Representatives of agribusiness in St. Louis pitched the importance of the Show Me state and the Bio Belt at the 2009 World Ag Congress Tuesday.
Novus International, the National Corn Growers Association (NCGA), the American Soybean Association (ASA), and the University of Missouri were among those touting Missouri’s unique agribusiness climate and characteristics. NCGA Director of Biotechnology and Economic Analysis Nathan Fields said they were proud to call St. Louis home, which gives them a grassroots perspective.
I talked with Nathan about the World Ag Congress and how the corn growers are working on the missions of sustainability and feeding the world. “We feel that U.S. corn production is a model system for the world,” he said. “We we have the greatest efficiency in production and we think that we have a lot of information that we can impart internationally to promote the technology that we use to increase productivity.”
Yesterday’s press conference with three members of the Obama cabinet about the administration’s commitment to biofuels offered some refreshingly encouraging words for our nation’s agricultural industry.
Probably the best words of praise came from Energy Secretary Steven Chu, who noted that agriculture is one of the nation’s greatest resources for energy. “We have incredible capacity not only to grow the food we need and to have dynamic exports, we can also grow a considerable amount of energy,” said Chu. (Take that, fuel versus foodies!)
Environmental Protection Agency administrator Lisa Jackson also noted the important role agriculture has in supplying the nation’s energy needs. “In the 2007 Energy Independence and Security Act (EISA), Congress recognized the need for a homegrown fuel source,” said Jackson. “Every year, we send billions of dollars overseas, often to unfriendly places. With renewable fuels, we can send those billions to rural and farming communities, people who need help most in these challenging economic times.”
Agriculture Secretary Tom Vilsack is supposed to say nice things about agriculture, but we’ll give him some credit for saying them anyway. It was especially encouraging that he got top billing in yesterday’s press conference, which was really about the release of EPA’s proposed rulemaking for the Renewable Fuels Standard. It indicates that the Obama administration really does recognize the critical role agriculture plays in the biofuels industry, as Vilsack stated in his comments. “This reflects President Obama’s commitment to rural America. It merges and marries together rural economic development with agriculture to create clean jobs and clean opportunity. It is a firm commitment in making this industry an integral part of this new 21st century American economy,” said Vilsack. “It provides additional income opportunities for American farmers and ranchers, jobs for those who live in rural communities and energy security for every single American.”
The Congressional Budget Office report on ethanol and food prices released last week spun both ways for ethanol, depending on the media outlet and which side of the food versus fuel debate your corn is buttered.
For example, the San Francisco Chronicle headline proclaimed “Energy Blamed More than Ethanol For Food Prices.” Others with a similar spin included Midwestern papers like the Des Moines Register and the Grand Island Independent.
Headlines from the Associated Press and Reuters, however, led with a more negative spin. AP headlined “Report: Ethanol Raises Cost of Nutrition Programs.” Unfortunately the report only quantified the effect of higher corn prices on last year’s food price increases, even though it specifically notes that “certain other factors—for example, higher energy costs—had a greater effect on food prices than did the use of ethanol as a motor fuel.” It would be nice to know how much higher gasoline and electricity prices helped to raise the cost of nutrition programs, but CBO was only charged with finding out how much ethanol was to blame.
The report made some important points about the inability to predict ethanol’s future impact on food prices because the forces determining that impact move in opposite directions.” Federal mandates now in place require additional use of ethanol in the future, which would continue to put upward pressure on prices. In contrast, increases in the supply of corn from cultivating more cropland, increasing crop yields, or improving the technology for making ethanol from corn or other feedstocks (raw materials) would tend to lower food prices.
What was interesting about the report was that there was something in it for everyone, with both sides of the food versus fuel debate claiming that it supported them. I guess the government just wanted to be fair to everybody.
The latest World Agricultural Supply and Demand Estimate (WASDE) from USDA is projecting a higher carryout for corn this year due to smaller than expected usage for ethanol and exports.
Projected U.S. feed grain ending stocks for 2008/09 are raised this month with increases for corn, barley, and oats. Corn use is projected lower with increased feed and residual use more than offset by reductions in ethanol use and exports. Ethanol use is projected 300 million bushels lower this month as prospects for blending above federally mandated levels decline. Financial problems for ethanol producers are reducing plant capacity utilization for existing plants and delaying plant openings for those facilities still under construction. Falling gasoline prices have also resulted in high relative prices for ethanol, reducing blender incentives. Despite reductions in expected meat production, corn feed and residual use are raised 50 million bushels as lower ethanol production reduces the availability of distiller grains. Corn exports are projected 100 million bushels lower reflecting strong competition from larger foreign grain supplies and the slow pace of sales to date. Projected ending stocks are raised 350 million bushels. The season-average farm price is projected at $3.65 to $4.35 per bushel, down on both ends of the range from last month’s $4.00 to $4.80 per bushel.
