US Agriculture Secretary Vilsack visits Minnesota; defends ethanol subsidies

By Steve Karnowski

….Some in Congress and other critics of the ethanol industry have called for ending the main federal subsidy for corn-based ethanol, the 45 cent per gallon “blender’s credit,” which expires at the end of the year and goes to fuel companies that blend ethanol into gasoline. They argue that the country can’t afford it, and that the industry doesn’t need it because the federal Renewable Fuels Standard already ensures demand for ethanol. And they also contend corn ethanol drives up food prices, an idea Vilsack disputed.

Vilsack said corn ethanol subsidies are still important while the country invests in developing advanced biofuels including cellulosic ethanol, which can be made from biomass such as corn stalks, perennial grasses and waste wood. He listed several Agriculture Department programs that are funding such work, but cost hurdles and a shortage of investment capital have impeded large-scale production of cellulosic ethanol so far.

The secretary paid tribute to Minnesota’s and CHS’ efforts to promote biofuels. Dayton pointed out that Minnesota was the first state to mandate that gasoline contain 10 percent ethanol.

CHS says Cenex is the country’s largest retailer of the high-ethanol blend E85 and one of the leading operators of “blender pumps,” which dispense blends ranging from 10 percent ethanol to 85 percent ethanol. E85 is sold at 238 Cenex stations, and the chain has about 114 blender pumps, said Ann Mann, spokeswoman for CHS’ energy group.

Vilsack highlighted the Agriculture Department’s announcement earlier this month of financial incentives for fuel station owners to install blender pumps, also known as flexible-fuel pumps, which can cost them around $100,000. He noted the Obama administration’s goals of reducing oil imports and of installing 10,000 blender pumps nationwide within five years. A robust biofuels industry will also require encouraging automakers to produce and motorists to buy more flexible-fuel vehicles, which currently make up only about 3.5 percent of U.S. automobiles on the road, he said.

Our Take:
A thank you is in order to CHS for being a leader in developing blender pump infrastructure. The Obama Administration and the USDA have recently announced the formulation of programs that are meant to result in 10,000 blender pump installations across the US in the next five years. We would argue this is a good start, especially given the federal government’s budgetary concerns. Once American motorists get a taste for true choice at the pump, the clamor for more blender pumps may accelerate the spread of this infrastructure.

We think supporting domestic energy production will increase the flow of revenue to the US Treasury and ultimately help combat the deficit by reducing our trade imbalance in energy.

Blender Pumps in combination with the inclusion of flexible fuel systems in more cars produced in Detroit promise to break the sleeper-hold that oil has on transportation energy in the United States. Until the blender pump/fueling infrastructure reaches critical mass (say a blender pump in every third or fourth gasoline station–one in every station would be even better), the blender credit is the necessary bribe that gets oil companies to blend ethanol at levels above the national requirement. Yes they would blend it based on RFS alone, up to the amount stipulated by law, but oil companies have consistently used about a billion gallons more ethanol than RFS requires since the first RFS passed in 2005 — this is absolutely essential to the proper functioning of the fuel market. It allows the ethanol companies to underwrite the build out in advance of the stipulated requirement. When the law reaches its maximum requirement, 15 billion gallons, the production capacity will already be in place before that amount is required by law.

People may remember in the early 2000s what happened when all of a sudden MTBE was being yanked off the market–ethanol’s only competitor as a gasoline oxygenator–state governments banned the fossil fuel product because it was found to have serious environmental impacts to water quality. There was a period of time when the 39 US cities required to use oxygenates in gasoline called for more ethanol than was being produced. The result was economic discomfort, to say the least.

Since the blender credit is responsible for creating that excess capacity, doing away with it before the RFS law reaches the highest stair step–15 billion gallons per year–could result in the industry pulling back and not creating the last necessary piece of capacity.

All that is very technical, but the bottom line for consumers is choice. In order to have a viable choice other than gasoline at the pump, the alternatives need to be supported until they break through the monopoly and can stand on their own. Without that support, it’s back to one choice at the pump, which increases the ability of oil producers to charge more, and means we are transferring more American wealth and losing American energy jobs, and filling the treasuries of countries that have no love for us. And don’t forget, it was the price of gasoline that triggered the last recession–people traveled less, spent more on gas and less on products that had a higher economic impact for America. Do we really want to go another recession when people choose to spend on gasoline, and pull back their spending on other consumer goods? It’s a toxic situation that requires American investment so that we can build our way to energy independence.

EPA director Jackson accompanies Secretary Vilsack on Iowa farm tour

(from AP coverage of the visit)

(Jackson said) “What I learned was, whether it was the livestock operation, the row crops, biodiesel or ethanol or other advances,” she said, “biofuels is about the innovation. There really is remarkable innovation happening right here on the ground.” Specifically, Jackson referred to business-based innovation in improved process efficiencies and growing methods that “had great impact on air quality and water quality.”

She also noted that while EPA has a “specific mission,” there is no reason for it to work in competition with agriculture. “In fact,” she added, “what I learned today just reinforces my belief that there are tremendous win-win opportunities.”

