Archive for July, 2010

Now it’s time for milk and dough

From Internet Sources

Minnesota’s 2010 corn crop continues to one for the record books—89 percent of the crop is rated good or excellent by USDA observers, as we begin the last week of July.

“Statewide average precipitation was over one half-inch above normal,” the National Agricultural Statistics Service crop weather report for July 26 states. “Heavy rains on Thursday (7/22) fell across the south, exceeding 3 inches in some areas.  Topsoil moisture supplies were rated 16 percent surplus, up from 15 percent last week.   Statewide 5 days were rated suitable for fieldwork.  Some producers in the central region reported isolated hail damage from recent storms.”

As of Sunday, NASS reported that 11 percent of the crop had reached the stage where the grains are filling in, known as the milk stage—in the past five years Minnesota has averaged ten percent in milk stage by this date. In a typical year, the leading one percent of the crop has reached the further grain filling stage, known as dough, but so far NASS observers have not seen it this year.

Looking at germination, however, shows the crop still out ahead of average progress—85 percent of corn plants are silking now, compared to 67 on average over the past five years at this date.

Red River News Network casts an eye over the whole corn belt and pronounces that from a market standpoint traders are already treating the crop as if its in the bin: “From the trader’s standpoint, the corn crop is made. Ag Management Services says pollination is nearing the 75 percent complete level, and the weather outlook into the early days of August appears to contain few if any threats. In addition, corn development is several days ahead of average in many parts of Iowa, reducing the potential for damage to the crop from an early frost. Now that forecasts extend into August, traders also see little problem for the soybean crop. With soybean crop conditions improving last week, traders foresee a strong possibility of matching last year’s record 44 bushel per acre national average yield.”

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Ethanol to flow from Oswego County plant

Sunoco customers in Central New York could soon be fueling their rides with locally produced ethanol.

The Sunoco Ethanol Facility in Volney is finally pumping out the fuel. It shipped out its first four million gallons of ethanol at the end of June and the plant is also expected to fuel more development in Oswego County….

Oswego County Legislature Chairman Barry Leeman thinks the 60 new jobs represent a boost for Oswego County, which has one of the highest unemployment rates in the state….

The plant could also be a benefit for Central New York’s farms.

Each year, the new plant and its silos are expected to help turn 30 million bushels of corn into 100 million gallons of ethanol. Many people in Oswego County hope this is just the beginning of biofuel productions….

After the ethanol leaves the Volney facility, it’s taken to blending centers throughout the region. Sunoco says the final product then makes its way back to Central New York’s pumps.

Full story
http://www.9wsyr.com/news/local/story/Ethanol-to-flow-from-Oswego-County-plant/7FrPk0L6lEG04W-JjbHuaQ.cspx
Our Take:
I sat next to an upstate New York dairyman on a flight to Minneapolis last week and he told me that the economy and the jobs picture between Syracuse and Albany in rural New York state is “dead.” He was quite discouraged about the state of agriculture in his region.

Upstate New York is going to discover what Minnesota has known for more than a decade—ethanol is the most successful rural economic development engine America has ever seen.

The Volney plant is a case in point, bringing 60 high paying jobs to town, and consuming 30 million bushels of corn annually—the boost to local grain prices will put major money in the pockets of local farmers. And as Minnesota knows, farmers are among the best local spenders—money earned on the farm recirculates on Main Street, in its retail stores, groceries, car and equipment dealerships and banks.

Of course, you don’t get lemonade without the lemons—the Volney plant was originally conceived and much of the project capitalized by local investors. When commodity speculation turned the ethanol market upside down in 2008, those investors paid the price, and oil company Sunoco bought the plant for 10 cents on the dollar of the original investors’ capital.

We see it as a sign of maturity in the biofuels industry that the third largest ethanol producer in the country is also the largest oil refiner (Valero). Sunoco, Chevron and others now have their toe in the pool. Sunoco still had to put major capital into the project to bring it online.

It is our hope that public policy can grow the market for renewable, farm-based energy, and include incentives that encourage farmer participation in ownership. Minnesota has found farmer owned ethanol plants have added great vitality to a dozen communities and the regions that surround them.

We wish this ethanol company success, not only because we like to see other farmers do well, but we also look forward to New York State leaving its post on the fence and joining the ranks of the enthusiastic biofuels supporters.

Ethanol contributes $2.5 B to Minnesota economy in 2009

Impact will grow 24 percent this year

 A new report from Minnesota Department of Agriculture shows ethanol contributed $2.5 billion to the state economy in 2009 and directly supported 6,800 jobs. While the state looks for ways to maintain its current path of economic recovery, ethanol’s economic impact is expected to grow to $3.1 billion this year, a 24 percent increase. Likewise, the industry will add 1,500 jobs this year.

