One of the findings in a Farm Foundation study being released today is that oil is ultimately behind the increase in corn prices.
As Purdue agricultural economist Wally Tyner explains it, “Higher oil price means higher gasoline price, higher gasoline price means more demand for ethanol because ethanol is a substitute for gasoline, and the higher ethanol demand means more demand for corn and more demand for corn means higher corn prices.” The result has been that the price of crude oil and the price of corn are now linked, Tyner says, which is a revolution for global agriculture.
“What’s Driving Food Prices?” was written by Tyner and two other Purdue University economists. Another interesting finding in the report is that China and India have less of an impact on food prices than many believe. “While many studies focus attention on China and India, neither country is a major trader of most agricultural commodities. However, China’s rapidly growing oil imports have
had an indirect effect on food prices by impacting world prices for crude oil.”
“We commissioned this report to provide a comprehensive, objective assessment of the forces driving food prices,” said Farm Foundation president Wallace Conklin. “It is the intent of Farm Foundation that the information will help all stakeholders meet the challenge to address one of the most critical public policy issues facing the world today.”
Presidential candidates Barack Obama and John McCain spoke to the American Farm Bureau Federation’s Council of Presidents meeting in Washington DC last week by teleconference, both pledging their continued support for American agriculture. However, they shared different ideas on how they would accomplish that.
Sen. McCain (R-Ariz.), first to speak, pledged to support trade agreements that will open markets to U.S. agriculture. “I believe the American agricultural worker is the most efficient and productive in the world and one of my jobs is to open every market in the world to your products,” McCain said.
Sen. Obama (D-Ill.) followed McCain and emphasized his support of the recently passed farm bill. “I would have liked to have seen some additional reforms in the bill, but on balance the bill did a lot more good than bad because it dramatically increased the funding to fight hunger, it increased funding for conservation, and it provided farmers with stability in an increasingly volatile market,” Obama said.
The candidates differed pretty radically on their views of the estate tax, with McCain saying the first $10 million of an estate should be exempt from the estate tax with anything above the $10 million level taxed at a 15- percent rate. “It’s outrageous that you can’t pass onto your children and grandchildren the hard-won fruits of your labor,” McCain said.
Obama said he would keep the estate tax exemption at the 2009 rate, $3.5 million for single filers and $7 million for married couples, but pledged to not raise it above that level. “The truth is a complete repeal of the estate tax would cost the government $1 trillion over the first 10 years at a time when our country has some huge priorities,” Obama said.
Both McCain and Obama emphasized the need for immigration reform to meet the current labor crisis facing agriculture and the importance of agriculture in meeting America’s energy needs.
The highly anticipated analysis of certain provisions of the new farm bill by the Food and Agricultural Policy Research Institute at the University of Missouri–Columbia, better known as FAPRI, was released this week.
The report provides preliminary analysis of impacts of certain provisions of the 2008 Food, Conservation and Energy Act, including the ACRE program. The report found that, besides ACRE, most of the selected provisions of the law would have only modest impacts on commodity markets, farm program expenditures and consumer food prices.
The ACRE program could have significant effects on producer income and taxpayer costs. On a crop year basis, the program increases net farm program payments by an average of more than $1 billion per year and the potential expenditures are much larger. Given program rules and estimated payments, the ACRE program appears much more likely to appeal to producers of feed grains, wheat and soybeans than to producers of cotton, rice and peanuts. Thus, the program is more likely to be attractive to producers in
northern states than in southern states.
The report also looked at the impact of extending the ethanol specific tariff and reducing the ethanol tax credit and found that “extending the $0.54 per gallon specific tariff on ethanol imports for two more years results in lower ethanol imports and slightly higher prices for ethanol and corn. In contrast, reducing the ethanol tax credit to $0.45 per gallon from the current $0.51 per gallon would tend to reduce ethanol and corn producer prices. The tariff effect is slightly larger than the tax credit effect, so average corn and ethanol prices increase slightly.”
Read the entire report here.
A Senate panel heard testimony Thursday that advances in agricultural productivity make the expanded Renewable Fuels Standard an attainable goal.
DuPont Vice President for Applied BioSciences Technology John Pierce told the Senate Environment and Public Works clean air subcommittee that American agriculture has outpaced the oil industry in productivity.
“When our Pioneer subsidiary began operations in 1926, corn yields were about 27 bushels per acre and petroleum was relatively cheap – you could buy 3.5 pounds of petroleum for the cost of one pound of corn,” Pierce’s testimony reads. “Today, corn yields in the US average about 150 bushels per acre. Corn, at $7 per bushel, is 3.5 times cheaper than petroleum, instead of being 3.5 times more expensive as it was in 1926 – a remarkable testament to agricultural productivity.”