For Vilsack, those opportunities include the benefits of biofuel production. “The USDA wants to show its support of biofuels to reduce dependence on foreign oil,” he said in response to a question from Ethanol Producer Magazine’s editor, Sue Retka Schill, on what the USDA has been up to over the last few weeks with biofuels announcements. “We see this (biofuels) as a lynch pin to revitalize rural economies. Not only will it add dollars and cents to the bottom lines of farmers and ranchers,” he said, “it will also help to create jobs.” When the U.S. reaches the 36 billion gallon goal set by the RFS2, he said the country could see up to a million new jobs. Along with job creation, “we are going to see capital investment [and] more construction opportunities” based on a continued development of the biofuels industry.

To seize on the benefits of biofuels, however, Vilsack pointed to a number of things that need to happen, most notably continued governmental support. “It requires continuing to provide some degree of support for this industry. We found out what happens when the supports are ended abruptly when the biodiesel tax credit was stopped. We lost production capacity, we lost jobs, and we clearly don’t want to replicate that.”

Our Take:
The USDA estimates the 36 billion gallon per year goal of RFS will create a million new jobs. We doubt that oil production in the Gulf of Mexico will create a million new jobs, but it will undoubtedly bring a reprise of last year’s disaster–the worst manmade environmental disaster in US history.

We’d like to see Jackson put her money where her mouth is and come up with ideas that allow EPA and other government agencies to support and work cooperatively with agriculture to achieve the nation’s environmental goals.

Recognition that ethanol and biodiesel are an environmental highroad when compared to offshore oil stilling–and biofuels ought to be treated that way, switching incentives now paid out to oil companies to other uses that would help us grow our renewable energy production base.

Second annual Ag Awareness Day offers students facts about food

Written by Jonathan Eisenthal

The below average chilly temperatures last Tuesday didn’t deter members of the University of Minnesota Agriculture Education Club from finding plenty of fellow students, faculty and university workers to share a word or two about what farming means for everyone.

Farmers and agribusiness representatives joined these ag club student, to host booths stretching along Church Street–a well-populated walkway through the heart of the East Bank campus of the university.

“Our message is that food doesn’t start in the grocery store–it comes about through the hard work of farmers who undertake a whole variety of processes to bring us not only food that’s plentiful and cheap, but fiber and energy too,” said Dale Busch, the regional representative for Minnesota Corn Growers Association’s south central region. “One young person wondered aloud and asked me what I meant by ‘cheap’ and I told her that the next time she got back from the grocery store she should separate her purchases into two groups–food and other products like paper products, cleaners and such. Typically, the food part of the purchase is very economical. Americans spend less on food than just about any other society in the world.”

Busch was joined by Professor Vern Cardwell (Department of Agronomy and Plant Genetics) who staffed the Minnesota Corn Growers Association booth, at midday, along with Derek Mulhern, a University of Minnesota agriculture student and an MCGA Agvocate.

One faculty member asked about why corn is made into ethanol when the world needs a lot of food.

“We are not starving the world by making part of the corn crop into energy,” said Busch who explained that the supply is big enough to cover all food/animal feed needs as well as providing a feedstock for the ethanol industry. He explained that today’s market information helps farmers make the right planting decisions in order to cover all these uses. He added, “We’ve never said that corn is THE renewable energy solution–it has to be part of a range of renewable energy sources–corn ethanol, soy biodiesel, and in the future algae, biomass-based ethanol and other sources we haven’t even thought of yet.”

Cardwell used four mason jars of corn filled with progressively higher amounts of corn kernels, and four beakers of pellets (representing nitrogen fertilizer) to explain the incredible gains in nutrient efficiency in corn production in the past 75 years: In 1935, US farmers harvested 33 bushels of corn per acre and used 16 tons fertilizer per acre where today, farmers are raising 165 bushels of corn on that same acre and using 4.4 tons of fertilizer. This comes down 1.2 pounds of nitrogen per 56 pounds of corn–a fourfold reduction in fertilizer per unit.

“We’ve learned a lot about the placement and the timing of fertilizer,” Cardwell told a pair of university students who had stopped at the MCGA booth. “Combined with the improvements in the plant varieties, farmers have seen incredible success raising corn in the United States.”

Members of the agricultural club proved very effective interacting with the crowd and sharing their enthusiasm for the role of farmers in providing the most basic products society needs.

Kristen Wingert, a junior ag education major said the day “is all about providing an environment for learning and creates a means for people to gather information and gain understanding about the importance of agriculture.”

Wingert grew up on a farm in southeast Minnesota where both parents had jobs off the farm and worked mornings, evenings and weekends to raise a beef cow herd. She will graduate next year and hopes to teach food science, agronomy, animal science, environmental science and other topics in a high school agricultural program.

Busch believes the Church Street location improved the contact with students and others compared to last year’s venue, just outside Northrop Auditorium.

