Corn Commentary

On Feast, Famine and Farm Bills…

Farming on any scale much larger than a backyard garden - even a big garden for that matter - is a business and as such it must turn a profit at the end of the day to survive, if not prosper. It doesn’t matter if you are growing corn or tomatoes. This may seem like clear logic, but in truth most urbanites don’t understand the complexities of how food is grown, processed, packaged, and transported to their door.

In our society we will spend ludicrous sums on money on things like cars, cell phones, or even a cup of trendy coffee, yet we continue to demand access to all the bounty Mother Nature has to offer at discount prices.

It is a modern miracle that the largest consumptive offenders on the planet – Americans – also have the cheapest food supply on terra firma. We spend less than 10% of our disposable income on actual food items compared to other developed nations that spend as much as 15% to 50% of what they earn to put food on the table.

There are numerous factors that make this access to cheap and abundant food possible including a wildly productive agricultural core that produces key crops like wheat, corn, and soybeans. These staple crops provide the very foundation of the “real” food pyramid. These are crops that we have learned to grow fairly predictably on a large scale even when Mother Nature hits us with challenging weather. In the worst-case scenario when weather, insects or disease reduces the size of these crops we have a certain amount in reserve.

However, with a growing emphasis on more fruits and vegetable in our diet, there are also those calling for more and more taxpayers dollars to shift from existing farm programs to encourage and expand farmers markets and produce production. Striking a reasonable balance won’t be easy but it will be critical.

While many produce items have a shelf life of weeks or months at best, corn, soybeans and wheat can be transported more readily and stored for years.  The authors of the original farm bill understood this and chose to put their emphasis and limited budget into programs that help growers of these keystone crops make it through tough times.

Times have changed and the farm bill is antiquated in many ways, but the importance of these key crops has not waned. The farm bill in the U.S. is not a perfect piece of legislation, few are that have become this big and cumbersome.

But today’s “farm bill” is a misnomer since the lion’s share of the expenditures go to social programs like women, infant and children, school lunches, food stamps and even forestry. Yet critics like to cultivate the illusion that it all goes to farmers.

As we continue to analyze and discuss these consumer support programs – yes, it is a consumer program that helps guarantees you the aforementioned cheap food over the long haul – it is important we do a little homework before making wholesale changes.

In the interim keep this in mind; if we stopped growing green beans or carrots tomorrow the world would not end. But if we see big reductions in crops like corn, soybeans or wheat the loss of essential oils, protein and other precious calories would change the food universe as you know it. Likely wouldn’t do our economy or our balance of trade much good either.

The Rest of the World Wants U.S. Ethanol, Why Don’t We?

According to a recent Renewable Fuels Association report, the U.S. became a net ethanol exporter in 2010.  A rise in global demand has many countries, including Brazil and some in the Middle East, looking for a low cost ethanol source which America capably provides.

In light of this, the consequences of the arbitrary 10 percent cap on ethanol currently imposed by the U.S. government are obvious.  Instead of capitalizing on our growers’ ability to continuously meet growing demands for fuel, feed and food, regulations limit ethanol’s growth depriving the public of the economic and security benefits of homegrown fuel.

Government regulations cause the fuel we need to go overseas.  If regulators tore down the blend wall, consumers could benefit immediately from the flow of renewable, economical corn ethanol into the domestic market.  By increasing the level of ethanol allowed in an average tank of gasoline, our country would take a significant step toward its stated goal of energy independence.

U.S. ethanol is an international bargain.  Currently, Iowa ethanol plant-gate prices are 50 cents per gallon lower than Brazilian ethanol prices.  According to RFA analysis, this translates to savings of 11 cents per gallon on E10 ethanol made in the U.S. instead of Brazil.  Global buyers take advantage of these savings.  Shouldn’t we?

Let’s not miss out on the savings and security a domestic energy supply provides.  The U.S. government should learn what the rest of the world already knows; our nation’s corn ethanol provides a viable solution to growing energy demands.

Corn to China is a Big Deal

The day after USDA forecast a three percent increase in corn exports this coming year, China gave that prediction a boost by purchasing 14.5 million bushels, with the promise of more. The 369,000 tons, bought by China’s state-owned Cofco Limited, was the country’s second major purchase in less than a month, according to USDA.