Pierce says the expanded RFS, which increases the amount of renewable fuels required up to 36 billion gallons by 2022 - 16 billion of that from biomass - is attainable both in terms of corn ethanol and cellulosic. “In fact, there are multiple technology developers intending to produce cellulosic ethanol in pilot or demonstration quantities from a range of feedstocks over the next 24 months. The economics and carbon performance of grain ethanol continues to improve as well, as does agricultural productivity and sustainability in the US. These trends suggest that while the RFS targets are aggressive, as they should be, they are not out of reach.”
Read Pierce’s full testimony here.
Amazingly, two turkey farmers in different parts of the country have the exact same views about ethanol, using the exact same words in editorials to different newspapers.
Both start exactly the same way: Over the past few months, a debate has begun about whether it’s a good idea for Congress to force America to turn over one-third of our nation’s corn into ethanol. It’s about time.
Instead of engaging in this debate, however, some who support the current policy have decided to make it personal, claiming that those who want to take a second look at ethanol are out to get the American farmer. In a nation that deeply respects farmers, those are fighting words — and I know them to be false. I believe we should rethink our ethanol policy, and I am a farmer.
They then add personal information about their individual operations. After that, the letters are nearly identical.
The Minnesota Corn Growers pointed out the similarities to Minnesota TV station wanting to cover the story. When confronted on camera by the reporter, Rothfork admitted that he “had help with the article by Sherrie Rosenblatt,” public relations vice president for the National Turkey Federation. He said the ideas and thoughts in the editorial are his own, “She helped me craft the words.”
“There are a couple of thing that set this apart from the usual ‘that’s just PR flaks doing their job’ scenario,” says Mark Hamerlinck, communications director for the Minnesota Corn Growers. “First, these are not simply letters to the editor that were generated by a letter writing campaign – in the case of the Star Tribune, this piece took up a third of their op-ed page. And, had the opinion piece been on another subject (say, the economic and security benefits of ethanol) you can bet they wouldn’t have touched it had they known it was published a month before in another paper under another name.” Hamerlinck gives the KARE11 television reporter credit for asking the turkey farmer about the obvious editorial similarities.
Corn and ethanol industry representatives are urged to keep an eye out for similar turkey sightings in their own areas and use their own ammunition to shoot back.
By producing a few billion gallons more ethanol and using a little bit less fuel on the road, America could be energy independent through the Fourth of July every year.
Over 35 biofuels, agricultural and environmental organizations are calling attention to the idea that America is on the road to energy independence. A joint statement from the groups points out that America could effectively supply its own transportation fuel needs for 186 days in 2009 — equivalent to January 1 through July 4 — meaning that imports would be needed for less than half the year. That can be achieved if each person would conserve just 21 gallons of fuel in the coming year and if we would increase ethanol production by about five billion more gallons.
The groups are calling for unity to achieve this goal. “To find true and long-lasting sustainable solutions, corporate self interests, political polarization, and agendas must be set aside. We must band together in the fight for Energy Independence here in the United States and around the globe.”
Among the many groups supporting Energy Independence Day are the National Corn Growers Association, Ethanol Promotion and Information Council, Renewable Fuels Association, Renewable Fuels Now, National Farmers Union, National Sorghum Producers, National Wheat Growers Association, and the National Ethanol Vehicle Coalition.
The USDA Planted Acreage report out Monday was good news, although it did not totally reflect the damage from Midwest flooding yet.
Corn planted area is reported to be 1.31 million acres more than was estimated in the March intentions report at 87.3 million acres, down just 7 percent from last year. That is the second highest since 1946, behind last year’s total of 93.6 million acres. If it were all to make it, growers would harvest 78.9 million acres for grain, down 9 percent from 2007 and the second highest since 1944.
NASS collected most of the data for the report before the majority of the flooding occurred but they did re-interview about 1,200 farmers at the end of the month in the flood-affected areas. Through that it was determined that farmers intend to harvest about two percent less, or 90.4 percent, of their planted acres of corn for grain.
I had the opportunity to chat with a few corn growers Friday night at a benefit concert for Farm Foundation held at the Lake Ozark home of Sara Wyant (Agri-Pulse) and husband Allan Johnson (USDA Rural Development). Garry Niemeyer of Illinois and and Ken McCauley of Kansas were two of the growers at the event. Ken, who is the chairman of the National Corn Growers, says his corn in Northeast Kansas looks good. “If you’re sitting there with flood water, you don’t want to go to northeast Kansas, because it looks really good,” Ken told me. “We have had some hail, we have had some wind, but overall I think we can make it through because we do need a big corn crop.”
“I tell you what, everybody is going to produce some corn,” Ken says. “Iowa will produce a lot of corn and when you get down to it we’re gonna have a good corn crop and it could even be one of the better one or two or three.”
“I really think we’re gonna get through this and farmers are going to look back and say ‘what a year!’”
At the Iowa Speedway yesterday, the Iowa Corn Growers Association held an outdoor press conference. They used it to help educate media about corn usage by placing banners on the side of a grain trailer showing the relative percentages of corn used for different purposes like livestock feed and ethanol.