Organizations participating in Agriculture Awareness Day included the U of M College of Food, Agricultural and Natural Resource Sciences, Minnesota Farmer’s Union, Minnesota Corn Growers, Minnesota Agricultural Water Resources Coalition, Minnesota Department of Agriculture, U of M Extension’s Minnesota 4-H, Minnesota Pork Board, Minnesota Turkey Growers, Minnesota Beef Council, Minnesota Farm Bureau Federation, Midwest Dairy Association, Minnesota Buffalo Association, Minnesota Soybean Growers, Cooperative Network and Minnesota State Rabbit Breeders Association.

http://www.facebook.com/AgAwareness

April brings Senate defeat of a range of measures to limit EPA control of greenhouse gas emissions

Written by Jonathan Eisenthal

In the first two weeks of April, Senators have soundly defeated a number of amendments to the Small Business bill that would have limited or ended the US Environmental Protection Agency’s role in regulating the emission of carbon dioxide, methane and other “CO2-equivalent” gases which have been found, according to US Supreme Court decision (2007) to be harmful to human health and the environment.

“We don’t want to debate the science of climate change, but we do want to assert that great care needs to be taken in whatever approach government does take to limit greenhouse gas emissions, so that we don’t endanger other equally important values–like assuring that our food supply remains abundant and affordable for all Americans,” said Greg Schwarz, a farmer in Le Sueur, Minnesota who serves as president of Minnesota Corn Growers Association. “We think that climate change may be too important an issue to leave in the hands of bureaucrats and instead should be handled by our elected officials, who are more directly answerable to the voters. Just coming out of the worst economic times since the Great Depression and with our country still slow to add jobs, we need to assure that whatever approach arises it won’t endanger jobs.”

Shots at EPAs role in GHG emissions regulations came from both sides of the aisle, though the biggest challenge came in an amendment from Sen. Mitch McConnell, R-Ky, which would have ended EPA regulation of GHGs altogether.

The McConnell amendment garnered a 50-50 vote, but needed 60 votes to pass. Four Democrats joined 46 Republicans voting in the affirmative. One Republican, Sen. Susan Collins, R-Maine, voted against the amendment.

Earlier, an amendment that would have exempted farmers and small businesses from EPA greenhouse rules failed on a vote of 93-7. Max Baucus, D-Montana, authored the amendment, and the vote split the Minnesota delegation: Sen. Amy Klobuchar voting in favor, Sen. Al Franken voting against. Both are Democrats.

West Virginia Democrat Jay Rockefeller offered an amendment that would suspend greenhouse rules for two years, to allow Congress to further study the issue, particularly its economic impact, before setting the 2009-approved GHG provisions of the Clean Air Act in motion.  Sen. Debbie Stabenow, D-Michigan, offered a similar amendment. Both were defeated.

The National Corn Growers Association favors an approach to greenhouse gas reductions that would be similar to other ‘green box’ USDA programs — voluntary, incentive-based programs that can reward farmers for engaging in agricultural practices that would increase carbon sequestration.

How much Corn would we grow if not for ethanol?

Since production is tailored to demand, the critics don’t want more food, they want less corn

Our Take:
C. Ford Runge is at it again, spreading his pretense as far as Brisbane, Australia. An article appearing there Wednesday details Runge’s simple-minded fear-mongering economics as a justification for current Senate legislation (Coburn et al) that would gut the US ethanol program.

Runge, University of Minnesota economics professor, pretends that the amount of corn we grow is fixed, and that we are now allotting more to ethanol, taking it away from the use of corn to produce food.

To answer Runge’s charge in his own rhetorical style, you don’t have to have a PhD in economics to know that without ethanol, less corn would be produced. We’d still grow the same amount demanded by the feed and export (for animal feed) markets. It would take less corn to satisfy demand if not for ethanol. And that is what Runge, and Senators Coburn and Cardin are really after. They don’t care about hungry people. If they did then they would know the way to feed them is to ensure the profitability of farming–that is the only incentive that guarantees that America will produce as much food as it can.

It’s a very predictable method of attack. Take away the ethanol tax credit and reduce the number of ethanol producers. The ones remaining will charge more for their product which will be in high demand thanks to the renewable fuels standard. And then the Big Oil lobby will complain about the onerous cost of ethanol, point to the high gasoline prices the Oil industry has engineered and deliver to a compliant US Congress the perfect alibi to do away with the ethanol requirement altogther. We’ll be back to mainlining oil.

The oil producers in Coburn’s home state of Oklahoma can go back to profiteering on the backs of every American driver by enjoying  their monopoly at the pump. We are looking at $4 a gallon for gasoline now. Knock the legs out from under ethanol and you better be ready to try five or six dollars a gallon on for size. That might create a good number of hungry people in America who choose gas for work over food.

Do away with ethanol and Cardin can claim an environmental victory because “out of sight, out of mind.” Rather than bet on American agricultural and renewable energy innovation to continue the trend of reducing environmental impact while increasing yield, Cardin would prefer to outsource both food and energy production.

The part of the economic picture that Runge deliberately brushes aside is that the success of ethanol is a major part of what is inspiring that innovation in crop production. Corn yield has grown right alongside the growth of the ethanol industry. In 1993, farmers brought in 100 bushels per acre. By 2003 that yield had risen to 142 bushels per acre, and in the last few years 150 bushels is the floor. Again, this is no accident. The profitability of ethanol is what is paving the way to this explosion of food productivity.