There is no update for corn production from USDA this month, which remains at 12 billion bushels.
The world’s population will grow by 33 percent by the year 2040, but the amount of farmland to feed and fuel that growing demand won’t have to grow by that same one-third… that’s what attendees at the Farm Foundation’s Food and Agriculture Policy Summit in Washington, D.C. heard this week from Greg Webb of Archer Daniels Midland.
Webb from Archer Daniels Midland told the group increasing efficiencies in production agriculture would help meet the growing demands while adding only a disproportional smaller amount of land to the production mix.
“Agriculture’s role is not one of conflict between food or fuel,” Webb said. “It is one that is quite compatible. Producing more food results in more fuel being produced as well.”
Webb says more efficient practices will give farmers, who are already are being pretty efficient compared to just recent history, an even greater opportunity to produce both the food and fuel the world demands, as long policies don’t get in the way.
Listen to an interview with Greg Webb by reporter John Davis with DomesticFuel:
A group of ethanol producers has announced the launch of their new organization, Growth Energy, with the release of a policy brief and an ad campaign to set the record straight on food prices. The campaign comes at a time when corn prices have decreased by more than fifty percent and oil prices have been tumbling, while food prices continue to soar.
“Big Food and their Washington lobbyists have been trying to blame the rising cost of food on American ethanol producers and the cost of corn. Well, now that the price of corn has dropped more than fifty percent since the summer, we ask the Big Food industry to explain to the American people why food prices are still so high,” said Jeff Broin, CEO of POET. “The lies the Big Food lobby has been spreading about clean, green biofuels have finally been exposed as an intellectually dishonest smear campaign. It’s wrong and we’re coming together to ask Big Food to give struggling Americans a break.”
The cost of food has increased at the brisk clip of 7.6 percent in the past year, the worst rate in nearly twenty years, and has continued to increase while the cost of corn and other commodities have fallen in the past four months. The Bureau of Labor Statistics reports that the price of basic foods in the United States is currently rising at twice the rate of inflation and is expected to continue to rise in the future. Milk prices increased by 13.3 percent; cheese by 12.5 percent; eggs by 29.9 percent; and bread by 14.7 percent from March 2007 through March 2008. Big Food is sowing profit growth from these higher prices. Kraft’s revenues increased nearly 20 percent from the year-earlier period and saw net income shoot up in the third quarter to $1.4 billion. Sales at Kellogg’s climbed 9.5 percent and third-quarter net income increased to $342 million, up from $305 million the year earlier.
More and more, the food “versus” fuel debate is being proved for the lie it was. There never was a strong connection between ethanol demand and retail food prices. Here are a few more obituaries, if you will, for this discussion.
“While food processors were willing and able to immediately blame ethanol and rising corn prices for having to increase retail food prices, they won’t be extending the same courtesy by lowering those prices with lower corn and oil prices.”
“… those who blamed biofuels for pushing up prices of major grains made a problematic mistake. The more cautious (and often less noisy) experts - like the Wageningen University’s agrocommodity specialists - were correct, when they said biofuels played a ‘marginal’ role at best.”
The former commissioner of agriculture for the European Union says the food versus fuel controversy is unfair.
“They don’t differentiate between food price and agriculture price and the agriculture price is usually only a small component of the final food product,” Franz Fischler told me during an interview in Austria Friday.
Fischler says that second generation biofuels will be key in meeting long term renewable fuels goals for all countries, but it has to start with first generation ethanol from corn. “That’s why we have to start now,” he added.
Austria has ten biodiesel plants but so far only one ethanol plant. “It seems to me that biodiesel is the most difficult concept as far as sustainability is concerned,” Fischler said, mainly because soybeans and other oilseeds are less economical to grow in that region, compared to corn.
Listen to Fischler’s comments on ethanol here:
On the first day of the IFAJ Congress in Austria, Chuck Zimmerman asked Mr. Fischler what he thought about the Doha Round and if there will ever be any progress made. You might remember that Fischler was very involved in the GATT negotiations once upon a time. Fischler said it is regrettable that a conclusion has not been reached yet. “The negotiations were so advanced that a solution was very close,” Fischler said. “But now I think we must be patient because I don’t see a continuation of the trade talks until a new administration in the US is in charge. Only then I think can we re-launch the round.”
Maybe Texas Gov. Rick Perry is one of those politicians who likes to spend too much on things like haircuts. I can’t otherwise understand his statement in the Wall Street Journal today that corn is “close to $8 per bushel.”
