Economist Surprised by USDA Figures

In Ethanol, Exports, government by Cindy

Some of the numbers in the USDA December World Agricultural Supply and Demand Estimates (WASDE) took American Farm Bureau Federation senior economist Terry Francl by surprise.

AFBF Terry Francl“The most dramatic change in the December WASDE report was the big drop in corn used for ethanol production,” said Francl in an AFBF press release. “I am surprised that corn use for ethanol dropped by that much. Demand for ethanol is down, just like demand for gasoline is down, but I just don’t think the decline is that large. I believe 3.8 billion bushels to 3.9 billion bushels is closer to the mark.”

The WASDE estimates corn used for ethanol production this year at 3.7 billion bushels, down 300 million bushels from the November estimate. Francl explained that a number of ethanol plants are idled due to weak demand, which explains the drop in corn used for ethanol. However, the Renewable Fuel Standards would seem to imply that at least 3.8 billion bushels of corn will be utilized for ethanol production in 2008/09.

He does seem to agree with the estimate for exports, which was lowered 100 million bushels from November to 1.8 billion bushels. “The drop in corn exports is more on target due to the weakening global economy,” Francl said.

The AFBF economist expects a further weakening in corn exports in 2009 due to the economic slowdown.

Disconnect Between Food and Agriculture

In Farming, Media by Cindy

There seems to be an enormous disconnect in places like New York City between food and the farmers who produce it.

nyt editorialTake for example this editorial in the New York Times this week by Nicholas D. Kristof calling on president-elect Obama to appoint a “Secretary for Food” instead of agriculture.

Mr. Kristof says, “A Department of Agriculture made sense 100 years ago when 35 percent of Americans engaged in farming. But today, fewer than 2 percent are farmers. In contrast, 100 percent of Americans eat.”

Did it happen to occur to Mr. Kristof that that means two percent of our population feeds themselves and the other 98 percent – not to mention a good portion of the rest of the world? Nope. For some reason, he doesn’t appear to get that connection. Instead he says that renaming the USDA the “Department of Food” would move us “away from a bankrupt structure of factory farming that squanders energy, exacerbates climate change and makes Americans unhealthy — all while costing taxpayers billions of dollars.”

Then he proceeds to quote from anti-agriculture activist Michael Pollan who says, “We’re subsidizing the least healthy calories in the supermarket — high fructose corn syrup and hydrogenated soy oil, and we’re doing very little for farmers trying to grow real food.”

I guess that means that all the corn and soybean farmers in this country are not growing real food. So why should anyone be concerned that ethanol production is using food for fuel then?

Then Mr. Kristof complains that he gets $588 a year for “not growing crops on timberland I own in Oregon.” He gallantly points out that he forwards that money to charity. More than likely that money comes from some conservation program that is designed to help preserve our natural resources. Again, he seems to think this is a bad thing.

There were some 250 comments on this article in one day before they closed the comments. Sadly, too many of those commenting seemed to agree with his contention that the government, through USDA, supports “factory farms” rather than small family operations and rural towns. He wants to see a “Department of Food” to give “primacy to America’s 300 million eaters.”

What he apparently doesn’t realize is that because there are less farmers they need to produce more and more food to feed those “eaters.” Does he think we should have smaller farms and more of them? Would he like to have his own sustainable, organic farm in New York City to produce his own food?

Despite our best efforts in agriculture, the disconnect remains. The well-fed population of the United States fails to see the connection between the healthy, safe and abundant food supply they enjoy and the hard working farmers who produce it.

Higher Ending Stocks Projected for Corn

In Audio, Ethanol, Exports, Farming, Food vs Fuel, government by Cindy

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.

USDAProjected 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.

Improving the Health of Old Man River

In Environmental, Farming by Cindy

Agricultural and environmental interests are teaming up for the sake of Old Man River.

ms riverMonsanto Company launched a new effort this week to help reduce nutrients and sediments in agricultural runoff by partnering with The Nature Conservancy, Iowa Soybean Association, Delta Wildlife and The National Audubon Society on conservation projects in the Mississippi River Basin.

The partnership aims to offer the agricultural community a comprehensive approach to improving the health of the Mississippi River while at the same time generating best practices that could be used in other major river systems around the world.

Monsanto and its conservation partners, along with grower associations including the National Corn Growers Association and the American Soybean Association also announced that they will be forming a Mississippi River Farm Nutrient Working Group which will involve other agricultural-related interests, government leaders and other interested organizations. Additional information on this group will be announced in spring 2009.

No Connection Between HFCS and Obesity

In HFCS, Research by Cindy

Sweeteners are sweeteners – whether they are from sugar or corn – according to some new nutrition research.

Nutrition JournalA supplement in the December 2008 edition of the American Journal of Clinical Nutrition that reviews the history and development of high fructose corn syrup “finds no scientific support for the hypothesis that high fructose corn syrup is causally linked to obesity in the United States or globally any more or less than other caloric sweeteners.”

A recent symposium brought together scientific leaders on this topic from varying backgrounds – including many who have been critical of high fructose corn syrup. From that symposium, a consensus emerged that HFCS “is in fact indistinguishable from sucrose in its metabolic effects.”

In fact, what they seem to agree on is (get ready for this shocker) …. “The true cause of the obesity crisis is more likely an increase in caloric intake overall.”

So, what they are saying is the cause for obesity in America is not really corn after all – it’s simply that we eat too much! Who would have thought that?