This is a big deal because China is a big user of corn and normally an exporter, not an importer. The last time China was a net importer of corn was 14 years ago when the country’s crop was hit by drought. This actually marks the first time China has bought U.S. corn in nearly a decade.

It’s also a big deal because we have plenty of corn on hand and another record crop expected, so increasing exports is important for farmers to get some decent prices.

The U.S. Grains Council (USGC) thinks it’s a pretty big deal. “If this is true, and we certainly hope it is, we view it as good news,” said Thomas Dorr, president and CEO of USGC. “This may be the beginning of some opportunities to trade more consistently with China.” Dorr says it’s possible as many as 15 U.S. cargoes have been sold to the Chinese.

China has been an increasingly good market for dried distillers grains (DDGs), the by-product of ethanol production, and Dorr says he expects that to continue. “As a matter of fact, there is still very strong demand for DDGs,” said Dorr. China bought 524,000 tons of DDGs in 2009 and so far this year they have already puchased 240,000 metric tons.

Time for Everyone to Become River Advocates

 Our extensive water transportation system in the United States may very well be one of our greatest national economic and strategic assets. It is definitely our most unappreciated means of moving goods because the vast majority of the population doesn’t see river transport in action, smell it, or risk getting run over by it.

 That’s also the downside. People will support road projects all day because of our personal engagement with the asphalt and concrete, but ignore our most efficient and environmentally safe means of moving critical goods from coal to corn to construction materials.

 So it is concerning that a critical part of our nation’s transportation infrastructure, the locks and dams along the Illinois River and the Upper Mississippi River, are deteriorating and falling behind technologically after 80 years of stalwart contributions.

 Granted, this oversight may be understandable given the public and government’s focus on political issues from war to health care and economic issues that don’t need any explanation, but the consequence for this lack of vision may carry a big price tag in years ahead.

 The country’s inland navigation system plays a critical role in the nation’s economy, moving more than a billion tons of domestic commerce valued at more than $300 billion per year.  More than one billion bushels of grain (about 60 percent of all grain exports) move to export markets via the inland waterways each year. 

Growing agricultural productivity in the U.S. and growing populations and buying power overseas provide some clues to the critical importance of addressing this issue. Population is expected to grow by 2.5 billion more people by 2050 to more than 9 billion people and many of those hungry eyes will be looking to the U.S. to keep their pantries and their stomachs full.

There are also significant environmental benefits to the inland waterway system.   The backwaters created by the lock and dam system support more than 40 percent of the migratory water fowl and fish breeding grounds and are home to more than 500 miles of wildlife refuge.  In addition, more than $1 billion are generated each year in recreational use – fishing, hunting and tourism.

So if the opportunity arise to tell your local, state or federal elected officials they need to get active now on updating our water transportation system it will be time well spent.

Working On International Trade

The U.S. Grains Council is holding its 7th Annual International Marketing Conference and 50th Annual Membership Meeting in Mexico. One of the main purposes of this meeting is for the organization to create a new working plan for the development of U.S. grain exports.

Participating in the conference is NCGA CEO, Rick Tolman, seen here addressing one of the meetings. NCGA is one of the founding members of the U.S. Grains Council.

Rick, who worked for USGC for many years, says that NCGA considers the Grains Council their international trade partner. The two organizations have a very strong working relationship. He says one of the things he’s really happy to hear discussed here at this meeting is how well exports of DDGS have been due to the efforts of the Grains Council. That’s good news for corn growers for whom the production of ethanol is so important right now. He says that the Grains Council is looking at other value added products they can promote for export too.

I spoke with Rick in between meetings and you can listen to the interview here:

USDA Calls 2009 Corn Crop a Record

cornThere may still be corn left standing in the snow, but USDA says the 2009 corn crop was a record setter.

In today’s crop production summary report, USDA projects U.S. corn production at a record 13.2 billion bushels, up from 12.9 billion bushels projected in USDA’s December forecast and 1 percent above the previous record of 13.0 billion bushels set in 2007. The corn yield is estimated at a record 165.2 bushels per acre in 2009, 2.3 bushels higher than the December forecast and 4.9 bushels above the previous record of 160.3 bushels per acre set in 2004.

Rebecca Fecitt, U.S. Grains Council director of biotechnology programs, said the continued utilization of scientifically proven biotechnology applications provided by life science companies will help to increase corn yields, solidifying the need to continue developing markets for U.S. coarse grains.

