Corn Commentary

Corn Cob Harvester

Vermeer Corn Cob HarvesterThe new Vermeer corn cob harvester announced this week by the company was on display earlier this month at the cob harvesting event sponsored by POET at project LIBERTY in Iowa.

Vermeer says the CCX770 Cob Harvester new wagon-style cob collection system “will revolutionize corn harvesting by enabling farmers to harvest corn and cobs simultaneously.”

The harvester is towed immediately behind select corn harvesting combines to collect and unload the cobs. While the main idea here is to harvest the cobs for cellulosic ethanol production, the company points out that there are many other uses for corn cobs, such as livestock feed supplement for mixed
rations, livestock and pet animal bedding, blending cobs with coal to co-generate electricity, gasification to create several types of energy for industrial processes and other industrial applications including
construction materials, abrasives and absorbents.

Secretary Calls Attack on Ethanol Wrong

Ed SchaferSpeaking to members of the media after a speech at the Cellulosic Ethanol Summit Wednesday, Secretary of Agriculture Schafer said the group that held a press conference yesterday calling for an end to ethanol subsidies “stood up there with no credibility whatsoever,” when they claimed that it will take 18-24 months for the lower commodity prices to bring food prices back down.

“I just think that they are totally off base,” Schafer said. “They are trying to justify the increased cost and increased profits that they’re making at the expense of another industry and that’s just not appropriate.”

Schafer is especially concerned that the group is working against important public policy for energy independence. “Why would be they be against energy independence?” he asked. “They’re working against economic activity. Why would they be against economic activity?”

“They’re trying to justify their corporate policy in increasing costs to the consumer by blaming it on somebody else – that’s just simply wrong.”

Yes it is.

Listen to my question and Schafer’s answer here:

Attack on Corn Ethanol

Now that gas prices are lower and corn prices are down, everyone wants to know why food prices are still higher than they were a year ago. But, the companies and organizations most responsible for the price of food went on the attack again today blaming ethanol, specifically corn ethanol, for the problem.

Calling ethanol the “30 year old still living in the parents’ house,” the “Food Before Fuel” group called for an end to all ethanol subsidies on what they called the 30th anniversary of government incentives to help development of the industry. The focus was totally on corn ethanol, without even a mention of moving into next generation fuels. The group took a few questions from the room, but the phone system must not have been working and no questions were taken from the phone.

Here’s what I wanted to ask National Turkey Federation president Joel Brandenberg, who was the main speaker on behalf of the organization: What if all the restaurants and grocery stores in the country were owned by the beef producers? How would the turkey industry compete? What incentive would they have to sell turkey? That is the situation the ethanol industry has been facing for the past 30 years (even though at least the first 20 shouldn’t count). How long do you think it would take to build up the turkey industry from scratch, teach people how to cook it, get farmers to breed and produce the birds, get processing plants in place, get federal regulations for turkey inspections, etc. You get the picture. This industry has been built literally from the ground up in less than 30 years.

FPTAnd don’t get me started on the food price issue. They said it will take “18-24 months, assuming no future spike in corn price, to work through the damage that was done this summer,” said Brandenberg. Yet these were the same people who promised that if Texas were granted a waiver of the Renewable Fuels Standard that food prices would drop immediately.

The group claims that the general public agrees with them. Sure, if you tell them that the production of ethanol caused by government policies is driving up the cost of their food prices – of course they are going to agree with you. Problem is, that’s not true and the fact that they are saying the drop in corn prices will take TWO YEARS to work through the system while the increase in corn prices had an immediate affect on food prices proves that it’s not true.

Needless to say, the corn and ethanol industries immediately struck back after the press conference today. “These same ethanol critics are the ones who virtually promised to reduce food prices immediately, and have failed to do so, even though corn prices and energy prices are down by more than half in the last few weeks,” National Corn Growers Association president Bob Dickey said.

The newly-formed ethanol organization Growth Energy held a press conference after the food industry event, calling on them to “come clean about the misinformation that it has been spreading” noting that even though the Grocery Manufacturers Association was not out front in the media event, they are still the “ones that are funding most of the misinformation campaign that we are trying to work on.”

Growth Energy launched a countdown clock this week to track the hours and days elapsed since the group called on GMA and its members to lower prices for consumers at the grocery store in line with drop in the cost of corn and oil, which have decreased significantly. At a press conference last week, Growth Energy challenged GMA to either lower food prices or admit to the fundamentally flawed argument it has been making about biofuels.

I hope to see Congress have a hearing on this issue and pull in the food manufacturers like they pulled in the oil companies to at least rake them over the coals a bit for making big profits at the expense of the consumer and then blaming it on someone else. At least they aren’t lining up for a bail-out – yet.

Defining Sustainability

Rick TolmanOne of the buzz words for agriculture in 2008 has been sustainability and that was one topic being discussed by National Corn Growers Association officials at the National Association of Farm Broadcasting annual meeting last week.

CEO Rick Tolman says NCGA is part of a group called the “Field to Market” Keystone initiative to look at sustainable agriculture. “Basically what we decided is that to be sustainable is to be doing more, being more productive, with the same amount of resources,” Rick said. The Keystone group, which includes agriculture, environmental and food companies and organizations, just released a draft Environmental Resource Indicator Report in September.

Sustainability is also a major issue in the ethanol industry, especially when it comes to land use, but Rick says the reality is that corn farmers continue to be more productive.

