Corn Commentary

European Biotech Resistance

It was pretty evident at last week’s World Food Prize symposium in Des Moines that European nations remain the most resistant to biotech crops. But some farmers are bucking the system.

Oliver Ransmann of Germany participated in a Truth about Trade and Technology farmer roundtable that included over 20 producers from nearly as many countries discussing the benefits and challenges of biotechnology in their parts of the world. I had a very interesting conversation with him about the lack of acceptance of biotech in his country and Europe in general. He just started using Monsanto’s corn borer resistant genetics two years ago on his 400 ha farm that grows mainly corn and rye to generate biogas. He talked about the stringent government regulations on biotech crops and the general distrust of biotech by both farmers and the general public.

He told me that farmers who choose to grow biotech crops in Germany are “branded” in a way and subject to vandalism. “This year my ground was damaged by activists - we had iron sticks in the fields and spoons and knives in the grain,” he told me. “We can’t understand why people are doing it and it’s very dangerous.”

So why does he still choose to grow biotech crops on his farm? “If I’m not using Bt maize, I have 30-40 percent less productivity and I can’t afford it,” he said. He understands that biotech varieties offer environmental benefits by allowing farmers to use less chemicals and to produce more on less land, but he says that message is being ignored in Europe.

Listen to an interview with Oliver here:

UN Unaware Corn Prices are Falling

On Tuesday, the United Nations Food and Agriculture Organization called for a review of “current policies supporting, subsidizing and mandating biofuel production and use” because demand for biofuels, such as ethanol or biodiesel, was leading to “continued upward pressure” on the price of agricultural commodities.

FAOHowever, commodity prices are falling - and rapidly. Right along with the stock market, corn futures dropped Monday more than 6% to the lowest level in more than 10 months, and the decline continued on Tuesday with corn for December delivery closing at $4.17.

As the old saying goes - the best cure for high prices is high prices - meaning that, basically, what goes up must come down. Corn is getting back down to year ago levels now after hitting around $8 a bushel earlier this year.

However, the new FAO report “The State of Food and Agriculture 2008″ was probably written back when commodity prices were higher, I guess on the assumption that they would just continue to rise.

The FAO report says “The emergence of biofuels as a new and significant source of demand for some agricultural commodities … contributes to higher prices for agricultural commodities in general, and for the resources used to produce them.”

Oddly enough, the report says nothing about the impact of higher biofuel production on oil prices - which are also much lower now then they were earlier this year.

A Look at China’s Corn Crop

Representatives of the U.S. Grains Council recently returned from their China Corn Tour, which is conducted every year to try and get a handle on production, yields and demand, since there is no source of reliable corn crop estimates from the Chinese government. The tour consisted of four groups of agriculturists evaluating nearly 300 cornfields.

Charles Ring of the Texas Corn Producers Board was with the group that toured corn fields in the Northeastern provinces of Heilonjiang and Jilin. He is also the team leader of the Council’s Asia Advisory Team and is pictured here with a Chinese farming family. “The farmers in China are very efficient with what they have,” observed Ring. “They don’t waste anything and family is the central point of their work.”

What the groups were able to determine on their tours was that higher corn yields are expected in China for 2008 compared to 2007 resulting in a crop of 153.54 million metric tons - or about 6 billion bushels. According to Cary Sifferath, U.S. Grains Council senior director in China, the national average yield for all provinces is 5.28 tons per hectare (84 bushels per acre) with Jilin province showing the highest yield the tour saw in terms of production at 111 bushels per acre.

Despite the improved yield numbers in 2008, there seems to be little sign that China will begin exporting corn anytime soon as the government has been trying to control food inflation. “The government has virtually shut down exports of corn, wheat and rice. Other than a few sales trying to go through, there are no real exports going on at all,” Sifferath said. He also said feed demand in China is increasing with more corn going into the country’s swine industry.

Producing Food and Fuel to Fight Poverty

This week’s summit on the Millennium Development Goals of the United Nations seemed to focus precious little time on how agriculture can help end global poverty and hunger. In fact, it was sad to see that the whole summit seemed to focus more on problems than solutions.

However, a pre-summit private industry forum did offer some constructive suggestions, and one of them is biofuels production. The CEO of South Dakota-based POET, the world’s largest ethanol producer, was one of two presenters at a roundtable on energy and biofuels at the UN on Wednesday. Jeff Broin made a compelling argument for ethanol being “one of the greatest opportunities our world has seen in decades” mainly because of the great productivity possible in agriculture. Here’s just a portion of his comments - you can read the rest on the POET blog, on Rhapsody in Green.