At this moment seed companies are ready to bring to market varieties of corn and other crops that are more water efficient (drought resistant) and more productive with fewer nutrient inputs than any crops ever grown before. Take away ethanol and prepare to slow down or end this kind of innovation.

Without the market foundation provided by being able to sell part of their crop for energy, a huge number of American crop farmers would not be in business and the rural communities that depend on the prosperity of farmers would dry up and blow away. That is unless we went back to a farm welfare system. Massive government subsidization of crops that cost more to produce than the market would pay for them. Why? Because the system deliberately encouraged overproduction in order to depress prices. A market that knows it can’t possibly use up what it demands will pay a lot less for that product.

And depressing the price for crops consequently depresses the value of land, the prices commanded by all consumer products in the rural economy, and the quality of products offered on Main Street. Ending farm-based energy is a prescription for a downward economic spiral.

Coburn and Runge and Cardin can complain about $6 billion in ethanol subsidies–an investment that generates several multiples in state and federal tax revenue. But doing away with ethanol, we will have to go back to even pricier farm subsidies, which incidentally didn’t do nearly as well as renewable energy to insure economic vitality in the heartland.

In case you want to read the carpings of Runge and company, here is the article that appeared in the April 13 edition of Brisbane Times:

Surging food prices fuel ethanol critics

A surge in global food prices has prompted fresh criticism of US subsidies for ethanol, which diverts massive amounts of corn from global food supplies for energy.

Producers of ethanol argue that the biofuel helps blunt the impact of high imported petroleum prices, but critics say the US policy giving tax breaks for ethanol used in motor fuel ends up being bad for food, energy and the environment.

The issue has created unusual political alliances, with environmental groups and some lawmakers from both parties clashing with farm interests and legislators from the corn-producing midwest states.

Senators Tom Coburn, a Republican from Oklahoma, and Ben Cardin, a Maryland Democrat, introduced a measure last month to scrap the tax credit of 45 cents per gallon for ethanol in gasoline.

“The ethanol tax credit is bad economic policy, bad energy policy and bad environmental policy. The $6 billion we waste every year on corporate welfare should instead stay in taxpayers’ pockets where it can be used to spur innovation, stimulate growth and create jobs,” said Coburn.

The lawmakers cited a Government Accountability Office report describing the tax credit as “largely unneeded today to ensure demand for domestic ethanol production.”

C. Ford Runge, a University of Minnesota professor of applied economics and law, argues that ethanol from crops has many “hidden costs” that should dissuade the government from subsidies.

Runge, who raised concerns about ethanol policy as early as 2007, says his research suggests some 30 per cent of food price increases come from diversion of US corn for ethanol.

“If you’re taking 40 per cent of the US corn crop, the largest of any country on earth, and putting it to one use… you don’t have to have a Ph.D in economics to know that’s going to put upward pressure on prices,” he told AFP.

In an essay written for Yale University’s Environment 360 online magazine, Runge cites “strong evidence that growing corn, soybeans, and other food crops to produce ethanol takes a heavy toll on the environment and is hurting the world’s poor through higher food prices”.

The UN’s Food and Agriculture Organization has warned that rising food prices are driving unrest around the world, including recent uprisings in the Middle East and North Africa.

Runge said high food prices – including corn at record highs – are a factor in the unrest, saying “these countries have been subjected to the pressures in their household costs,” adding to the political pressures.

Economist Ed Yardeni at Yardeni Research said diversion of crops to fuel is important because the US provides more than half of global corn exports and over 40 per cent of soybean exports.

“So our ethanol policy is exacerbating the global food fight, destabilizing the Middle East… Is that insane, or what?”,” Yardeni said.

Yet ethanol has its staunch defenders including Senator Tom Harkin the corn-belt state of Iowa, who told a recent hearing that ethanol “has dramatically reduced our need for oil.”

Harkin said the focus on ethanol diverts attention from the oil industry’s “very lucrative and unnecessary subsidies.”

Bob Dinneen, president of the Renewable Fuels Association, said ethanol is important for the goal of energy security, and he dismisses its impact on food prices, saying refiners use only the starch component of feed corn, and produce animal feed as a byproduct.

“Ethanol is the only thing we have today to moderate skyrocketing prices of gasoline and crude oil,” Dinneen said.

“If the chaos in the Middle East teaches us anything, it should be that America must forcefully begin down the path of energy self-reliance. Increasing the use of domestic renewable fuels like ethanol is the first, and arguably, the easiest step we can take,” he said at a congressional hearing.

US President Barack Obama said in a March 30 speech on energy policy that ethanol should be part of the US energy future as part of an expanded effort for biofuels.

He said there is “tremendous promise” in renewable biofuels, “not just ethanol, but biofuels made from things like switchgrass, wood chips, and biomass.”

A White House official said that “corn ethanol is already making a significant contribution to reducing our oil dependence. But going much further will require commercialization of advanced biofuels technologies.”

Dinneen argued the US will need a variety of biofuels, but added “the existing ethanol industry is providing the foundation on which those other biofuels will be able to grow.”