 If not for ethanol and other growing renewable energy sources like wind and solar, Minnesota would have to import all of its energy. Though Minnesota has no oil production within its borders, it will produce an estimated 1.1 billion gallons of the cleaner burning renewable fuel this year. The state consumes roughly one third of that ethanol, thanks to a requirement to blend ten percent ethanol into every gallon of gas. The growing use of E85 fuel by flexible fuel vehicle owners is also increasing ethanol use in Minnesota.

 However, the state produces a surplus of more than 700 million gallons above its own needs, making ethanol a huge benefit to the state’s balance of trade.

 The increase of Minnesota’s ethanol requirement to 20 percent in 2013, and the anticipated allowance of 15 percent ethanol nationwide would further accelerate the economic impact of biofuels here.

 Minnesota Corn Growers Association President DeVonna Zeug says the ethanol industry is an important economic driver for the state. 

 “The ethanol industry is adding value to every bushel of corn we grow right here in our state.  When we’re able to keep more of the value of what we produce – rather than give it up to another state or another country – it’s a huge advantage for Minnesota,” said Zeug.

 Many of the state’s 80,000 farms produce corn, tallying an annual harvest of more than a billion bushels, and putting Minnesota consistently in the top five states for corn production. The increased profitability to corn from ethanol production has allowed many farmers in Minnesota to stay in business and even grow. And this helps the state economy as a whole to weather even the toughest economic adversity.

 The job creation strength of the biofuels industry makes it an indispensable addition to Minnesota. Though the Midwest fared better than much of the nation, it is still down 452,000 jobs, which is a loss of 3.5 percent since the economic downturn, according to Professor Ernie Goss, an economist at Creighton University.

 It is safe to say that no other sector in Minnesota expects a 22 percent job growth rate this year.

 Minnesota Agriculture Commissioner Gene Hugoson says the rebound is good news for the state’s 21 ethanol plants, half of which remain farmer-owned cooperatives.  

 “The ethanol industry’s downturn in 2009 was felt on farms and in our rural communities,” said Hugoson. “This year is looking much better in terms of increased production, economic impact and employment.”      

  MDA’s 2010 Minnesota Ethanol Industry Report can be viewed online at www.mda.state.mn.us/ethanol.

FarmFest 2010: Giving every producer the tools to step up and tell the farming story

Written by Jonathan Eisenthal

From Tuesday through Thursday, August 3-5, hundreds of exhibitors will show their wares and promote their organizations and more than 30,000 visitors will roam the once-a-year avenues at Gilfillan Estates outside Redwood Falls, Minnesota. It’s the largest outdoor farm trade show in the upper midwest, FarmFest.

Minnesota Corn Growers Association will be found at its usual spot, tent 702, to take part in the excitement. The 6,000-member grassroots organization–one of the nation’s largest state commodity groups–has a message that has been part of its mission since it was founded in 1978–every farmer needs to make advocacy for farming a part of his or her job description.

“We are urging everyone this year to ‘Stand Up and Speak Out for Agriculture’–it’s not just something we can leave for the other folks to do–we each have to join in this effort to enlighten people about where their food comes from,” said DeVonna Zeug, a Redwood County farmer and president of Minnesota Corn Growers Association. “I know it doesn’t come naturally to everyone. But MCGA and other groups we are working with are here to help. No one is a more powerful advocate for farming than the farmer. Every person connected to farming needs to spend a few minutes a day, an hour or so a week, connecting to people and telling our story–you can write letters to the editor, respond to letters or articles in the paper, blog about what you do on the farm, share your experiences on Facebook or over Twitter. Some people are better with in-person events–you can volunteer to speak at a school event or talk to people at a county fair. You can help out at an E85 promotion at a local filling station. We’ve reached a critical time for building bridges to the general public. If each of us can’t make communicating part of our farming business plan, we might just as well plan to get out of farming, because political, economic and social forces will end independent family farming as we know it.”

Tent 702, with the help of grower leaders and volunteers from county corn grower groups around the state, will offer plenty to draw in FarmFest visitors.

MCGA will give away two laptop computers in prize drawings–one on Tuesday, the other on Wednesday.

“We got rave reviews for our corn ice cream last year,” said Jenna Kromann, communications assistant for MCGA. “It’s hard to describe, but at first you taste this very sweet, light, vanilla-like flavor and then you taste corn. It’s very good but the only problem last year was that we ran out, so this year we’ll be prepared for the demand. We’ve ordered a whole lot of corn ice cream.”