With a billion acres of idled cropland across the globe — and the price of agricultural commodities above the cost of production for the first time in decades -there is an unbelievable opportunity for underdeveloped countries to simultaneously lift people out of poverty and solve their crippling addiction to energy imports.

How? Given all the advancement in agriculture, including new seeds, more durable crops, and smarter farming techniques, people today in places as far apart as Sioux Falls and South Africa can grow more sustainable crops than ever before. For example, in the 1940s, the average American farmer produced about 40 bushels of corn per acre; today it’s 140. The result is an agriculture industry that can meet the growing demand for food and biofuels — and help nations once left out of the agriculture industry take care of their food needs, raise people out of poverty, and develop a profitable, self-sustaining farming industry.

And the good news is that this development doesn’t have to come at the expense of the environment. The billion acres of idled crop land guarantees that new farm land need not come from rainforests or other sensitive areas. And thanks to the work of scientists, farming today relies much less on pesticides and much more on new seeds and smarter agricultural techniques.

Is anybody listening?

Former EU Commissioner on Ethanol and Trade Talks

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.”

Listen to Fischler’s comments on trade here:

Journalists in the Corn

Some 260 agricultural journalists from all over the world are on an annual congress this week that goes to a different country every year. This year it is Austria and Slovenia.

One of the excursions in Austria was to a biomass facility in the southern part of the country where nearly all of the town of Gussing has locally generated energy. Biofuels are not a major part of the renewable energy in the country - just one ethanol plant and ten biodiesel plants total. More vehicles run on diesel, but while they grow lots of corn they have to import oilseeds for biodiesel feedstock, so it is pretty expensive right now.

It is always interesting to get perspectives on agriculture from other countries. There was a huge corn field across from the biomass facility we were visiting and many of the journalists were more fascinated by the corn than the piles of wood chips that were being used to generate local energy. Some of the countries represented here grow very little, if any, corn - countries like Japan and Finland, for example. Biofuels are a big topic of discussion and the people that I talked to were very interested in our work here in the United States to start making ethanol from corn stover.

If you are interested in seeing more about the International Federation of Agricultural Journalists congress, check out AgWired. We leave Austria today for Slovenia and will be visiting another biomass facility, as well as a hog operation and a dairy farm.

Surprise! OPEC Hates Biofuels

Is it a good or bad thing that OPEC (the cartel of Oil and Petroleum Exporting Countries) hates biofuels?

On July 6, OPEC president Chakib Khelil of Algeria was quoted saying that “the intrusion of bioethanol on the market” was responsible for 40 percent of the incrrease in oil prices. The weak U.S. dollar and “geopolitical worries” were responsible for the other 60 percent.

Now, in its World Oil Outlook, OPEC is concerned about “moves in Europe and the United States to cut oil dependence and promote alternatives,” according to a Reuters story.

“Without the confidence that additional demand for oil will emerge, and without reliable market signals, the incentive to invest can be affected,” OPEC Secretary General Abdullah al-Badri wrote in the report. “Just like anyone else, oil producers do not want to invest in a product that will not be used.”

Well, perhaps energy independence and variety in energy sources are a little more important than OPEC’s bottom line and the tendency of some OPEC oil barons to live a little high on the hog.

What World Bank Report Says - and Doesn’t Say

The World Bank report released earlier this month has gotten quite a bit of media attention lately, especially regarding its concern about biofuels production.

During a press conference with President Bush Tuesday, a reporter said, “The World Bank says about 85 percent of the increase in corn price since 2002 is due to biofuel — increased demand for biofuels.”

Near as I can tell, the World Bank report does not say that. What it does say is, “Only a relatively small share of the increase in food production prices (around 15%) is due directly to higher energy and fertilizer costs.” It does not attribute a percentage to biofuels production.

Robert ZoellickWhat it does say is, “Almost all of the increase in global maize production from 2004 to 2007 (the period when grain prices rose sharply) went for biofuels production in the U.S., while existing stocks were depleted by an increase in global consumption for other uses.” What that means is that, as Agriculture Secretary Ed Schafer told farm broadcasters Tuesday, “Only about 25 percent of the corn crop goes into ethanol today and we have been able to stay ahead of that by yield increases.” In other words, our yield increases in the United States have offset the increased demand for corn to make ethanol.