AFP

Back in the black: Minnesota farm incomes rose in 2010

Written by Jonathan Eisenthal

Crunching the numbers from nearly 2500 farms across Minnesota, a recent study found that the average farmer netted a 12.5 percent rate of return in 2010, up from 3.1 percent in 2009.

“Most Minnesota producers had a good year in 2010,” said Richard Joerger in a news release published this week. Joerger is system director for agriculture and business at the Minnesota State College and Universities system, which has just published a study of the incomes of 2500 farmers who take part in marketing education programs in the state. Joerger noted, “However, these results occurred in an extremely risky and volatile environment.”

A key element in cash crop farm profitability was the reduction of fertilizer cost, which dropped 27 percent and contributed to an overall crop production cost reduction of six percent. For livestock farmers, the cost of feed stabilized and prices for hogs and beef rose.

“We think it’s important to spotlight the volatility in these markets,” said Greg Schwarz, a farmer in Le Sueur, Minnesota. Schwarz raises corn, soybeans and turkeys and serves as president of Minnesota Corn Growers Association. “Some folks look at the current price of corn and soybeans and they think there’s little need for a USDA farm program. Looking back even one year, we see how important it is to provide a safety net for farmers. Agriculture provides economic strength for Minnesota when the rest of the economy slows down. The safety net assures the longterm economic strength of our Minnesota state economy.”

Breaking the findings out by different types of operations, the study found profits for cash crop farmers rose 169 percent compared to 2009, an off-year. Average prices received for major commodities were: corn, $3.67, down from $3.81 in 2009; soybeans, $9.66, down from $9.84; and spring wheat, $5.03, down from $5.81. These figures measured prices on actual sales, but profit estimates included crops in storage that the farmer had yet to market–a year end price rise made the product in the bins very valuable and had a major effect on the total profit outlook for the year.

“We’re confident these farmers were able to execute sales on these crops. The estimated rise in income was across the board–crop and livestock farmers across a range of farm sizes,” said Dale Nordquist, Extension economist with the University of Minnesota’s Center for Farm Financial Management. “Many Minnesota farmers have already sold their crops for 2011 and they’ve locked in prices for their inputs so the positive financial outlook will continue for many crop farmers this year.”

Livestock farms also made a comeback. Minnesota hog farms earned median profits of more than $250,000 compared to losses of $73,000 in 2009. Nordquist noted that hog farming has a cyclical history of returns.

“When they make money, they make lots of money, and when they lose money, they lose a lot of money,” said Nordquist.

The rise in revenues for dairy farms meant a return to break-even status, and after a number of down years many dairies are in precarious condition. Nordquist observed that the public trimmed its food budget when the economy went into recession. Many people reduced purchases of cheese, for example, and the industry is still trying to come back from that, he said.

“Even small changes in habits can have a major effect–so much of our dairy production goes to cheese,” said Nordquist.

Though the study sample was not scientific, Nordquist noted that of the 80,000 USDA-registered farms in Minnesota, about 20,000 have sales above $100,000, which serves as Nordquist’s rule of thumb for a “commercial farming operation.” The study included financials for 2,362 farmers taking part in marketing education through the Minnesota State College and University System and an additional 97 farmers belong to the Southwest Minnesota Farm Business Management Association, which delivers educational programming provided by University of Minnesota.

It’s not Either/Or, it’s CORN and CELLULOSE (when it finally gets here, whenever that actually happens)

(“Corn’s biofuel role in question” — Article by: JIM SPENCER, Star Tribune)

WASHINGTON – The biofuel company Gevo is about to break ground in the southwest corner of Minnesota on a system that will make it the first in the country to commercially produce a gasoline additive called isobutanol.

Gevo believes isobutanol could become an important alternative to regular gasoline. It burns more powerfully and efficiently than ethanol and runs just fine in existing automobile engines.

The plant in Luverne appears to be everything the Obama administration wants to reduce America’s dependence on fossil fuels and foreign oil — except for one thing.

The plant will use corn to produce isobutanol.

So the federal government refuses to provide loan guaranties to support the innovation.

Attempts to dethrone King Corn in the renewable fuels market are more frequent and forceful than they used to be. Corn ethanol no longer qualifies as an innovative technology that garners broad federal subsidies. When the administration recently announced its plans to increase the market share of renewable fuels, it trumpeted “breaking ground on at least four commercial-scale cellulosic or advanced biorefineries over the next two years.”

Those priorities matter in Minnesota, which helped develop the corn ethanol industry and now produces 1 billion gallons a year at 21 corn ethanol plants. Many of them are owned by farmer cooperatives. The state won’t get one of the new biorefineries, although some of its farmers may participate in one in northern Iowa….

At a Senate Energy Committee hearing last week, some speakers questioned the bill sponsored by Minnesota’s two senators, Al Franken and Amy Klobuchar, as well as Iowa Sen. Tom Harkin.

The bill requires automakers to build flex-fuel engines and mandates installation of ethanol pumps in service stations nationwide. Critics call the bill an over commitment to corn.

On the day of the hearing, the New York Times published a story that said using corn and other crops for ethanol causes hunger and higher food prices. The day before the hearing, environmental activists of the Environmental Working Group circulated a position paper that claimed corn ethanol cost more to produce than it saved in fossil fuel use.

