October 31, 2008

Ocean freight rates lowest in five years


According to the U.S. Department of Agriculture's October 30 Grain Transportation Report (.pdf), ocean shipping rates for bulk grain have sunk to their lowest level in 5 years.

Driving the decline is the fear of a global economic downturn - as fears and uncertainties expressed themselves in the world markets, causing reduced demand for bulk shipments. Although not mentioned in the article, perhaps lower fuel surcharges are also reducing costs.

As of October 24, the cost of shipping grain from the Mississippi Gulf to Japan was $31 per metric ton, the lowest since June 2003. The rate from the Pacific Northwest to Japan was $17, the lowest since November 2002.

The report's author said he expects that rates will remain low as long as the economic slump persists.

These lower costs - and current lower commodity prices - make it less expensive for countries to buy U.S. grain. A weak dollar helps, too. USDA expects corn exports to reach 1.95 billion bushels this marketing year - down from last year's 2.44 billion. It will be interesting to see if lower freight rates/commodity costs alter this picture.

Playing into foreign demand is global grain and oilseed production - figures that have rebounded this year after weather problems in some areas a year ago. Plus global growers had an improved financial incentive this year.

The result: Global wheat production for 2008-09 is projected to be a record 680.2 million tons, global rice production a record 433.2 million tons, global oilseed production 420.4 (up 7.4 percent) and global course grain production 1.1 billion tons (up 11 percent). These are all big numbers and for all but course grains, global ending stocks are expected to rise.

October 30, 2008

Grassley wants apology from Grocery Gang

Iowa Senator Charles Grassley sent a letter October 28 to the interim president and CEO of the Grocery Manufacturers Association (GMA) - asking Mr. Molpus when he could expect GMA's member companies to "reduce food prices commensurate with lower input costs."

Grassley reminded the head of the Grocery Gang that GMA and its segregates blamed high corn prices for higher food prices for much of this year, yet now that corn prices are half what they were then, food prices have remained high. Click here for a FoodPriceTruth blog post that links to the letter.

Grassley said GMA did "everything it could" to make ethanol a scapegoat for the rise in commodity and food prices. "Subsequent events clearly prove that ethanol was not the primary driver of those corn prices," he wrote.

He also called out one of GMA's spokesmen, who has recently been quoted in a couple of papers continuing his ill-conceived mantra.

Grassley told DTN's Chris Clayton that an apology from GMA - or lower food prices - would be nice.

On Wednesday, almost on cue and providing Grassley with more ammunition, Kraft Foods reported that it's third-quarter net income of $1.4 billion was more than double last year's income - thanks to price increases and cost cuts.

October 29, 2008

Ethanol beats gas in environmental, economic profiles

At a news conference in Illinois Tuesday, the Illinois Corn Growers Association (ICGA) announced the results of two studies that conclude production of the biofuel ethanol leaves a smaller carbon footprint than gasoline and has substantial room for growth - without affecting corn supply to the food and feed sectors.

Rob Elliott, vice president of ICGA said the studies indicate that modern ethanol plants have a superior carbon footprint and net energy benefit when compared to gasoline refineries and provide "compelling data that ethanol production can grow substantially at no risk to food supplies."

The studies' authors were Ross Korves, economic policy analyst at ProExporter Network, and Dr. Steffen Mueller, principal research economist at the University of Illinois at Chicago's Energy Resources Center.

Mueller examined the global warming and land use impact of corn ethanol produced at the Illinois River Energy ethanol plant, a modern, natural gas fueled facility, on a full life-cycle basis. "We found conclusively that the global warming impact of the modern ethanol plant is 40 percent lower than gasoline. This is a sizable reduction from numbers currently being used by public agencies and in the public debate. The study also documents the significant net energy benefits of ethanol when compared to gasoline," he said.

For more information on this study, and to download it, click here.

The Korves study, broader in scope, analyzed the consequences of a technology-driven revolution that is occurring throughout America agriculture which would see average corn production increase from 155 bushels an acre today to 289 bushels over the next two decades. The study suggests that sufficient amounts of corn will be available to increase ethanol production from the current level of 7.1 billion gallons last year to 33 billion gallons by 2030 with current technology. The study also factors in increased future demand for corn from both export and livestock (feed) sectors.

Korves also looked at the environmental impact of ethanol production, predicting that the global warming impact of the average ethanol plant would decline dramatically through increased efficiencies in coming years. ICGA reported the reduction was significant enough that corn ethanol could be categorized as an advanced biofuel based on the performance requirements in the Energy Independence and Security Act of 2007.