As always, the FarmFest booth is a great opportunity to re-up your MCGA membership, or join for the first time. Visitors can learn all the benefits of joining the organization–all the things MCGA does for all of Minnesota’s corn producers. Learn about the partnerships MCGA has forged with organizations like MAWRC (Minnesota Agricultural Water Resources Coalition) in order to make research and communications dollars go farther.  One such project located in Willmar measures runoff from farm fields and city storm sewers (guess which contributes more phosphorous to local water courses).

“MCGA and our partners are the advocates standing up and insisting that public policy that affects agriculture has to be based on sound science,” said Zeug. “We stand up so that farming doesn’t just become a convenient target for politicians or groups that want to make points and raise funds by painting a negative and unrealistic picture of what we do.”

And don’t forget that FarmFest is also a great chance to see this year’s political contenders up-close and personal at the FarmFest Forums that are held each day. Minnesota’s governor candidates and congressional hopefuls will appear, take questions and present their views.

And once again, University of Minnesota Extension Service will honor Farm Families of the Year. One from each of the 73 participating counties has been selected, and all have wonderful stories to share that do honor to the farming profession.

E85 use back on the rise in Minnesota

Posted by Paul Tosto on Minnesota Public Radio’s website

Back in February, I asked: Are Minnesotans voting no on E85?

I wrote, “While use of the fuel (85 percent corn-based ethanol and 15 percent gasoline) is rising in government fleets, overall E85 sales fell more than 25 percent from 2008 to 2009 following years of big increases.” Recent data from the state Commerce Department, however, show E85 consumption climbing back toward pre-recession levels. (Click on the chart for a larger view)

In the worst parts of the recession, fuel use, including E85, dropped significantly, and the cost gap narrowed between gasoline and the typically lower priced E85. Those were the chief reasons consumption dropped.

The price gap widened again earlier this year as average regular gasoline prices ran above $2.70 a gallon most of the spring in Minnesota, while E85 averaged $2.20 to $2.26, which explains why the use of E85 is on the upswing again.

I eat my words!

Comments (2)

Bravo, Sir!

Thanks for taking a second look at the numbers. We have been seeing the same trend. Recently, a Litchfield, MN station sold 1,972 gallons of E85 during a 3-hour promotion.

E85 sales are certainly coming back.

Bob Moffitt, Communications Director, Clean Fuel & Vehicle Technologies
American Lung Association in Minnesota

Posted by Bob Moffitt | July 13, 2010 3:17 PM

 Bob, thanks, I think!

I’m a free market guy at heart and still wonder about the benefits of E85 compared to its economic and environmental costs. But the fact is consumption began climbing again after my post and I needed to highlight that. Cheers.

Posted by Paul / MinnEcon | July 14, 2010 9:38 AM

 http://minnesota.publicradio.org/collections/special/columns/minnecon/archive/2010/07/e85-use-back-on-the-rise-in-minnesota.shtml

Our Take:
It’s refreshing to see someone revisit E85 in a balanced way and admit his previous judgment was off base—the writer thought sales data showed consumers dropping E85 in favor of gasoline.

 Where such expressions of opinion tend to become extremely emotional, and pundits become invested in their positions, it is wonderful to see someone in print reconsider and modify his views. Yes, now that the economic storm has passed (for the moment) E85 is once again on a growth curve.

 We do think Mr. Tosto could go a little further and look at the Department of Energy’s statistics on gasoline sales. They tell a different tale. Though over a longer period, the reduction in America’s use of gasoline has been even steeper than the slack in E85 sales.

 Here is the EIA web site:

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A103600001&f=M

 From 1999-2003 Americans were consuming in excess of 60 million gallons of gasoline a day. Even in 2004 through 2006, significant periods of time saw sales in that range. And then the worst economic meltdown since the Great Depression happened. Americans had an epiphany—they could switch to more economical cars and drive less in order to save money they wanted to hold on to, in case the worst happened—pay cuts, job loss, business failures. Over the same period that Tosto perceived people voting against E85 with their pocketbooks, sales for gasoline were also dropping significantly.

 In mid-2009, gasoline use dropped below 50 million gallons per day for the first time since 1983, apparently reflecting not only the ongoing quiet period in economic activity, but also showing our more or less permanent change in attitude towards fuel consumption.

 Compare the latest figures for gasoline sales—in May 2010 America averaged gasoline sales of 46.17 million gallons per day. Compare that to May 2003, at the height of America’s love affair with big vehicles, when you see sales of 66.8 million gallons of gas a day. That’s a 20-plus million gallon per day drop, or a 30 percent drop in usage. 