“That’s just not true,” Franken said in an interview. “The yields go up and up. We’re meeting the need for feed.”

Our Take:
Call us old fashioned, but when the reporter can’t get the name of his source right– Kerry Nixon–we think it reveals a general lack of knowledge and carelessness with facts.

That the writer refers to “King Corn” without it being a quote or placing the phrase in quotes means this piece is an op-ed, not an unbiased news article. Corn is grown on 16 percent of US farms. It’s true that’s more than any other crop. But kings are crowned–this crop has won the votes of farmers, who like the rest of us, vote with their checkbooks and want to grow a crop that is versatile, has a history of success and can make them money. Corn’s profitability is a direct result not of any government program, but the fact that livestock, energy and export markets are filled with consumers who have succeeded by using corn as an ingredient in what they produce.

Yes, Secretary Chu has made no secret of his dislike of ethanol–a 14 billion gallon per year industry–while he favors drop-in fuels that can replace gasoline without need of engine modification. The number of gallons of drop-in fuel being produced from cellulose? Zero.

Hmmm. Does Chu want to have an impact on American energy this decade? We hope drop in fuels come along. They can go in the underground tanks that currently store gasoline, and ethanol can continue to go in ethanol tanks, and that way we’ll have a fighting chance of replacing all our foreign-sourced energy when it really matters–that is in the nearest possible term. Why care about replacing foreign oil? We watch the price on the gas pumps rise toward $4 for regular unleaded and we wonder if anyone doesn’t get the fact that until we replace foreign oil, we are not in control of our energy security–our energy destiny. Energy is the number one issue in maintaining America’s economic strength.

Even Gevo is betting on corn though that means Chu shuts the purse strings against them.

The Renewable Fuels Standard calls for 36 billion gallons of annual renewable fuel use by 2022–to get there we will need every ounce of the 15 billion gallons of corn ethanol stipulated by the law. Cellulose ethanol will be built on top of a strong and abiding foundation of corn-based fuel. To get to 16 billion gallons of cellulose ethanol production between now and then will mean that many, perhaps all existing corn ethanol plants will add a front-end component to brew ethanol from plant cellulose.

Canadian company Iogen and Danish company Inbicon both have ethanol production based on wheat straw, pumping out a million-plus gallons per year at their largest facilities. Nothing exists yet on the scale of today’s smallest dry grind corn ethanol plants. If they want to catch the American cellulose ethanol wave, Iogen, Inbicon, Gevo and others will need to roll out scaled-up versions quickly (Inbicon plans to break ground on an American plant sometime in the next 12 months). They will also require investor groups to purchase the license for this technology and build these projects. Many of these investors will be folks who know the ethanol industry that exists today. In fact, we believe these folks, today’s corn ethanol producers, will have an edge over neophytes who try to jump into the renewable energy business with no previous experience.

Environmental Working Group’s assertion that ethanol costs more to produce than the fossil fuels it replaces is unadulterated nonsense. Their paper goes against research studies by Argonne National Laboratory and the USDA, among others, that find a positive energy balance in ethanol production. Other studies find a phenomenal, positive economic impact from corn-based ethanol. It’s spring, and EWG is fundraising among people who know they love the earth, but who don’t know how much better corn ethanol is than the alternatives EWG’s anti-ethanol policy would push on us (Canadian tar sands oil, for instance).

New York Times thinks corn ethanol is making food more expensive and causing hunger. So they want farmers to grow crops that aren’t food to make into energy? Or they want to take away a key incentive that keeps food production at the highest possible level–yes, it’s a bit counterintuitive but the price strength that comes from all the different markets for corn, including ethanol, assures that farmers and agribusinesses will apply every possible resource to keep achieving higher and higher yields. Take away any element of the demand picture and in short order, farmers will be growing less.

Authorities usually granted unquestioned acceptance by the New York Times–the UN and the World Bank–thoroughly studied the commodity price shock of 2008-2009 and found corn and ethanol had very little to do with food price increases and that biofuels could not be blamed for creating hunger. That the Times continues to saw away at this tune illustrates the fact that even the purveyors of “all the news that’s fit to print” suffer from “fact resistance,” the effect documented by University of Michigan political scientist Brendan Nyhan.

(read more about Fact Resistance at http://articles.boston.com/2010-07-11/bostonglobe/29324096_1_facts-misinformation-beliefs)

When the Times is interested in making something that isn’t just fit to be fertilizer, they should talk to some farmers, and really listen to people who make food that really feeds the world. It’s what we do every day.

A new category of animals on feed?

Trumpeter swans overwinter in Monticello, munching shelled corn.

By Jonathan Eisenthal

The sad news spread Saturday that the “Swan Lady’ of Monticello, Sheila Lawrence, had passed away after an eight-month battle with cancer. Her husband Jim vows to continue her legacy–providing a supply of winter food for a growing flock of Trumpeter Swans.

Sheila’s special project began 20 years ago when she spotted two of the elegant, huge water fowl at the banks of the Mississippi River that flows past the Lawrence property in Monticello. She put out corn to assure that the birds would survive. Soon she noticed that the number of swans gathering on the river bank was growing.