30 Year Challenge for Agriculture

In Farming, General by Cindy

An increasing world population coupled with increasing incomes will pose some major challenges for agriculture over the next three decades, as the world puts greater and greater demands on farmers to meet the world’s food and energy needs.

Farm Foundation SummitFarm Foundation released a new report this week at The Food and Agriculture Policy Summit in Washington, D.C. that outlines those challenges. Entitled “The 30-Year Challenge: Agriculture’s Strategic Role in Feeding and Fueling a Growing World,” the report includes input from a diverse set of agriculture and agribusiness leaders, government agency representatives and academics.

Neil Conklin Farm Foundation“Global population is expected to increase by one-third by 2040. Increasing incomes, particularly in developing countries, may bring changes in dietary preferences and greater demand for agriculture to provide food and energy,” says Farm Foundation President Neilson Conklin. All this will increase pressure on and competition for natural resources at a time when the impacts of climate change on production systems are not yet fully understood, he adds.

“Farm Foundation has a 75-year commitment to objectivity, fostering constructive debate that is essential to sound public policy development in a democracy. It is appropriate that Farm Foundation be the catalyst to spur all stakeholders to begin discussions on the 30-year challenge,” Conklin continues.

Farm Foundation is directing and leading this project with support from the Alliance for Abundant Food and Energy, the American Farm Bureau Federation, the National Corn Growers Association, the National Pork Producers Council and United Egg Producers.

Listen to an interview with Neil about the report here: [audio:]

ADM Bullish on Food and Fuel

In Farming, Food vs Fuel by Cindy

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.

Greg Webb ADMWebb 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: [audio:]

Corn Growers Heard at Bankruptcy Hearing

In Ethanol, Farming by Cindy

A hearing is the place to be heard and corn growers are pleased that they at least had their input during the bankruptcy hearing this week for VeraSun, even if the outcome was not favorable.

VeraSunAs expected, bankruptcy law and the ruling will allow VeraSun to reject any contracts that are economically disadvantageous to VeraSun, including corn growers’ contracts.

National Corn Growers Association (NCGA) Chairman Ron Litterer of Iowa says at least they tried. “It was doubtful that we could influence the courts to require VeraSun to pay the contracted price for our corn,” Litterer said. “We believe we did influence other issues of concern to growers.”

“We will continue to advocate for the interests of all corn suppliers and play a role to help make the best of a bad situation,” said Litterer. “As providers of corn to VeraSun, corn growers want fair payment under fair terms for their corn, as well as a positive conclusion that allows VeraSun to stay viable as a long-term customer for our corn.”

NCGA will continue to monitor the VeraSun situation and keep growers informed.

Disappointed Corn Growers

In Ethanol, State Groups by Cindy

The Indiana Corn Marketing Board is calling for action over the Indy Racing League decision to partner with Brazil for ethanol to fuel the Indy Car Series.

“It is unfortunate that the IRL has chosen to promote imported ethanol at a time when we, as a country, are working hard to lessen our dependence on foreign sources of energy and have an industry that has the capacity to meet all U.S. ethanol needs,” said Mike Shuter, president of the Indiana Corn Marketing Council (ICMC). “The U.S. ethanol industry and U.S. corn farmers have been strong supporters of the IRL – not only promoting the series as it moved towards ethanol but also pumping funds into it.”

Shuter added that the ICMC, which is the state’s corn checkoff organization, will continue working hard to promote domestically-made corn ethanol which supports the creation of jobs and boosts local economies.

“We encourage the citizens of Indiana to make your opinion known to the IRL if you feel this decision was a mistake and not in the best interest of our country, Indiana farmers, and the local economies that benefit from the growing ethanol industry in our state,” said Shuter.

Hoosier Ag Today did an interview
with Shuter, which farm broadcaster Gary Truitt was kind enough to share with Corn Commentary.

Listen to Gary’s interview here: [audio:]

Who is Indy?

In Ethanol, State Groups by Cindy

The Indy Racing League is taking a lot of flack for signing a contract with APEX-Brasil — a trade promotion agency that will be the official ethanol supplier to the series beginning in 2009.

Last week, IRL officials met with the Iowa Corn Growers Association, Indiana Corn Marketing Council and National Corn Growers Association to discuss the arrangement. After the meeting, the IRL issued a statement explaining the deal, noting that the Brazilian Sugarcane Industry Association UNICA “will look to partner with a U.S. company to supply the IndyCar Series with American-produced corn-based ethanol.”

Terry Angstadt, president of the commercial division of the Indy Racing League, provided more explanation. “For the last three years, ethanol has been the official fuel as a result of a sponsorship agreement with the ethanol producers and EPIC, the Ethanol Promotion and Information Council,” he said. “The ethanol producers recently notified the IndyCar Series that it would not be renewing the agreement for 2009 and beyond and EPIC is ceasing operation. No one from any other part of the American-based ethanol community stepped forward with a substantial proposal.”

Now this requires a bit of explanation. First, regarding EPIC “ceasing operation.” The organization is becoming part of the new Growth Energy group announced earlier this month. Growth Energy was started by the same major players who started EPIC almost four years ago – POET, ICM and Fagan – and now they are going in a different direction with the organization.

Also, reports are that several American ethanol producers did come forward to offer their services as a supplier during last week’s meetings but IRL officials are concerned that independent American suppliers would have difficulty matching the resources of APEX-Brasil for promotion and marketing. Still, at least for 2009, the Indy Car Series will be fueled with American ethanol through the Brazilian partnership.