Corn Commentary

Don’t Throw Corn Ethanol Under the Bus

The development of alternative feedstocks for ethanol doesn’t mean that corn ethanol will be thrown under the bus, according to Agriculture Secretary Ed Schafer.

Ed SchaferSpeaking to farm broadcasters in Washington on Tuesday, Schafer talked about the importance of ethanol today. “We’ve passed Renewable Fuels Standards in this country that are important,” he said. “We cannot meet those demands with (only) corn-driven ethanol as a feed stock,” But, he says corn ethanol is a “stepping stone” to get to alternative feed stocks. “If we pull it back, we can do all the research in the world and come up with new ideas for alternative feed stocks and you won’t be able to do anything with them. So we need to make sure that we continue to develop the ethanol industry based on a corn feed stock.”

Does that mean we throw corn ethanol under the bus after the cellulosic ethanol comes on line?

“Absolutely not,” Schafer says. “What happens then is you have alternative feed stocks, the market place chooses the feed stock, the market place sets the price, that’s what made this country great.”

Listen to some of Schafer’s comments here: [audio:]

What World Bank Report Says – and Doesn’t Say

The World Bank report released earlier this month has gotten quite a bit of media attention lately, especially regarding its concern about biofuels production.

During a press conference with President Bush Tuesday, a reporter said, “The World Bank says about 85 percent of the increase in corn price since 2002 is due to biofuel — increased demand for biofuels.”

Near as I can tell, the World Bank report does not say that. What it does say is, “Only a relatively small share of the increase in food production prices (around 15%) is due directly to higher energy and fertilizer costs.” It does not attribute a percentage to biofuels production.

Robert ZoellickWhat it does say is, “Almost all of the increase in global maize production from 2004 to 2007 (the period when grain prices rose sharply) went for biofuels production in the U.S., while existing stocks were depleted by an increase in global consumption for other uses.” What that means is that, as Agriculture Secretary Ed Schafer told farm broadcasters Tuesday, “Only about 25 percent of the corn crop goes into ethanol today and we have been able to stay ahead of that by yield increases.” In other words, our yield increases in the United States have offset the increased demand for corn to make ethanol.

It’s also critical to note that in the World Bank report graph showing expected world food price percentage increases for 2008 compared to 2004 – the biggest increases are in wheat (119%) and rice (101%) – not corn. Rice seems to be a major focus of the world food crisis, yet there appears to be no direct connection between the price of rice and biofuels production.

The World Bank does say that increased bio-fuel production has contributed to the rise in food prices. No one denies that. No doubt that increased corn prices have had an effect on increasing food prices. However, no one seems to know exactly how much. It is nearly impossible to sort out the impact of so many different factors coming to bear on food prices.

UN Food CrisisIn announcing a food crisis task force on Tuesday, United Nations Secretary-General Ban Ki-moon blamed the escalating prices on a range of factors — high oil prices, growing demand, bad trade policies, bad weather, panic buying and speculation, as well as, “the new craze of biofuels derived from food products.”

“In addition to increasing food prices, we see at the same time farmers in developing countries planting less, producing less, due to the escalating cost of fertilizer and energy,” he said. “We must make every effort to support those farmers so that in the coming year we do not see even more severe food shortages.”

That is key to the whole food crisis right there. Supporting farmers in other countries so they can produce their own food. President Bush noted in his press conference today that the US is “deeply concerned about people who don’t have food abroad” and will continue to be generous in food donations. He also suggested a “creative policy – is if we would buy food from local farmers as a way to help deal with scarcity, but also as a way to put in place an infrastructure so that nations can be self-sustaining and self-supporting.”

Presidential Press Conference

Higher food and energy costs were topics during a presidential press briefing Tuesday morning.

Bush press conferencePresident Bush noted that the high price of gasoline is going to spur more investment in ethanol as an alternative to gasoline. “And the truth of the matter is it’s in our national interests that our farmers grow energy, as opposed to us purchasing energy from parts of the world that are unstable or may not like us,” he added.

Regarding food price inflation, one reporter said, “The World Bank says about 85 percent of the increase in corn price since 2002 is due to biofuel — increased demand for biofuels. And your Secretary of State said that — indicated yesterday that she thought that might be part of the problem. Do you agree with that?”

Bush responded, “Actually, I have a little different take: I thought it was 85 percent of the world’s food prices are caused by weather, increased demand and energy prices — just the cost of growing product — and that 15 percent has been caused by ethanol, the arrival of ethanol.”

The president said the United States is concerned about the scarcity of food in poorer countries and will continue to be generous in food donations abroad.

Growing Positive on Corn

In March 2007, the USDA stated that growers intended to plant 90.5 million acres of corn. Given that farmers had planted 78.3 million acres in 2006, this was a very optimistic prediction. This past month, the projection from USDA was 86 million acres, down from last year but still way above what was seen before.

High input costs, especially fertilizer, are greatly to blame, but the National Corn Growers Association has held that the number of planted corn acres will be above the USDA prediction. Today, we have further confirmation, via the Associated Press.

Darrell Good, University of Illinois agricultural economics professor:

“The pendulum has swung decidedly in favor of corn at this point. For a lot of the central and northern Illinois farms, corn pencils out easily to be $200 an acre more profit than soybeans.”

