Ethanol plays key role in fuel supply, helps lower prices

Want to pay nearly $100 to fill up your 15-gallon gas tank? You would if ethanol were removed from the market, according to a report (.pdf) by Xiaodong Du and Dermot J. Hayes at the Center for Agricultural and Rural Development at Iowa State University.

They said if ethanol production came to an immediate halt, under a very wide range of parameters, the estimated gasoline price increase would be of "historic proportions," ranging from 41 to 92 percent. At today's prices you'd be looking at $5.60-$7.60 per gallon gas without ethanol.

Economists are already concerned what $100 oil and $4 gas is doing to the economy. Just imagine the impact of $6.50 per gallon – or $97.50 for a 15-gallon fill up!

The researchers also looked at the impact of ethanol on fuel prices for 2010.

The more than 13 billion gallons of ethanol in the marketplace last year saved motorists, on average across the country, 89 cents per gallon in 2010. The lowest impact regionally was 58 cents per gallon in the East Coast, while motorists in the Midwest saved $1.37 per gallon (that's more than $20 for each 15-gallon fill-up). 

Considering oil and gas prices are higher this year than last, it will be interesting to see of the researchers will do an update using 2011 figures...certainly the savings numbers would be even more.

In addition to looking at just 2010, the researchers also looked at numbers from January 2000 to December 2010. For that 11-year period, the growth in ethanol production reduced wholesale gasoline prices by 25 cents per gallon on average across the country. Regionally, the Midwest saw the biggest impact, with a 39 cent per gallon reduction over that time period, while the East Coast had the smallest impact at 16 cents gallon.

The smaller impact over the 11-year period makes sense because if you look back to 2000, only 1.6 billion gallons of ethanol were produced – a very small percentage of the total fuel market. Ethanol production didn't surpass 2 billion gallons until 2002 and pass 6 billion gallons until 2007 and 10 billion gallons until 2009. The 13+ billion gallons of ethanol produced last year is about 10 percent of our fuel supply – and without we'd really see some pain at the pump.

Farming a blog

Blogs are becoming widespread to a group of people we often like to write about: farmers!

Farmers in Nebraska, like Randy Uhrmacher, are using social media to interact with his customers – or “anyone that eats” – like he says on his blog, Cornfrmr: Random thoughts of a Nebraska corn/soybean farmer. Randy also has a farm Facebook page and twitter account (@Cornfrmr) that he share messages, pictures and updates about his life on the farm – and even being NASCAR fan.

Randy does a great job at sharing not only pictures of planting and equipment, but the true issues that surround agriculture today. He recently blogged about things we take for granted, like tires, to put food on the table, and another blog faces the anti-ag issues surrounding modern agriculture production.

Another Nebraska farmer, Ryan Weeks, is a fifth generation family farmer who blogs about his farm and raising the world’s food, feed, fiber and fuel on the same acreage settled by his great-great grandparents in 1892, on his is blog, Days of the Weeks.

Ryan also has a farm Facebook page and twitter account (@HuskerFarm). He shows some great pictures and explains why they do what they do on their farm, as well as other media, like podcast interviews on the advantages of autosteer and other technology.

I'm sure Randy and Ryan could tell you more about their positive experiences of using social media to educate consumers and producers alike. What are you doing to share your farm story?

Podcast: South Korean and other trade deals are good for agriculture

In this podcast, Greg Whitmore (@SustainableGreg), a farmer from Shelby and member of the Nebraska Corn Growers Association, notes that South Korea is one of the top five corn export markets for the United States and is a potential growth market for corn co-products like distillers grains.

"The Korean market is very valuable to U.S. corn farmers and we fully support the pending free trade agreement with Korea and have appreciated recent progress on this and other trade agreements," he said.

The FTA with South Korea provides that both feed corn and distillers grains receive immediate duty-free treatment. In addition, tariffs on all refined corn products will eventually be phased out, creating new market access for corn sweeteners and corn oil. The agreement also provides immediate market access for exports of corn starch.

"Just as important, though, the Korean FTA provides for significantly improved market access for beef, pork and other livestock products," Whitmore said. "This increases opportunities for Nebraska beef and pork producers and all those who raise livestock."

He also discusses the pending trade agreement with Columbia and the benefits it would bring – plus the potential of the pending deal with Panama and the Trans Pacific Partnership, a trade pact that includes several countries in the Pacific.