For more information on this study, and to download it, click here.

October 28, 2008

Error lowers corn production estimate

The U.S. Department of Agriculture today corrected errors in two reports it issued October 10, lowering planted and harvested area for corn by 1.0 million acres.

This cut corn production from 12.2 billion bushels to 12.0 billion. While correcting this error, USDA lowered expected feed/residual use 50 million bushels to 5.3 billion, reduced corn exports 50 million bushels to 1.95 billion and lowered 2008-09 ending stocks to 1.09 billion, a drop of 66 million but still above the psychologically important 1 billion bushel mark.

USDA then raised the anticipated average farm price a nickel to $4.25-5.25/bu. (Most farmers would be happy with that right now.)

For the corrected crop production details, click here.
For the abbreviated and corrected supply/demand report, click here.

In addition to the 1.2 percent drop in corn acres, USDA reported 1.4 percent fewer planted acres for soybeans, 1.9 percent fewer acres planted acres for canola, 0.8 percent fewer planted acres for sunflowers and 0.7 percent fewer planted acres for dry edible beans. Sorghum planted acres, though, increased 2.5 percent.

Despite the change in acreage estimates, the 2008 corn crop is still on track to be the second largest on record, while the soybean crop will be the fourth largest. (For the lowdown on the original USDA estimates, click here.)

Meanwhile, a couple of analysts thought USDA may take the opportunity alter yield estimates - raising corn and lowering soybeans. While anecdotal talk from the field continues to support that notion, we'll have to wait for the next regular report, due out November 10, for that information.

October 27, 2008

21 percent of Nebraska corn is in the bin

The U.S. Department of Agriculture’s crop production report today said 21 percent of Nebraska’s corn crop was harvested as of Oct. 26. This is up only 3 points from a week ago, as widespread rain kept farmers out of the field for much of the past seven days. A year ago, 58 percent of the crop was harvested, and the five-year average is 56 percent.

USDA said 87 percent of Nebraska’s crop was mature, compared to 100 percent a year ago and on average. A hard freeze across the state last night will certainly put an end to any further crop development. Still, early reports from the field indicate strong yields (better than expected?), but it will be interesting to see how the recent rain and wind will impact overall final harvest numbers.

A sunny and dry week is anticipated, so harvest numbers should jump by next week.

Nationally, 39 percent of the crop is harvested, compared to the average of 66 percent. Again, dry weather for the next week will allow a lot of corn to move from the field to grain elevator or bin, especially has more farmers wrap up soybean harvest, which is only about 5 points behind last year.

October 24, 2008

Websites offer facts on high fructose corn syrup

Just a few weeks ago, a post talked about some advertising spots on TV talking about the "Sweet Surprise" of high fructose corn syrup, or HCFS. The surprise part is the truth about HFCS - and that some folks don't know why they have a negative connotation of HFCS in the first place. (Follow the link above to view one of the commercials.)

Today, the Nebraska Corn Board made a few points - and encouraged people to visit a couple of websites: HFCSfacts.com and SweetSurprise.com. Both contain some great, fact-based and consumer-friendly information about high fructose corn syrup.

In a news release, Don Hutchens, executive director, noted that HFCS has been targeted by some groups as a "causative agent for a variety of ills facing society today, yet the simple truth is HFCS is no different than any other sweetener, other than it is made from corn."

For example, HFCS contains four calories per gram, which is no different common table sugar or honey. It also contains similar ratios of fructose and glucose and is metabolized in the same way as table sugar and honey.

People want an easy answer - and an easy solution - for things like obesity and diabetes. Blaming HFCS won't solve anything, and blaming agriculture in generaly certainly won't improve anyone's health. Agriculture - the entire food system - provides nourishment for people in this and many other countries. What we eat and how we eat it is up to us - good or bad.

In June, the American Medical Association noted that "high fructose corn syrup does not appear to contribute to obesity more than other caloric sweeteners." In other words, treat HFCS like any other sweetner. The Food and Drug Administration has affirmed that HFCS is a natural product, not some product of science like some other sweeteners on the market.

"HFCS is a natural ingredient made from corn, and should be treated and consumed like other sweeteners, not made the scapegoat," Hutchens said.

October 23, 2008

One state's push to cut petroleum use

Following the state's long history of supporting ethanol and renewable fuels, Minnesota Governor Tim Pawlenty called on state employees to reduce petroleum fuel consumption and use cleaner-burning alternative fuels like E85 in state vehicles whenever possible.