I did a short interview with Gary Edwards, ICGA board member. Ken Root, WHO, also participated. Gary farms in Animosa, IA which is in one of the most flood impacted areas of the state. He says that although corn growth is behind schedule and there is a lot of land impacted, he expects that the state will still have a good crop. He wants people to keep in mind that last year they had a record corn crop and this year still has the potential to be one of the biggest. He says the water levels have gone down significantly already and he expects that a lot of those fields will dry out and be re-planted. He has no doubt that they’ll be able to provide all the corn needed for both food and fuel again this year.
ICM, Inc. made what could quite possibly be a revolutionary announcement today about technology that can be added to existing ethanol plants to allow the production of both fuel AND food. Not just distillers grains to feed livestock, but high quality protein to feed people.
ICM president Dave Vander Griend says their technology can literally help to feed the world. “There’s been a lot of talk about the global need for grain, but in fact, the global need is really for protein,” he said.
The process separates the corn kernel into its three main components - endosperm, germ and bran. Optimizing the whole kernel allows for the production of a number of food and feed grade co-products as well as another alternate fuel source to power the plant itself.
One of the most promising aspects of the technology is the protein that can be separated out from the germ. “Because that protein is a very amino acid balanced protein, a very healthy protein,” Dave says. The protein can be then utilized as a supplement to make a better food product and could be exported as part of the United States food aid program.
I interviewed Dave about this exciting opportunity during the Fuel Ethanol Workshop in Nashville. He also talks about the mood of the industry and his feelings about the efficiency of American farmers.
With feed costs representing 70 percent of the price of raising hogs, there is no doubt that pork producers are feeling the pinch of high grain prices. But, producers are recognizing the fact that it is more than just ethanol production driving up the prices.
“This is not specifically an ethanol problem,” said National Pork Producers Council president Bryan Black. “The world demand for grain, the total energy price crisis and shortages of grain across the world have led to this situation and we are not pointing the finger at any one particular one.”
The NPPC has created a brand new task force to look at new feed alternatives to help them deal with the rising cost of corn and soybean meal, which have been the primary source of feed for hogs. In addition, USDA’s move to free up some Conservation Reserve Program acreage to haying and grazing should help by increasing the amount of feed available to the livestock industry.
One of the findings in a Farm Foundation study being released today is that oil is ultimately behind the increase in corn prices.
“We commissioned this report to provide a comprehensive, objective assessment of the forces driving food prices,” said Farm Foundation president Wallace Conklin. “It is the intent of Farm Foundation that the information will help all stakeholders meet the challenge to address one of the most critical public policy issues facing the world today.”
Sen. McCain (R-Ariz.), first to speak, pledged to support trade agreements that will open markets to U.S. agriculture. “I believe the American agricultural worker is the most efficient and productive in the world and one of my jobs is to open every market in the world to your products,” McCain said.
The report provides preliminary analysis of impacts of certain provisions of the 2008 Food, Conservation and Energy Act, including the ACRE program. The report found that, besides ACRE, most of the selected provisions of the law would have only modest impacts on commodity markets, farm program expenditures and consumer food prices.
“When our Pioneer subsidiary began operations in 1926, corn yields were about 27 bushels per acre and petroleum was relatively cheap – you could buy 3.5 pounds of petroleum for the cost of one pound of corn,” Pierce’s testimony reads. “Today, corn yields in the US average about 150 bushels per acre. Corn, at $7 per bushel, is 3.5 times cheaper than petroleum, instead of being 3.5 times more expensive as it was in 1926 – a remarkable testament to agricultural productivity.”
Both start exactly the same way:
Over 35 biofuels, agricultural and environmental organizations are calling attention to the idea that America is on the road to energy independence. A joint statement from the groups points out that America could effectively supply its own transportation fuel needs for 186 days in 2009 — equivalent to January 1 through July 4 — meaning that imports would be needed for less than half the year. That can be achieved if each person would conserve just 21 gallons of fuel in the coming year and if we would increase ethanol production by about five billion more gallons. 
The 
I had the opportunity to chat with a few corn growers Friday night at a benefit concert for Farm Foundation held at the Lake Ozark home of Sara Wyant (Agri-Pulse) and husband Allan Johnson (USDA Rural Development). Garry Niemeyer of Illinois and and Ken McCauley of Kansas were two of the growers at the event. Ken, who is the chairman of the National Corn Growers, says his corn in Northeast Kansas looks good. “If you’re sitting there with flood water, you don’t want to go to northeast Kansas, because it looks really good,” Ken told me. “We have had some hail, we have had some wind, but overall I think we can make it through because we do need a big corn crop.”
At the Iowa Speedway yesterday, the 
The process separates the corn kernel into its three main components - endosperm, germ and bran. Optimizing the whole kernel allows for the production of a number of food and feed grade co-products as well as another alternate fuel source to power the plant itself.
“This is not specifically an ethanol problem,” said