“We hope to see this upward trend in yields for U.S. corn continue. As science becomes even more sophisticated, it will help increase and maintain our yields. This will be instrumental in feeding the world’s forecasted 9.1 billion people by 2050,” said Fecitt. “The growing population, especially in developing countries, will demand more meat, milk and eggs as incomes continue to increase. We have to maintain our biotechnology education efforts in order to ensure that grain derived from biotechnology is accepted around the world.”

The Renewable Fuels Association (RFA) says this proves the amazing productivity of the American farmer. “The unparalleled productivity of America’s farmers continues to amaze even the most skeptical of critics,” said RFA president Bob Dinneen. “Despite unfavorable weather conditions from start to finish, farmers produced considerably more corn than the food, feed, and fuel markets are demanding. Such gains in productivity undermine any claims that U.S. biofuel production will require new lands in other nations to come into production. There can be no question that American farmers have both the capability and the can-do attitude to feed the world while simultaneously helping reduce our nation’s reliance on imported oil.”

American farmers should be commended for this accomplishment.

Corn Mission Summary

U.S. Grains Council Corn Mission to Morocco, Egypt and Jordan has been immortalized in a 17 minute slide presentation by Chuck Zimmerman of ZimmComm New Media who documented the mission in photos and audio:

U.S. Grains Council - 2009 Corn Mission from Chuck Zimmerman on Vimeo.

Corn Mission Accomplished

The U.S. Grains Council Corn Mission team to Morocco, Egypt and Jordan has concluded and the group is back safe and sound on American soil.

Chuck Zimmerman reports on some final thoughts from the mission:

A consistent theme was the growth potential in these markets. That’s why the USGC has people on the ground working to develop new business opportunities for American farmers. After our team’s final dinner I spoke with them as a group to get their final thoughts on what they’d like farmers back home to know about their experience. We just went around the table starting with the corn grower members. Here are some of their final thoughts:

  • The main thing is the relationship the USGC staff has with people in all these countries. They appreciate what the USGC does.
  • I got to see what the USGC does on a personal level. These ddgs programs are working well. I hope they’ll buy more.
  • I sure learned a lot about the legwork that goes on on the ground here for these guys. There’s still some work to be done.
  • We spent our time well and did something that will benefit everyone back home. The USGC work has been an important part of keeping our exports going.
  • I think the potential for increased sales is there. The network is in place and working well.
  • Demand looks strong and will continue for a long time to come.

Shannon Schaffer, the USGC staff representative on our trip added these thoughts:

  • These guys worked really hard on this trip. Lots of time spent on the road and with the customers we service. They served as ambassadors for the USGC and corn growers specifically.

You can listen to Chuck’s final interview with the Corn Mission Team below:

Read all about the trip and see all the photos on Agwired and/or USGC’s The Grain Board.

Corn Grower in Jordan

Missouri corn grower Jim Stuever is one of the farmers taking part in the U.S. Grains Council Corn Mission, which is now completing the final leg of the journey in Amman, Jordan. The first two stops were Morocco and Egypt.

Jim, pictured here listening to a presentation by USDA Ag Specialist Mohamed Kraishy, says he has seen a very diverse set of conditions from country to country as they have traveled with different market development efforts. From what he has been able to witness, Jim believes the Grains Council is helping to reinforce and increase foreign markets for American corn and corn by-products.

You can listen to Chuck Zimmerman’s interview with Jim here:

See and hear much more about the Corn Mission on Agwired and on the USGC blog The Grain Board.

Corn Grower Comments from Egypt

As the U.S. Grains Council Corn Mission team moves on from Egypt to Jordan today, we get a chance to hear from Darren Armstrong, a corn grower from North Carolina who is on the trip. Chuck Zimmerman of Agwired interviewed Darren to get his thoughts about what the team saw in Egypt.

Darren was impressed with the potential he saw in Egypt for U.S. corn exports and thought the feedlots they visited were well taken care of and are becoming more efficient. He was also glad to see how well DDGs have been accepted by Egyptian livestock producers. You have to see the photos of the water buffalo feedlot and dairies the group visited, which can be viewed here. We don’t have very many water buffalo farms back here at home!

You can listen to Chuck’s interview with Darren here:

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