A new report from the Minnesota SmartFleet Committee said that in the first three quarters of this year, E85 use in the state fleet is 79 percent greater than during the same period last year. In looking the numbers, that translates to 529,000 gallons of E85 used to fuel the state’s roughly 1,700 flexible fuel vehicles, compared to 295,000 gallons last year. That's a big increase in using a home-grown renewable fuel in place of oil.

The report report was hailed by the American Lung Association of Minnesota, which supports the use of E85.

"A flexible fuel vehicle running on E85 instead of gasoline produces significantly less tailpipe emissions than the same vehicle using gasoline," said Kelly Marczak, director of the American Lung Association of Minnesota’s clean fuels program. "To-date, the state fleet’s use of E85 in 2008 has prevented more than 2,100 tons of lifecycle carbon dioxide emissions and other harmful pollutants from entering our air simply by using E85 instead of gasoline."

That's just one state - one state's government fleet. Imagine if that was repeated over and over across the country. It would cut petroleum use - and help clear the air.

The Ethanol Factor - calculate your savings, your impact

Ever wondered how much you lower greenhouse gas emissions by using E10 or E85 in your vehicle? Or how many barrels of oil a city of 10,000 could eliminate by using ethanol?

Well, the Ethanol Factor - an online calculator - can tell you exactly that and more.

Maybe you'd like to see how much you'd save if you fill your tank once a week - or how much money citizens of a community could save by using E85.

Here's one - a city of 10,000 folks filling their mid-size sedan tanks once a week would save more than 24,000 barrels of oil with E10 or a whopping 202,000 barrels with E85.

The Ethanol Factor was developed by the American Coalition of Ethanol.

October 21, 2008

Don't expect lower food prices anytime soon

Here's the opening line from a Wall Street Journal article: Grain and soybean prices have fallen by about 50% since their summer highs. But don't expect grocery prices to drop anytime soon.

Other than starting a sentence with "But", they got that right.

It notes that food companies are quick to raise prices and slow to lower them. No surprise there. In fact, the article reported that food company stocks have out performed the broader stock market -- profits for General Mills, for example, will jump to $4.18 a share next year from $3.81 this year. Kelloggs will go from $3.02 to $3.32, while Nestle's earnings will jump 11 percent. That's pretty good considering the economic situation in this country and abroad.

The paper unfortunately gave ink to the one of the Grocery Gang's chief "sky is falling" spokesman -- and didn't bother to mention the word "oil" or "gas" in relation to increased costs that these food companies have (and are) facing.

Oil and energy were mentioned here, in an article about "sticky" prices - about how food prices go up but don't often come down. In other words don't expect the price of your fruit crunchies to get smaller - although the package may.

FoodPriceTruth (click here for the report) and Consumer Reports (click here) have highlighted another way food companies pad their margin: Make products smaller (and sometimes increase the size of packaging to fool us). FoodPriceTruth has a great chart showing the increasing profits of some big food companies.

Isn't it a bit disingenuous for these organizations to blame ethanol and corn growers for higher input costs at the same time their profits are going up?

October 20, 2008

Corn harvest in full swing, but behind

The country's corn crop was 93 percent mature as of Oct. 19, which is 5 points behind the latest five-year average, according to today's crop progress report from USDA. Some states, including Nebraska, are further behind. In Nebraska, 83 percent of the crop was mature, compared to 98 percent on average. Yet states like Illinois and Iowa have caught up considerably - with Iowa being 92 and Illinois 98 percent mature (compared to 100 percent on average for both).

As for harvest, 29 percent of the country's corn crop is in the bin - compared to 53 percent on average. In Nebraska, 18 percent of the crop is harvested, less than half the 40 percent average. Iowa and Minnesota are further behind. Yet much progress can happen with a few dry days. In fact, a lot of farmers were in the field yesterday going all out.

Nevertheless, it is going to be a long fall for farmers - who are facing rain again this week. As evidence to the length of this year's crop cycles, USDA included corn crop conditions in its report. A year ago, those had already ended (87 percent of the crop remains in the fair, good and excellent categories.)

The photo above is from the Imperial FFA Chapter.

Podcast: Nebraska buffer strip progam is open

In this Podcast, Brandon Hunnicutt provides information on the Nebraska Buffer Strip Program, which is currently taking new enrollments. Buffers are very effective at trapping sediment and improve safety by keeping equipment away from the edge of the stream. They also provide an excellent habitat for pheasants, songbirds and other wildlife.

Hunnicutt, who is from Giltner, is a member of the Nebraska Corn Growers Association.