At first Lawrence would spend hours carrying shelled corn down to the river bank from a container kept on the couple’s driveway. Eventually, they rigged up an augur system to carry the grain from the container to the river bank.

What started with a few handfuls of feed has grown to a 2,500 to 3,000 bushel supply of shelled corn, at an estimated expense of $20,000 each year.

This phenomenon did not go unnoticed for long. Soon, word got out among birders and other tourists who made their way to Monticello to see this wonderful site of hundreds of swans congregating. City officials and the local Chamber of Commerce got involved, printing maps to the site that include information about eateries and hotels in the area. They even purchased an empty lot next to the Lawrence property to facilitate tourists stopping for a view of the birds.

The DNR credits Lawrence with bringing Minnesota’s population of this threatened species back from the brink. A migratory fowl species, Trumpeter Swans winter as far north as Minnesota, but then in spring they head up to Canada for nesting and raising young.

“We’re happy to hear that our product can contribute to what turns out to be a vital conservation project,” said Greg Schwarz, a corn farmer in Le Sueur and president of Minnesota Corn Growers Association. “As farmers, we see ourselves as stewards of the land. Not only do we want to produce food and energy for today, but we strive to maintain the soil, the landscape and our natural resources for the use and enjoyment of future generations. We think all Minnesotans can be grateful to the Lawrence family for this amazing accomplishment.”

For more info on Sheila Lawrence and the Trumpeters Swans of Monticello see the article in the Wednesday, April 6 edition of the Star Tribune newspaper at:

http://www.startribune.com/local/west/119294779.html

Senate energy committee explores biofuel infrastructure expansion

(published by Ethanol Producer magazine, written by Kris Bevill)

The Senate energy committee held a two-hour hearing April 7 to discuss proposed legislation to expand the domestic biofuels market, but expanded its scope through testimony and committee member questions to cover nearly every major issue related to biofuels production and market expansion.

Committee Chairman Jeff Bingaman, D-N.M., expressed cautious optimism for biofuels expansion during his opening statement. While domestically produced biofuels “are the best near-term option for replacing oil,” he is concerned that infrastructure built to support biofuels will become obsolete when drop-in fuels such as algae-based biocrude or biobutanol are ready for the market.

Sen. Tom Harkin, D-Iowa, testified in support of the Biofuels Market Expansion Act of 2011, a bill he co-sponsored that would mandate flex-fuel vehicle production, require one half of all U.S. gas stations to install at least one blender pump by 2020 and offer a federal loan guarantee for a biofuels pipeline. He reminded committee members that ethanol is a viable fuel replacement now, whereas drop-in fuels will not be commercially ready for perhaps 20 years. “By all means, we should continue apace with the development of drop-in fuels, but this is not an either-or proposition,” he said. “Until drop-in fuels are commercially viable, we should continue to support ethanol.”Senate energy committee explores biofuel infrastructure expansion.

See the full article at ethanolproducer.com/articles/7646/senate-energy-committee-explores-biofuel-infrastructure-expansion

Our Take:
Ethanol is an excellent customer of the railroads, but the question of how well the rail companies treat ethanol is a key element in the quest for biofuels pipelines to the East and West Coast.

It may be a bit of a shaggy dog, but some say that in the back rooms, the rail companies cut deals with the oil companies who supply their diesel–in exchange for cut rate fuel for their engines, these rail companies, it is rumored, willfully delay the arrival of rolling stock for ethanol pick ups, or delay their arrival at fuel terminals, as a discouragement to discretionary blending of ethanol.

This may or may not be happening, but it is prudent not to let the fox guard the hen house. Giving the ethanol industry direct control of the transportation of its product will make the ethanol marketplace more efficient, and the main beneficiary will be the customer. The ethanol supply at retail sites will be more plentiful and cheaper.

As to the other aspects of Harkin’s proposal, it must be said that the oil rich areas of the world are in political freefall. Consequently, the price of oil has skyrocketed, and the pump price of gasoline approaches $4. Some experts say it could hit $5 at the height of the driving season (Memorial Day Weekend). The fact is, that without the changes Harkin proposes, American drivers live with a 90-percent gasoline mandate. Implementing universal blender pump technology and flex fuel equipment (as Brazil has done) will put the choice of fuel in the hands of the consumer. The fuel system modification for flexible fuel vehicles would cost about $100 per auto. Though blender pumps are a capital intensive proposition, the fact that they would sell all blends of ethanol would make them more immediately profitable for the station owners than stand alone E85 dispensers.

Cellulose-based ethanol waits in the wings. In order to win financing and bank underwritten debt, in order to build their plants and start producing their advanced biofuel, they need to show they have a market. Simply put, cellulose ethanol will not have a market until blender pumps and flex fuel engines make E15 and higher intermediate blends a choice available to a much broader segment of American drivers. Blender pump installation will not prevent development of drop-in fuels. The drop in fuels can go right into the underground storage tanks that currently hold gasoline to feed into the blender pumps.

The answer for America’s energy future is not either/or, but rather, it is all of the above. If we pursue all these solutions, we will rid ourselves more quickly of the shackles of our foreign energy addiction.