Some of the most respected names in agriculture are teaming up to make the case that the world can produce both food and fuel and do so abundantly and sustainably.
The Alliance for Abundant Food and Energy includes Archer Daniels Midland, DuPont, John Deere, Monsanto, as well as the Renewable Fuels Association, who are all committed to “improving diets and reducing dependence on fossil fuels through agricultural productivity worldwide.”
Recently, critics have tried to frame the debate as an “either/or” decision, making people feel they must choose between food and energy security. The Alliance believes this is a false choice that ignores both the capabilities of agriculture and our nation’s history of using innovation to solve our problems. The Alliance realizes both are possible - and can be accomplished using less land and fewer resources than generally understood.
They point out the important innovations that these companies have already made to improve agricultural productivity, such as “seeds that yield more per acre, tractors that use GPS technology to avoid re-seeding rows, and processing techniques that allow us to make even more from a simple grain of corn. At the same time, these companies have sought to share their advances with farmers through donations and training programs in the U.S. and worldwide.”
The alliance plans to actively promote this message through advertising, lobbying and public relations efforts.
Representatives of agribusiness in St. Louis pitched the importance of the Show Me state and the Bio Belt at the 2009 World Ag Congress Tuesday.
I talked with Nathan about the World Ag Congress and how the corn growers are working on the missions of sustainability and feeding the world. “We feel that U.S. corn production is a model system for the world,” he said. “We we have the greatest efficiency in production and we think that we have a lot of information that we can impart internationally to promote the technology that we use to increase productivity.”
Probably the best words of praise came from Energy Secretary Steven Chu, who noted that agriculture is one of the nation’s greatest resources for energy. “We have incredible capacity not only to grow the food we need and to have dynamic exports, we can also grow a considerable amount of energy,” said Chu. (Take that, fuel versus foodies!)
Environmental Protection Agency administrator Lisa Jackson also noted the important role agriculture has in supplying the nation’s energy needs. “In the 2007 Energy Independence and Security Act (EISA), Congress recognized the need for a homegrown fuel source,” said Jackson. “Every year, we send billions of dollars overseas, often to unfriendly places. With renewable fuels, we can send those billions to rural and farming communities, people who need help most in these challenging economic times.” 
Agriculture Secretary Tom Vilsack is supposed to say nice things about agriculture, but we’ll give him some credit for saying them anyway. It was especially encouraging that he got top billing in yesterday’s press conference, which was really about the release of EPA’s proposed rulemaking for the Renewable Fuels Standard. It indicates that the Obama administration really does recognize the critical role agriculture plays in the biofuels industry, as Vilsack stated in his comments. “This reflects President Obama’s commitment to rural America. It merges and marries together rural economic development with agriculture to create clean jobs and clean opportunity. It is a firm commitment in making this industry an integral part of this new 21st century American economy,” said Vilsack. “It provides additional income opportunities for American farmers and ranchers, jobs for those who live in rural communities and energy security for every single American.”
For example, the 
Projected U.S. feed grain ending stocks for 2008/09 are raised this month with increases for corn, barley, and oats. Corn use is projected lower with increased feed and residual use more than offset by reductions in ethanol use and exports. Ethanol use is projected 300 million bushels lower this month as prospects for blending above federally mandated levels decline. Financial problems for ethanol producers are reducing plant capacity utilization for existing plants and delaying plant openings for those facilities still under construction. Falling gasoline prices have also resulted in high relative prices for ethanol, reducing blender incentives. Despite reductions in expected meat production, corn feed and residual use are raised 50 million bushels as lower ethanol production reduces the availability of distiller grains. Corn exports are projected 100 million bushels lower reflecting strong competition from larger foreign grain supplies and the slow pace of sales to date. Projected ending stocks are raised 350 million bushels. The season-average farm price is projected at $3.65 to $4.35 per bushel, down on both ends of the range from last month’s $4.00 to $4.80 per bushel.
Webb from Archer Daniels Midland told the group increasing efficiencies in production agriculture would help meet the growing demands while adding only a disproportional smaller amount of land to the production mix.
“Big Food and their Washington lobbyists have been trying to blame the rising cost of food on American ethanol producers and the cost of corn. Well, now that the price of corn has dropped more than fifty percent since the summer, we ask the Big Food industry to explain to the American people why food prices are still so high,” said Jeff Broin, CEO of POET. “The lies the Big Food lobby has been spreading about clean, green biofuels have finally been exposed as an intellectually dishonest smear campaign. It’s wrong and we’re coming together to ask Big Food to give struggling Americans a break.”
Fischler says that second generation biofuels will be key in meeting long term renewable fuels goals for all countries, but it has to start with first generation ethanol from corn. “That’s why we have to start now,” he added. 
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