October 19, 2008

Most farms and ranches are family owned

More than 90% of America's farms and ranches are family-owned, Brad Johnson points out in the video below. Johnson grew up on a ranch and went on to become an actor with credits including Comanche Moon, Crossfire Trail and Rough Riders. He explains that farmers and ranchers care for people, the animals they raise and the land in their care.

The video is the work of the Animal Agriculture Alliance which has posted several videos here. The group encourages all of us to stand up for animal agriculture - and all of agriculture.

October 17, 2008

35 years ago: The oil embargo begins

According to this history of "significant events" in U.S.-Lyban relations, the Arab oil embargo began Oct. 19, 1973 - 35 years ago this Sunday. Saudi Arabia and other Arab oil producing states followed suit the next day.

The embargo was devastating to the United States - gasoline rationing, soaring prices and long lines at filling stations. It also pushed the government to develop and announced Project Independence to promote domestic energy independence. This first run at energy independence failed even though another energy crisis emerged in the late 1970s - in part due to collusion and unfair trade practices by oil companies. Follow the link at the bottom of this post for details, and for other efforts by oil companies to stymie alternative fuels.

(For more info on Project Independence - from Time magazine - click here.)

For an interesting take on the oil embargo, check out this article from Wired.

As the article noted, the embargo awakened the West to just how dependent it was on Middle Eastern oil, and how fragile that lifeline really was (we're more dependent today). Hence, Project Independence.

The embargo was the culmination of a decision to use oil as a weapon - it was the ultimate trump card as the rest of the world didn't have a choice. Pay the piper or no oil. And we're still paying today. But can ethanol change the trump suit?

Podcast: Agriculture is interesting again

In this week's Podcast, corn grower Jim Hultman of Sutton talks about the excitement seen in agriculture today. FFA is growing, corn membership groups are growing and farm incomes will set a record this year. Hultman is a member of the Nebraska Corn Growers Association.

October 16, 2008

Oil prices fall - OPEC in a panic

According to this article from the New York Times, another big drop in oil prices today - with oil falling below $70 for the first time in 16 months - set the oil cartel OPEC into a tizzy, with the cartel deciding to hold an emergency meeting next week. (OPEC calls the Oct. 24 meeting an "extraordinary meeting", but is it extra-extraordinary since November's regularly scheduled extraordinary meeting was hastily moved up a month?)

The second paragraph of the article is interesting: The rapid decline in prices had alarmed petroleum executives and oil producers who are becoming increasingly nervous that it is undermining the stability of energy markets.

Falling prices will undermine the stability of the energy markets? That implies they were stable to begin with. Going from $70 to $100 to $145 is no more stable than going from $145 to $100 and back to $70. Except when prices are going in reverse consumers benefit from lower gas and energy costs - and so does the economy as a whole. Toss in a few billion gallons of ethanol and a growing renewable fuels sector and we're on the right track.

But oil company execs want "stability" - which apparently is a code word for "high prices" and "record profits". They want this "stability" to so they can invest over the long term. If only the world were so perfect. After all, wouldn't everyone want this form of "stability"?

Anyway, expect the oil cartel cut production, maybe by a million barrels a day. Good thing we have a domestic renewable fuels industry - which is already replacing some of that oil.

Corn and ethanol: An economic resurgence story

Check out this news of the day post from the National Corn Growers Association (NCGA). It covers some of what NCGA CEO Rick Tolman told AgriTalk about ethanol and the economy. There's also a quote or two from USDA Under Secretary for Rural Development Thomas Dorr.

In the interview, Tolman stressed the importance of corn ethanol for the people and economy of rural America and provided an update on the 2008 corn crop.

"It’s a tremendous story of economic resurgence," Tolman said. "Nationally, we have about 240,000 jobs supported by the ethanol industry. The most compelling stories are the local rural ones, of communities that can now build schools and fire stations because of increased tax receipts. It's an exciting story."

The interview was in conjunction with a Farm Foundation/USDA conference on the rural bioeconomy.

October 15, 2008

Big Chicken Little cries wolf

Five months ago this week, news broke that the Grocery Gang had declared war corn based ethanol - claiming the sky was falling because corn prices were higher than the historical average. They ignored record oil and fuel prices at the time and how that impacted their bottom line and every product on every shelf in the country.

As reported in this post, the Gang - a wealthy lobby of more than 300 food and beverage makers and marketers like Kraft Foods, Miller Brewing, Dean Foods and ConAgra - made and marketed, a "highly believable yet highly fake food vs. fuel debate." Part of the Gang was Big Chicken, which this post pointed out provided the seed money in the form of a $100,000 donation and a first class plane ticket for Texas Governor Rick Perry to challenge the Renewable Fuels Standard. Fortunately, EPA saw through the Gang’s stack of half-truths and denied the waiver.