Listen to my interview with Rick here:

MO Corn Growers Fighting Back

Corn is selling under the cost of production, yet the price at the grocery store remains the same and food processors are continuing to blame ethanol producers for high food prices. Corn growers in Missouri are fighting back to get the truth out to consumers.

MCGAMissouri Corn Merchandising Council chairman Keith Witt of Warrenton says, “Judging by the record profits and smaller packaging, the motive of big food companies is crystal clear. Their focus is on their bottom line – at the expense of farmers and consumers.”

And that bottomline looks pretty good right now. This quarter alone, Kraft boasted a net income of $1.4 billion – more than double last year’s results. Sales at Kellogg’s climbed 9.5 percent and third-quarter net income increased from $305 million last year to $342 million this year.

“Consumers deserve the truth and America’s farmers deserve an apology,” Witt concluded.

To that end, Missouri Corn has launched a series of radio ads to help educate consumers on the “sticky pricing” in today’s food industry. The spots question how grain prices have dropped, yet food prices remain the same, therefore eliminating the blame ethanol has unfairly been given.

Farm Broadcasters Interview Corn Growers

NCGA at NAFBThe National Association of Farm Broadcasting annual meeting each year in Kansas City includes an intense six hour “Trade Talk” where over 100 farm broadcasters have the opportunity to meet and interview representatives from over 100 ag organizations and companies. With all the issues surrounding corn this year, the National Corn Growers Association booth was busy the entire time fielding questions from reporters.

NCGA at NAFBNCGA president Bob Dickey of Laurel, Nebraska and first vice president Darrin Ihnen of Hurley, SD are seen here being interviewed at the NCGA booth. Among the topics they were discussing – corn price volatility, ethanol, sustainability, food versus fuel, the economy, and the upcoming new administration. The NCGA officials were interviewed by 30-40 reporters during the event – just about as many as you can do in a six hour period!

I have personally participated in NAFB’s Trade Talk since it’s inception some 15 years or so ago (getting too old to remember!) and I can tell you that it is probably the single best event of the year for both the interviewers and the interviewees. The members of NAFB represent both individual stations and radio networks across the country and reach an untold audience of farmers and ranchers, as well as rural lifestyle and even urban consumers in some cases. It is a great way for organizations like NCGA to get information out to a wide audience in a relatively short time.

Academic Smart About Ethanol

As the director of Iowa State University’s Bioeconomy Institute, Dr. Robert C. Brown has all the right credentials when it comes to discussing the impacts of increased ethanol production on food prices and land use. He tackled both these debates in yesterday’s Des Moines Register.

On food prices:

The starvation hypothesis is a popular one, but it has been easy to disprove. There is no correlation between world hunger and the amount of U.S. corn available to export. As recent corn-price declines have indicated, there is not even a correlation between the price of food in the supermarket and the price of corn.

On land use:

There is no scientific evidence indicating that deforestation is driven by biofuels production. Whereas the world has lost 500 million acres of rain forest in the past 10 years, the U.S. biofuels industry has diverted less than 20 million acres to ethanol production. Something else is responsible for the epidemic of deforestation.

On the benefits of ethanol:

The solution to our loss of rain forests and the resulting emission of greenhouse gases is not to shut down the U.S. biofuels industry, which has played an important role in reducing our dependence on imported petroleum and improving rural economies. The solution is to expand agriculture research and outreach in those parts of the world struggling with loss of farmland due to soil degradation.

Land Use Impact Claims Expertly Challenged

The Renewable Fuels Association today provided a significant amount of firepower to those who think we need to proceed with great caution when trying to track indirect land use impacts caused by U.S. ethanol production. In its new research paper, the organization made several things clear:
  • Growth in ethanol production has not significantly driven land use changes
  • Increased production reduces the amount of land needed for agriculture
  • Agricultural land use can expand without jeopardizing forest or other sensitive lands
  • Models used to predict future agricultural land use changes have limitations
  • Ethanol feed coproducts mitigate land use change
  • U.S. corn and soybean exports remain strong while biofuels production grows

New Ethanol Group Takes on Food Companies

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.

Growth Energy“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.

Read Growth Energy’s policy brief here.

Corn Prices Expected to Stay Low

The honeymoon of high commodity prices looks to be over for the moment, according to Terry Francl, senior economist with the American Farm Bureau Federation.

He says that corn and soybean farmers will likely have to wait until the first of the new year for any rally in prices,

AFBFThe latest USDA World Agricultural Supply and Demand Estimates (WASDE) projects the 2008/2009 season average farm price for corn at $4.00 per bushel to $4.80 per bushel, compared to $4.25 per bushel to $5.25 per bushel in October. “This decline has been driven by the decline in oil prices and concerns about the financial and equity markets,” Francl said.

“Crude oil prices will continue to be a critical factor impacting both corn and soybean prices,” Francl said. “Consequently, the post-harvest seasonal price rally may be somewhat moderate this year. However, as the new year approaches, more competitive bidding for 2009 acreage is expected to boost crop prices.”

The AFBF economist also paints a subdued outlook for the ethanol market in the months ahead. The WASDE November report pegs corn used for ethanol production at 4 billion bushels in 2008/2009. “Although an increasing renewable fuel standard will bolster demand, ethanol plants are going to continue to struggle until crude oil and gasoline prices recover.”

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