Minn. growers to take part in second largest planting since WWII

written by Jonathan Eisenthal

World demand and domestic value-added enterprise have created a strong market for US corn growers, who plan to plant nearly 92.2 million acres of corn this year–a 4.5 percent increase over last year, and the second largest crop since 1944 (2007 planted acres were 93.5 million).

Markets responded to the news with a strong upward bound for corn prices and futures contracts.

According to the 2011 USDA Planting Intentions report, Minnesota growers fully intend to join in this trend, increasing corn planting in the north star state by 300,000 acres over last year, for a total of 7.9 million acres.

“The market is sending as strong a signal as possible and the farmers are responding,” said Greg Schwarz, a farmer in Le Sueur, Minnesota and president of Minnesota Corn Growers Association. “Thanks to the variety of important uses for our farm products, we have a price that supports farmers. We can’t underestimate the importance of this market strength. The world is adding a whole Germany every year to the world population, and it will do that for the next forty years. U.S. farmers are ready. Each U.S. farmer feeds an average of 144 people, according to the latest statistics.”

Though U.S. producers plan to plant one percent fewer acres to soybeans compared to last year’s record planting, Minnesota growers are holding steady, intending to plant 7.4 million acres to soybeans.

“Despite increased plantings for most major field crops as reported in today’s Prospective Plantings report, the March 1 Grain Stocks report indicates continued strong demand and usage for these commodities. This suggests the current tight supply situation will continue into 2011 and 2012,” USDA Chief Economist Joseph Glauber wrote in his introduction to the report.

The Prospective Plantings report estimates farmers will plant 3.89 million (8.2 percent) more wheat acres, and 1.59 million (15 percent) more cotton acres than last year. Total planted area for all 21 major crops will be 323.8 million acres, a 7.09 million (2.2 percent) increase from 2010 but still 1.21 million acres below the 2008 total.

“As we move forward to meet the needs of the earth’s growing population, we need to maintain the strong partnership between farmers and agribusiness that has allowed farmers to achieve this kind of success,” said Schwarz. “And we need to maintain a government safety net, in the form of crop insurance and other guarantees, that will allow us to go out and plant with confidence. When we keep these elements of the US farm program in place, it ensures our ability to produce as much volume as our customers can use. American farmers have proved our ability to cover the needs of every buyer.”

In Minnesota, however, it may be a little while before planters come out of the sheds, with cool air temperatures and lingering snow cover keeping soil temperatures well below the 50 Degree Fahrenheit reading in soil where corn seed can germinate.

“Despite increased plantings for most major field crops as reported in March 31’s Prospective Plantings report, the March 1 Grain Stocks report indicates continued strong demand and usage for these commodities. This suggests the current tight supply situation will continue into 2011 and 2012,” said USDA Chief Economist, Joseph Glauber.

The largest increase in corn-planted acreage in 2011 is expected in South Dakota where growers intend to plant an additional 850,000 acres compared to last year when wet field conditions during planting prevented many from getting all of their intended acreage seeded. Iowa and North Dakota acreage is expected to increase 500,000 and 450,000 acres respectively. The largest decrease in planted acreage is expected in Texas, down 150,000 acres due to an increase in cotton acreage.

The 2011 wheat planted area is estimated at 58.0 million acres. Of this, 41.2 million acres is winter wheat planted area, 10 percent above last year and up 1 percent from the previous estimate.

Cotton acreage increases are expected in every state, for a total of 12.6 million acres, 15 percent above last year. The largest increase, at 548,000 acres, is expected in Texas. Acreage increases of more than 100,000 acres are expected in North Carolina, Georgia and Mississippi.

Soybean acreage planting is expected to be 76.6 million acres, down 1 percent from last year, for the third largest on record. Compared with last year’s record planting intentions, declines of 100,000 acres or more are expected in Iowa, Kansas, Mississippi, Nebraska and Ohio. If realized, the planted area in New York and North Dakota will be the largest on record at 1.5 million and 4.35 acres respectively.

Prospective Plantings provides the first official, survey-based estimates of U.S. farmers’ 2011 planting intentions for corn, all wheat, winter wheat, durum wheat, other spring wheat, oats, barley, flaxseed, cotton, rice by length of grain classes, oats, all sorghum, sweet potatoes, dry edible beans, soybeans, sunflower, peanuts, and sugarbeets; acreage for harvest of hay and tobacco. NASS surveyed approximately 85,000 farm operators across the United States from Feb. 26 to March 17, 2011. NASS will publish data on actual planted area in the Acreage report, to be released June 30 at 8:30 a.m. EDT.

NASS also released the quarterly Grain Stocks report today, showing corn stocks in all positions at 6.52 billion bushels as of March 1. This is down 15 percent from last year. Soybeans stored in all positions on March 1 totaled 1.25 billion bushels, down 2 percent from a year ago, while all wheat stored totaled 1.42 billion bushels, up 5 percent from March 1, 2010. Rough rice stocks in all positions on March 1, 2011 totaled 121 million hundredweight, up 16 percent from the same time last year.

Prospective Plantings, Grain Stocks and all NASS reports are available online at http://www.nass.usda.gov.

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