Back when the Grocery Gang’s campaign was made public it fueled considerable attention to ethanol and corn production, with the anti-ethanol crowd inexcusably (and irresponsibly) blaming ethanol and corn for food riots, a lack of food in developing countries and more. Over time these positions softened as people learned the truth about ethanol - but challenges remain yet today. And, of course, all of this ignored the fact that the Grocery Gang continued to make pretty darn good profits. Not a bad PR move on their part - blame ethanol while you continue to rake it in.

But here we are today, Oct. 15, and December corn futures closed at $3.88, with cash prices in the countryside well below that and likely below the cost of production for many corn growers. If Big Chicken Little isn’t buying all the corn it can, well, that’s their problem. But they certainly shouldn’t be pointing fingers - unless they’re looking in a mirror.

October 14, 2008

Farmers need to prioritize how to spend money

An outstanding article by Elizabeth Williams appeared on DTN today and covered the gamut of what farmers, lenders and others are thinking as they watched the stock market crash last week and the bottom fall out of the grain markets - and things to consider before spending money. Click here to view the article.

It's no secret that ag land values of soared significantly over the last few years as grain prices moved up. It begs the question as to whether a "correction" - like in the housing market - will happen at some point. Although not addressed specifically, there are reports of buyers holding off hoping for land prices to drop. That's a scary thought, but at least with land you own "something" and not just a piece of paper that entitles you to another piece of paper like in the derivatives market. But that’s not much of a consolation prize when the bank calls.

The significant drop in commodity prices over the last few weeks has cost some farmers big. Holding off selling a couple thousand bushels of beans was easily a $14,000 lost opportunity. What happens of commodity markets stay low? Will land buyers stay away? Will rents be renegotiated? Will farmers cut back on inputs? Pay down debt? Put off a new piece of equipment?

Farmers have "a lot at stake," and the situation they find themselves in is a big deal, Bob Johnson, a Hastings corn and soybean farmer, said in the article. Johnson told Williams he won't cut back on inputs such as fertilizers or seeds, but he is being careful about debts - and rightly so. During the 1980s, he served on a board that studied farmer financial situations. From that experience, he recalls that farmers should always own at least 50 percent of their assets.

A bit of silver lining: With falling grain and other commodity prices, fertilizer prices have dropped, too. DTN said wholesale urea plunged about 40 percent and DAP prices fell about 20 percent. The trend is expected to affect everything from ammonia to UAN.

And, finally, an important note from Brian Kuest, a consultant with LeMaster and Daniels in Quincy, Wash.: Anyone who borrows operating money will need to put a sharp pencil to their operations and make sure they are profitable and meet their lender's appropriate targets. For most, that means you need at least 15 percent of your 2009 crop costs on hand in cash before the lender will lend you the remainder for your operating line. Producers need to be prudent in their long-term purchases, especially in equipment and land. Don't dilute your liquidity. It's not a good year to take undue risk.

There's a lot more in the article, including details on the importance of lining up credit, so be sure to check it out.

October 13, 2008

Ethanol: Saving consumers more than $1 billion

The American Coalition for Ethanol today issued a news release (.pdf file) that said ethanol will save Americans more than $1 billion this year - simply because the average price of a gallon of ethanol is about a dollar less than regular gasoline.

That equates to a savings of $1 billion to $1.25 billion, according to ACE's Ron Lamberty.

Those savings are direct - and don't begin to factor in the savings to consumers from ethanol expanding our fuel supplies and helping to drive down gas prices. (That figure is about $70 billion.)

Lamberty said as ethanol production expands, refiners have a greater supply of "inexpensive, high octane, and clean burning ethanol to blend in to their gasoline. Ultimately, that makes more fuel available and drives down the prices at the pump."

Doing some additional math, ACE noted that at today's volume and prices, Americans would save $1.62 billion annually if every gallon of gas contained 10 percent ethanol. Moving to E15 would take the nation’s annual fuel savings $2.23 billion.

Lamberty noted that ethanol is the "most promising domestic supply of fuel this country has today. It doesn’t need to be drilled for or imported. It doesn’t require more years of laboratory study or significant changes to infrastructure. It is less expensive and a lot cleaner than gasoline, and it is here today."

The group also reminded us that the Grocery Gang spent (and is still spending?) a lot of money attacking ethanol this year - blaming ethanol for high grain prices, which would force them to raise prices. Now that grain prices have dropped (big time), have retail grocery prices followed? (Also see this post and this one.)

