with the Renewable Fuels Association, who made up half the panel talking about biofuels and new technology increasing yields to meet the demand for both food and fuel.

USDA Outlook 2008“The rapid advances in productivity, technology and innovation are contributing to remarkable productivity increases,” said Schickler. “World production of corn (since 1991) has progressed right along with the rapid increase in consumption and the reason is that corn yields have increased over that same period by 30 percent.”

Schickler noted that in the last decade the world population has increased 13 percent, income has increased 35 percent, meat consumption has increased 25 percent, corn consumption is up 32 percent and soybean consumption is up 52 percent … but total global crop area harvested has only increased by four percent.

He called it “remarkable” and it truly is. Here is a link to Schickler’s presentation in pdf form.

Dinneen said we need to make sure we are doing everything possible with biotechnology to develop new varieties to increase crop production. “We are going to get to 200 bushels per acre far sooner than anyone believes that we will,” he said.

“We will not have food security in this country unless and until we have energy security,” said Dinneen.

Watch the entire plenary panel session on USDA’s website.

There was also a panel focusing specifically on sustainability of ethanol with presenters including Dr. Mark Stowers of POET and Rick Tolman of National Corn Growers Association. (The links will take you to their presentations.)

Ethanol Lowers Gas Prices!

From our friends in Illinois:

Just as it begins to appear everyone is piling on and taking a cheap shot at the benefits of ethanol, a media heavy hitter unleashed this earth shaking bit of news…increased ethanol use cuts our dependence on foreign oil.

“While debates heat up on whether ethanol will ever be “green,” one aspect of the alternative fuel is becoming clearer: explosive production is stifling an established driver of oil markets — U.S. gasoline demand — and could lead to lower prices at the pump,” according to a Reuters story out today.

Monthly U.S. ethanol output through November 2007, the last data available, averaged nearly 12.7 million barrels, or 64 percent higher than average monthly production in 2005, according to the Energy Information Administration, the statistics arm of the Department of Energy.

Ethanol production this year is expected to rise 130,000 barrels per day — or the amount of gasoline a medium-sized oil refinery puts out — to 550,000 bpd, according to the EIA. However, production is anticipated to reach 9 billion gallons in 2008 with plenty of growth potential waiting in the wings for the right market signals.

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