 We wouldn’t call that America voting against gasoline. We would call it a new awareness of how we use resources, including our money.

Mr. Tosto is right to point out the price sensitivity of E85 sales. For all the somewhat intangible benefits like improved air quality (it’s tangible, but it’s incremental to the point that people can forget to notice what it is like to have nice breathable air in the Twin Cities, thanks to the universal use of E10 and the growing use of E85), it is a beneficial price difference that seals the deal for many E85 customers.

So it’s important to note that we can’t rely on economics alone to change our habits and move over to renewable energy. It is a positive thing that less fuel is being burned, but this has had a negative impact on ethanol right alongside gasoline. And that makes continuing incentives, building more infrastructure, and allowing higher blend rates all part of a comprehensive package that moves Americans into more and more domestically produced, cleaner burning renewable energy.

6-foot-1

by Jonathan Eisenthal

The corn crop in Minnesota averaged 73 inches, or 6-foot-1, as of Sunday, July 18, according to USDA National Agricultural Statistics Service. Almost two-thirds of the crop has reached silking stage, up from 14 percent last week—this continues the trend seen all year of above average progress.

Almost unheard of for this point in July, when heat stress usually hits the crop, 90 percent of Minnesota’s corn has been rated good or excellent (55 percent good, 35 percent excellent) by USDA-NASS observers.

“Crops continued developing ahead of average despite a stormy week ending
on July 18,” states the latest crop weather report from USDA, NASS, Minnesota Field Office. “On Wednesday, powerful thunderstorms moved across southern and central
Minnesota with reports of localized hail, damaging winds, and isolated tornados.  The heaviest rains were reported mostly in northern and eastern sections of the state.  More storms struck Saturday evening ashot, humid air gave way to severe thunderstorms accompanied by strong winds, localized hail and reports of tornados across the northern metro region.”

Four out of five acres has adequate topsoil moisture statewide, but about 15 percent has surplus moisture, according to USDA.

We are now 88 days into this crop, on average (April 23), and Growing Degree Days, the official measure of heat units, is above average in most locations across the state, with the exception fo the West Central Region. But even in places like Browns Valley, Montevideo and Morris, the crops are only a few days behind the average accumulation.

The full USDA-NASS crop weather report can be accessed at http://www.nass.usda.gov/mn

U.S. House said to consider reducing ethanol subsidy

(Bloomberg News Service) — The U.S. House Ways and Means Committee has proposed reducing the tax credit that helps support the ethanol industry by 20 percent to cut spending, according to two people familiar with the matter.

Refiners and blenders would receive 36 cents for every gallon of ethanol blended into gasoline, down from the 45 cents they currently pocket, said the people, who declined to be identified because the proposal hasn’t been made public. The tax credit expires this year and the committee is proposing to extend it a year.

Reducing the credit was a way to compromise with members of the committee who didn’t want to extend the incentives, the people said, and it could be attached to a legislative package for so-called green jobs within the next three weeks. The bill would also extend the 54-cent tariff slapped on Brazilian imports for one year.

“Clearly, the industry has to look at the likelihood that the tax credit isn’t going to be there forever,” said Mark McMinimy, an analyst at Concept Capital Washington Research Group. “That day may be sooner rather than later.”

The one-year extension and reduction would be short of the five years sought in a bill that Senators Charles Grassley, an Iowa Republican, and Kent Conrad, a North Dakota Democrat, introduced in April.
http://www.businessweek.com/news/2010-07-16/u-s-house-said-to-consider-reducing-ethanol-subsidy.html

Our Take:
Petroleum has been a major energy source for a century and yet it is more incentivized than ever— $35 Billion in the U.S., $508 Billion worldwide in 2008. Why should ethanol have to settle for a reduction and then an abrupt end to incentives during its growth phase while the federal government gives Big Oil, an industry apparently in its sunset years, the keys to the U.S. Treasury?

It is the stated energy policy of America to grow the biofuels industry, in order to enhance national and economic security and to promote economic activity and jobs domestically, and to realize an environmental benefit. How does underwriting the oil industry do that?
 
All the ethanol industry is asking for is a level playing field. If you are going to reduce ethanol incentives, reduce oil incentives by the same amount.

Cutting off ethanol incentives? Then end oil incentives too.

Since our economy is so dependent on cheap energy, we think dropping any of these incentives may end up being penny wise and pound foolish, but if politicians want to show themselves as discerning managers of the funds that belong to all of us, perhaps they should follow the advice of Growth Energy and take any reductions of incentives and allow them to flow into the development of more blender pumps and more flexible fuel vehicles.