"Now that commodity prices have fallen, consumers should ask where the savings are," said ACE's Brian Jennings. "Ethanol was a convenient excuse for a multi-million-dollar PR campaign to justify price hikes on American consumers."

October 11, 2008

Talking ethanol: From ranch to restaurant

ethanol across americaChairman of the Nebraska Ethanol Board - Jim Jenkins - recently authored a white paper for Ethanol Across America. The paper is based off Jenkins testimony at a Senate hearing in Omaha in August.

The white paper is titled Ethanol Economics from Ranch to Restaurant (.pdf file), which makes sense because Jenkins operates a cattle ranch near Callaway, Nebraska, and operates several restaurants including Skeeter Barnes. The white paper does a great job talking about how higher grain prices have impacted his two businesses. Importantly, he writes about how high grain prices may lead to more efficiency in cattle production and, ultimately, greater profitability.

There is a lot of well thought out in this white paper so be sure to download it and give it a read.

Here's Jenkin's conclusion:

So what is a cattle guy and restaurant owner doing in a pro-ethanol discussion like this? Well, as a Nebraskan and an American, I think the benefits of ethanol are getting lost in what is a muddled and multifaceted issue - creating change which is causing many to have to reconsider their business models...and that makes many people uncomfortable. Those with the intelligence, insight and will to adapt will do so - and thrive.

October 10, 2008

Corn crop, stocks bigger than expected

The U.S. Department of Agriculture’s crop production report today raised corn production and ending stocks, with production coming in at 12.2 billion bushels on 154.0 bushel-per-acre yields. This is a 1 percent gain in production (128 million bushels) and a 1.7 bushel per acre gain over last month, and if realized it will be the second largest yield on record (behind 2004). Total corn production remains the second highest on record, just behind last year.

The average pre-report guesstimate was for a 12.08 billion bushel crop.

Nebraska numbers also came in higher, with an estimated crop of 1.39 billion bushels on yields of 161 bushels per acre. A year ago, Nebraska saw a 1.47 billion bushel crop on yields of 157 bushels per acre.

For crop production details, click here.

These additional bushels, when combined with reduced use over the last quarter, have increased corn supplies. Beginning stocks for 2008-09 increased to 1.62 billion bushels, up from 1.58 billion. Feed use increased 150 million to 5.35 billion, while corn for ethanol dropped 100 million to 4.0 billion.

That leaves total ending stocks for the 2008-09 crop at 1.15 billion bushels.

USDA then cut the average expected farm price a full 80 cents to $4.20-5.20 per bushel.

The ethanol figure was cut because USDA believes gasoline consumption will slow, but adding to that is the slowing pace of new plants coming online. Conceivably, this number could shrink further.

Feed use was increased on larger supplies, reduced availability of distillers grains and "sharply lower prices."

For the supply and demand report, click here.

Pork exports sizzle, may set annual record

U.S. pork exports have sizzled this year, setting a record in the first half of the year and staying on pace to perhaps set a new all-time record, according to this report from the Nebraska Corn Board.

“More than 1 million metric tons of pork valued at more than $2 billion were exported from the U.S. in the first six months of this year,” said Mark Jagels, a farmer-director of the Nebraska Corn Board. Jagels said the high pace of exports has greatly supported hog prices. “A year ago, pork exports added about $28 to the value of a hog,” Jagels said, “but this year it’s $41 simply because exports have been such an important component of the markets.”

The Nebraska Corn Board pushes for pork exports by supporting the U.S. Meat Export Federation (USMEF), which conducts activities and promotions that support U.S. pork and beef sales around the globe. This year, the Corn Board has $400,000 budgeted for USMEF activities.

USMEF assistant vice president John Hinners said U.S. meat exports are critical to today’s livestock industry. “Exports support the prices livestock producers receive for their product, which helps them remain viable,” he said. “This is important for rural communities, which benefit from livestock production.”

Speaking of pork - October is National Pork Month, a celebration that began in 1962. And if all this discussion on pork, or the photo, has made you hungry, check out some of these great recipes over at the Nebraska Pork Producers site. Just scroll down to the recipe finder. It's a good thing.

October 9, 2008

Tyson's doubletalk on biofuels

Tyson Foods, the world's largest processor and marketer of chicken, beef and pork, broke ground this week on a biofuels plant in Louisiana with it’s partner Syntroleum Corp. and $100 million in Gulf Opportunity Zone Bonds.