Last year, the final corn planting was 3.1 million acres over and above the USDA’s prediction. Question now is — how high in 2008?

Time to break another record, growers!

Corn at the Ball Park

Corn CupsCorn will be playing in the major leagues with the boys of summer this year.

Some of the nation’s major league baseball teams are adopting cups made from corn starch this season to help quench the thirst of fans and be more environmentally-friendly at the same time.

The Pittsburgh Pirates, for example, have announced a new greening initiatives program called “Let’s Go Bucs. Let’s Go Green.”

Pitt PiratesBeginning with the 2008 season, the concessionaires at PNC Park will be using corn-based beverage cups. They are also reportedly printing game-day programs with soy-based inks and providing flex-fuel vehicles for team scouts.

According to Bob Nutting, Pirates Chairman of the Board, “We are not launching this program because ‘going green’ is a popular trend. We are doing it because it is the right thing to do. The measures being put into place at the ballpark will have an immediate positive impact. These initiatives not only make sense for the environment, but they make good business sense as well.”

The Oakland A’s are also reportedly using cups made of biodegradable cornstarch this season.

T. Boone Pickens Endorses Ethanol

An editorial in today’s Wisconsin State Journal.

Texas oilman T. Boone Pickens, who once scoffed at ethanol, recently told the CNBC financial news network that he now supports increased production of the homegrown, renewable fuel. Pickens cited the $1 billion a day that America spends on imported oil.

The editorial writers appear to have been reading our blog. We’ll give them the final word:

In America, ethanol is currently produced chiefly from corn. Consequently, in their latest attack, naysayers have concocted a near-doomsday scenario in which increased demand for corn sends food prices sky high. Farmers all over the world would plow up forests to plant more acres, leading to an environmental disaster.

The critics’ mistake — aside from gross exaggeration — is that they are failing to look ahead.

Ethanol Responds to Scam Article

The Ethanol Promotion and Information Council (EPIC) has responded to the current Time Magazine cover story “The Clean Energy Scam.”

EPIC Fueling LogoIn a letter to the editor of Time, EPIC executive director Toni Nuernberg says the article makes corn-based ethanol “the scapegoat of the week.”

She notes that the studies alluded to in the article, although not specifically referenced, (authored by Timothy Searchinger and Joseph Fargione) “reach conclusions regarding the greenhouse gas emissions associated with potential global land-use changes caused by increasing biofuels demand — specifically for corn-based ethanol. Their conclusions are considered debatable by others in the scientific community.”

She also points out that the studies make assumptions that are unrealistic.

(The assumptions) double the level of corn ethanol that is actually required under the new Renewable Fuels Standards by 2015, an assumption that’s not realistic to U.S. corn ethanol production in the next seven years. Congress established a production cap of 15 billion gallons of corn ethanol by 2015 to help guard against dramatic land use changes. But Searchinger bases his projections on a model in which U.S. corn ethanol production increased from 15 billion gallons a year to 30 billion gallons a year by 2015. Thus, the findings are irrelevant.

Finally, she says, “today’s grain-based ethanol industry is providing the auto industry with incentive to manufacture flex-fuel and alternative-fuel vehicles and creating an infrastructure to distribute ethanol produced from any feedstock.”

You can read Toni’s entire letter on

Unfortunately, the Time article is filled with sensationalism, emotionalism and just plain misinformation that will lead the public to believe that corn ethanol is starving the world and responsible for for everything from destabilization in Pakistan to deforestation in Brazil. Toni’s letter is likely too long to make it into the Time letters to the editor, if they would even include it – but ethanol supporters everywhere who feel that they are being slandered by that article should respond with a deluge of letters to the magazine.

How Much Corn Will Farmers Plant?

That’s the multi-million dollar question on the minds of lots of people right now – one that will be answered to some extent by the USDA’s first educated guess on Monday morning when the prospective plantings report is released.

Business WeekBusiness Week did an article today about those who are eagerly anticipating the report – from livestock producers to the ethanol industry to market analysts.

Here are a couple of quotes from the article:

“Everybody is looking to see what that report is going to look like,” said Bob Dinneen, a spokesman for the Renewable Fuels Association. “Everybody is anxious, us included.”

Mindy Williamson, a spokeswoman for the Iowa Corn Growers Association, said the ethanol-fueled demand for corn has changed the dynamics.

“Before we weren’t in a demand-driven market,” she said. “Now, it’s all about demand and you have a choice about where we want to sell (corn) and who you want to sell it to. There are still other things beyond farmers’ control, like weather, but it’s a good time.”

Sweet Hyperbole

Nestle CEOThe chief executive officer of the world’s largest food and drink company has given new meaning to the word hyperbole.

Peter Brabeck-Letmathe, CEO of Swiss food giant Nestle, is quoted in various news reports saying, “If as predicted we look to use biofuels to satisfy 20 percent of the growing demand for oil products, there will be nothing left to eat.”

He also called planned subsidies for biofuels “irresponsible and immoral” and “political insanity.”

I do like the last sentence in the story on Forbes website from Thompson Financial News.

Thus far Nestle has been successful in passing on a strong hike in raw materials prices, including milk, cacao and corn, to its clients.

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!

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