Archive for April, 2011

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.

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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.