With much fanfare - and gold shovels and shined wingtips - the companies talked big about the "well-compensated, highly-skilled jobs and a multi-million dollar payroll" the plant will create and the cleaner fuel it will produce that's an alternative to oil. These are all good things and worth a cheer.

Then they turned the soil and turned a page in the doubletalk playbook when they declared that the plant will make diesel and jet fuels from animal fats and greases.

The companies said they are different than the ethanol industry, "which use food ingredients such as corn" to produce fuel. (Somebody should explain to the suits at Tyson that that people don’t eat field corn.) Instead, they’ll use “non-food grade animal fats” such as beef tallow, pork lard, chicken fat and greases - all of which will be produced or procured by Tyson.

Don’t be fooled by the doubletalk. Just where have all those "non-food" fats gone over the years? Right into livestock and poultry feed. By creating a new market for traditionally cheap fat and grease, those prices will go up - and that’s good for Tyson.

So Tyson - who takes the opportunity to blast corn ethanol whenever it can - is talking out of both sides of its mouth. Biofuels are bad when they come from (non-food grade) corn - but good when they come from (non-food grade) fat and grease.

In other words, biofuels are great, as long as they are padding Tyson's already big pockets.

Podcast: New white paper explains food and fuel

In this Podcast, Steve Ebke of Daykin talks about a white paper produced by the National Corn Growers Association that shows how U.S. corn farmers are working to meet all needs by growing more corn per acre and doing so more efficiently. Ebke is chairman of the Nebraska Corn Growers Association.

October 8, 2008

Report: Biofuels not behind food crisis

Here’s a second blog post in response to the U.N. Food and Agriculture Organization’s The State of Food and Agriculure 2008 report. (Here’s the first post.)

Despite all the headlines - some created by the U.N. itself (remember the bogus “crimes against humanity line”?) - biofuels have contributed considerably less to rising global food prices than some have previously estimated. As noted in this report from Wired magazine, the U.N. report estimated that biofuels production added only 15 percent to world food prices.

And that is likely an overestimation because ethanol production has expanded in the U.S. over the last 10 months, yet overall global food prices have headed lower. (USDA's 3 percent figure is looking better all the time.)

"Food prices have dropped significantly and will continue to drop," Per Pinstrup-Andersen, a food economist at Cornell University, told Wired. "The reason for that is that farmers respond to these higher prices and you'll get more food produced than ever before."

Pinstrup-Anderson was not an author of the U.N. report, and he may not be a big supporter of corn ethanol. But he does understand that higher grain prices will lead the world to grow more, especially by farmers in developing countries, and that is important to remember when discussing biofuels and higher grain and oilseed prices.

The report includes a chart that shows FAO's food price index moved up sharply in the 2006-07 and early 2008 period. The last time a similar run-up was occurred? When oil prices spiked in the 1970s, just like they did this year. (FAO's "real food price index" is still below the 1970s figure.)

FAO noted that there are several factors involved in food prices. Here is its laundry list: weather-related production shortfalls in major exporting countries, low global cereal stocks, increasing fuel costs, the changing structure of demand associated with income growth, population growth and urbanization, operations on financial markets, short-term policy actions, exchange rate fluctuations and other factors.

Another important contributor to food insecurity? Decades of depressed prices that led developing countries to neglect investments in agriculture productivity, FAO said. Have higher global grain and oilseed prices over the last year begun to change that?

Biofuels can be positive for developing countries

A U.N. Food and Agriculture Organization report came out earlier this week and there are a couple of things to note. Here’s the first one. Check out the second half in this post.

First, The State of Food and Agriculure 2008 suggests that biofuels policies should be reviewed in order to preserve the goal of world food security, protect poor farmers, promote broad-based rural development and ensure environmental sustainability.

FAO Director-General Jacques Diouf said biofuels present both opportunities and risks, with the outcome depending on the specific context of the country and the policies adopted. "Current policies tend to favor producers in some developed countries over producers in most developing countries. The challenge is to reduce or manage the risks while sharing the opportunities more widely," he said.

That’s not exactly an "ah-ha" moment there, Diouf. After all, how many developing countries have the resources to develop a biofuels industry? But how many will progress down the path to having those resources should global agriculture be lifted up on the back of biofuels production?

FAO does go on to recognize that, but Diouf suggests one way to help poor countries is to remove agricultural and biofuel subsidies and trade barriers. He’s pointing fingers at the U.S. there, but forgetting that trade is a two-way street – and that poor countries don’t have the resources to develop a biofuels market in the first place. (And wouldn’t these countries want to use initial biofuels production for themselves first? As a way kick the expensive oil habit or to have a reliable supply of energy?)