It’s also critical to note that in the World Bank report graph showing expected world food price percentage increases for 2008 compared to 2004 - the biggest increases are in wheat (119%) and rice (101%) - not corn. Rice seems to be a major focus of the world food crisis, yet there appears to be no direct connection between the price of rice and biofuels production.

The World Bank does say that increased bio-fuel production has contributed to the rise in food prices. No one denies that. No doubt that increased corn prices have had an effect on increasing food prices. However, no one seems to know exactly how much. It is nearly impossible to sort out the impact of so many different factors coming to bear on food prices.

UN Food CrisisIn announcing a food crisis task force on Tuesday, United Nations Secretary-General Ban Ki-moon blamed the escalating prices on a range of factors — high oil prices, growing demand, bad trade policies, bad weather, panic buying and speculation, as well as, “the new craze of biofuels derived from food products.”

“In addition to increasing food prices, we see at the same time farmers in developing countries planting less, producing less, due to the escalating cost of fertilizer and energy,” he said. “We must make every effort to support those farmers so that in the coming year we do not see even more severe food shortages.”

That is key to the whole food crisis right there. Supporting farmers in other countries so they can produce their own food. President Bush noted in his press conference today that the US is “deeply concerned about people who don’t have food abroad” and will continue to be generous in food donations. He also suggested a “creative policy - is if we would buy food from local farmers as a way to help deal with scarcity, but also as a way to put in place an infrastructure so that nations can be self-sustaining and self-supporting.”

Response to Saudi Criticism of Ethanol

During an appearance in Paris last week, Minister Ali bin Ibrahim Al-Naimi said, “Let’s be realistic, ethanol and biofuels will not contribute to the protection of the global environment by reducing (carbon dioxide) emissions, they will not increase energy security, nor will they reduce dependency on fossil fuels to any appreciable degree.”

“Their cultivation eats into the human food supply, reduces the absorption of carbon dioxide as forests are cut down, has not improved the security of energy supply and has not reduced petrol prices,” he added. Biofuels also enjoy “financial favoritism” from governments.

Renewable Fuels Association president Bob Dinneen justifiably jumped on those remarks and fired off a letter to the minister.

“For the Saudi Oil Minister to assert that biofuels are not an effective energy alternative is no different from the wolf complaining that Little Red Riding Hood was interrupting his dinner plans,” Dinneen wrote. “As a leader of a country that opposes strict limits on carbon emissions and favors continued expansion of petroleum production, it is not surprising that you express opposition to the development of biofuels.”

“What is also galling about your statement is the claim that biofuels negatively impact the ‘food market.’ The evidence demonstrates that the number one negative impact on the food market is the high price of your primary export – oil,” Dinneen continues. “One hundred dollar per barrel oil has driven up the cost of everything from fertilizer to diesel oil used to transport food, to plastics used in food packaging.”

Read Dinneen’s full letter here.

Corn Growers Can Help US Get Off Oil

President Bush had a pretty simple message Wednesday at the Washington International Renewable Energy Conference 2008 (WIREC).

“America has got to change its habits. We’ve got to get off oil.”

No kidding. About the time he was making that statement, crude oil on the New York mercantile exchange jumped nearly $4 on falling oil inventories, trading over $104 a barrel and setting a new all-time record. The expectation is that gas prices will reach $4 a gallon by Memorial Day now.

Bush renewed his support for ethanol produced by the nation’s farmers to help us change our habits and get off that high-priced oil.

“The vast majority of that ethanol is coming from corn, and that’s good,” he said. “That’s good if you’re a corn-grower. And it’s good if you’re worried about national security. I’d rather have our corn farmers growing energy than relying upon some nation overseas that may not like us. That’s how I view it.”

He did express concerns about corn ethanol, however, and stressed the need for cellulosic technology.

“The best thing to do is not to retreat from our commitment to alternative fuels, but to spend research and development money on alternatives to ethanol made from other materials — for example, cellulosic ethanol holds a lot of promise. I’m sure there are people in the industry here that will tell you how far the industry has come in a very quick period of time.”

As to changing habits, Bush noted, “I probably didn’t help today when I rode over in a 20-car motorcade.” Some things may never change!

Read the president’s remarks here.

Page 5 of 6« First...23456