"These and other trade deals help ensure all U.S. ag sectors have access to markets," he said. "They also help ensure food and ag goods move more freely around the world, which is good for consumers because in the end they’ll have more reliable access to them."

Nebraska Corn Kernel podcasts are also available on iTunes! Click here to subscribe.

Big Oil defends tax breaks, massive profits

Big Oil was called before Congress yesterday to talk about high gas prices – but they spent their time defending the billions in tax breaks/credits/subsidies the industry gets courtesy of U.S. taxpayers. While mostly for show, the testimony was important to put Big Oil on the record in saying that after a century it apparently still needs government tax breaks to be successful.

While it is generally believed a bill to eliminate a stack of these tax breaks won't make it anywhere, Big Oil felt it needed to defend itself and, not surprisingly, everyone was on the same well-oiled page. ExxonMobile's CEO called the tax proposal "misinformed," "discriminatory" and "counterproductive." (Exxon, fyi, had profits of $11 billion in the first quarter of this year.)

I wonder what he has to say about incentives for the biofuels industry? And how are biofuels suppose to work their way into the system when like Big Oil controls the markets, dollars and reaps so much in terms of a tax advantage?

Of course the American Petroleum Institute (which supports tar sands oil but files lawsuits to prevent increased use of biofuels) is running TV ads trying to scare Americans into believing that "now is not the time to raise energy taxes" – and without directly saying so, essentially arguing that eliminating tax breaks for Big Oil is the same thing as raising taxes. Yet immediately eliminating the Volumetric Ethanol Excise Tax Credit (VEETC) for biofuels would do EXACTLY the same thing!

The difference is, Big Oil essentially has a monopoly on our fuel supply. Biofuels like ethanol are helping to change that. It will take time and perseverance – and the continued defense of myths and outright lies perpetuated online – but dropping the push for biofuels would be a giant step backward for the United States.

Yesterday, the Nebraska Corn Board distributed a news release that dealt a bit on the subject.

It noted that oil is in everything one way or another – from gas tanks to packaging to transporting to fabric to food – and high energy costs also significantly increase the cost of production no matter what’s being produced, from widgets to breakfast cereal.

“We’ve had very high oil prices for much of this year, and we’re all seeing it at the pump,” said Kim Clark of the Nebraska Corn Board. “Yet we’re also seeing the impact of higher energy costs in every transaction in every store because high oil prices have an impact at every step in the process for just about everything we buy. It’s taking dollars away from families and slowing our economic recovery.”

High oil prices also mean soaring profits for global oil companies – Exxon saw profits rise to $11 billion, up 69 percent from last year. Shell was up 22 percent, Chevron up 36 percent, ConocoPhillips jumped 43 percent and even BP, which is still paying for the massive oil spill in the Gulf, saw gains of 16 percent and $7.2 billion in earnings. Profits rival those in 2008 when oil hit $147 and Exxon earned more than $45 billion, more than any publicly traded company in history.

“Despite massive profits year after year, many of which go overseas, the oil industry continues to fight to keep U.S. tax breaks, tax credits and other subsidies, some of which have been in place for nearly a century, not to mention the military cost of keeping shipping lanes open,” Clark said. “How many decades do these companies need government support? Certainly we should consider the oil industry well established and able to stand on its own.”

At the same time, the oil industry and its many offshoot organizations continue to bemoan any incentives for biofuels. “They promote many myths and misinformation about biofuels like ethanol, and that is unfortunate because biofuels are our only hope of diversifying the fuel supply and producing more energy here at home,” Clark said. “Instead of being part of the solution, they continue to promote false ideas that only make us more dependent on oil, even if that oil comes from the Middle East.”

Wordless Wednesday | Pink corn

"Pink" treated seed corn

Thanks to the Howells-Clarkson FFA Chapter for this Crop Progress photo. You can see all of the Crop Progress photos from FFA chapters around the state at our online Flickr photo album.

Nebraska corn 57% planted, 4% emerged

Nebraska corn farmers had 57 percent of the corn crop planted as of yesterday, the U.S. Department of Agriculture said in its weekly crop progress report this afternoon. That's a big jump from only 15 percent planted last week – and continued good weather will allow farmers rapidly advance that figure this week. Some farmers, in fact, have already moved on to soybeans (15 percent of the state's soy crop is planted, 1 point ahead of the five-year average).

If you follow USDA's estimate that Nebraska farmers will plant 9.5 million acres of corn this year, then Nebraska farmers planted about 4 million acres of corn in the last seven days.

A year ago Nebraska farmers had 74 percent of their corn planted, but last spring's weather was nearly ideal. The five-year average is 62 percent planted by this date.

USDA also noted that about 4 percent of Nebraska's corn crop is emerged. That figure will jump this week, too, with warmer weather spurring things on.

Nationally, USDA said 40 percent of the corn crop is planted, a good jump from last week's 13 percent but still behind the five-year average of 59 percent planted. A year ago 80 percent of the crop was planted. Iowa saw the biggest jump in planting this past week – moving from 8 percent planted a week ago to 69 percent this week, matching its five-year average. (FYI - That means Iowa farmers planted about 8.5 million acres in seven days – more than 1 million acres a day!)

Some states are still lagging, but it is only May 9 and there is plenty of time to get corn in the ground.

USDA said 7 percent of the nation's corn crop had emerged, off from 36 percent last year and 21 percent for the five-year average.

This week's photo comes from the Imperial FFA Chapter and shows corn plants just emerging from the soil. It's part of the Nebraska Corn Board's 2011 crop progress photo set on Flickr. Be sure to check out more photos and details of the crop year at the Board's Crop Progress Update page.

Podcast: Nebraska farmers making $2.6 billion investment this spring

In this podcast, Don Hutchens, executive director of the Nebraska Corn Board, notes that Nebraska corn farmers will be making a $2.6 billion investment this spring just to get the corn planted and off to a good start.

"It’s an investment that has a significant economic impact on dozens of businesses in rural communities and, in fact, the entire state," Hutchens said. "It’s also an investment that is subject to Mother Nature and the whims of outside markets."

It's an investment in seed, fertilizer, fuel and all the other inputs it takes to get the crop in the ground and growing. Those have to come from somewhere, and local seed dealers, cooperatives and dozens of others benefit.

It all adds up pretty quickly, to more than $270 on average per acre based on estimates calculated by the University of Nebraska Extension (multiply that by 9.5 million acres USDA said Nebraska farmers will plant this year to reach the $2.6 billion). But that doesn’t tell the whole story, Hutchens said. Those dollars get circulated through communities and the entire state. With a multiplier of 2.5, planting corn this year will actually provide a $6.5 billion economic impact across the state as a whole, he said.

Those estimates don’t include labor or land costs, or the cost of irrigating for those farmers who carefully utilize that resource. It also doesn’t include the expense of harvesting, hauling and storing the final crop. All those costs come later and provide their own economic impact.

And along the way, it provides tremendous job opportunities in many different facets of the agribusiness sector.

For more on this subject, click here.

Nebraska Corn Kernel podcasts are also available on iTunes! Click here to subscribe.

Nebraska Corn Salutes May for Beef Month

May is Beef Month!

We produced a video to show our support of the beef industry and to brag a little bit about how great our Nebraska corn-fed beef tastes!

Beef is obviously important in Nebraska, ranking number one in commercial red meat production. And the farmers and ranchers who raise cattle are experts at converting Nebraska corn and ethanol co-products like distillers grains into nutritious, value-added beef.

Because of this, the Nebraska Corn Board invests checkoff dollars supporting our state’s beef industry, research for cattle production and nutrition, and global market development programs that feature Nebraska beef.

Take a couple of minutes to watch this video, and enjoy beef this May – it’s what’s for dinner!

Wordless Wednesday | Planting finally rolling

Thanks to the Imperial FFA Chapter for their Crop Progress photos. To see more photos, check out our online album here.

Podcast: Keep safety in mind this spring

In this podcast, Steve Ebke, a farmer from Daykin and member of the Nebraska Corn Growers Association, encourages farmers across the state to keep safety in mind while they are busy planting USDA's estimated 9.5 million acres of corn this spring.

He encourages farmers to take a break from time to time and avoid rushing just to get a few more acres in ahead of an oncoming rain.

He also has a message for farmers, people in town and visitors. "We all appreciate those peaceful country roads," he said, "but please be aware of farm equipment traveling from field to field and farm to farm. It’s large and moving pretty slow, meaning only a second or two is needed to close that distance for a car traveling at highway speeds. So drive safe and keep an eye out for all the farmers out there."

Nebraska Corn Kernel podcasts are also available on iTunes! Click here to subscribe.