Here’s the real "ah-ha" moment for the FAO: Growing demand for biofuels and the resulting higher agricultural commodity prices offer important opportunities for some developing countries. "Agriculture could become the growth engine for hunger reduction and poverty alleviation," it said.

It continues by saying: Production of biofuel feedstocks may create income and employment, if particularly poor small farmers receive support to expand their production and gain access to markets. Promoting smallholder participation in crop production, including for biofuel, requires investment in infrastructure, research, rural finance, market information and institutions and legal systems.

It is good the U.N. is recognizing the important and pivotal role biofuels can play in the developing world - and certainly we’re on our way. POET CEO Jeff Broin has addressed this subject at a recent U.N. event. Check it out here. Powerful stuff.

Wouldn't it be something if 100 countries could offer energy to the world - instead of the handful that do now? What a different world we would be living in.

October 7, 2008

Biofuels action plan unveiled

The U.S. Departments of Agriculture and Energy have released a National Biofuels Action Plan, which details the collaborative efforts of various federal agencies to accelerate the development of a sustainable biofuels industry.

The plan is in response to President George Bush’s "Twenty In Ten" goal - cutting gasoline consumption 20 percent over the next 10 years by investing in renewable and alternative fuel vehicles.

Ag Secretary Ed Schafer said federal leadership can provide the "vision for research, industry and citizens to understand how the nation will become less dependent on foreign oil and create strong rural economies." Energy Secretary Sam Bodman said the plan is a "strategic blueprint" that shows the way to meet President Bush’s goal.

The plan outlines interagency actions and accelerated federally supported research efforts in seven areas - Sustainability, Feedstock Production, Feedstock Logistics, Conversion Science and Technology, Distribution Infrastructure, Blending and Environment, Health and Safety.

The problem is, all of the people involved in the news conference today may be out of a job in a few months, and President Bush is out in January. Yet all the people doing the work to make this happen will still be around...So will this action plan grow legs and stand on its own by January or end up covered in dust?

Related to the action plan, an initial report came out today on using mid-range ethanol blends like E15 or E20. That report was supportive to using higher blends in regular cars - find it here (.pdf) or a response from the American Coalition of Ethanol here.

Ethanol spots on Limbaugh, Hannity radio shows

A new group, the American Ag and Energy Council (AAEC), has launched a national radio campaign featuring a "Food and Fuel Update." The first installment of Food and Fuel Update features commentary from Market to Market’s Mark Pearson and highlights the enormous cost of our nation's dependence on foreign oil and the financial benefits of ethanol.

If you listen to nationally syndicated radio shows by Rush Limbaugh and Sean Hannity, you may have heard these spots.

Wendy Wintersteen, dean of the Iowa State University College of Agriculture and Life Sciences, is co-chair of AAEC. She said the radio spots are the first in a series of efforts “to educate the American public on the positive benefits agriculture plays in their daily lives."

She said AAEC's main objective is to promote the common link between all sectors of
modern agriculture and energy through a positive and educational medium.

Pearson reported that there has “never been a more exciting time for agriculture, energy and in rural America. There is a wonderful story of progress that should be told and we'll do our part by educating the American public in the coming months."

AAEC's members include Big River Resources LLC, Hawkeye Energy Holdings and Golden Grain Energy.

You can listen to one of the spots below.

October 3, 2008

Op Ed: Bring balance, bigger picture to ethanol articles

A series of articles ran in the Journal Star this week that made an attempt to examine ethanol's impact on food and water, and examined the politics of the biofuel. According to the paper, the articles were from a year-long class project by a group of eight University of Nebraska-Lincoln journalism students who investigated the pros and cons of corn-based ethanol.

Fortunately, the paper published an op ed piece today by Don Hutchens, executive director of the Nebraska Corn Board. Check out the op ed column here. (There's a link to the series from within the op ed.)

In his response, Hutchens lays out a few facts on corn and ethanol and points out an error or two, especially in the first article in the series that addressed food and fuel. He notes that some facts and important information was left out of the series.

What's hard to understand is how a few easily corrected errors could be included after year-long work, or that much of the first article in the series came from other news articles and old research papers - and not from interviews with a few more sources who could provide perspective and depth.

Looking for E85? Check out this map

If you're wondering where E85 stations are in Nebraska, just follow this link to a Google map that shows them all. You can move the map with your mouse, zoom in and click on a station to get driving directions. The list is based off the National Ethanol Vehicle Coalition's list of E85 stations across the country, and was put together by Nebraska Corn Board intern Mat Hobrock.

NEVC has also posted a list of companies that will have E85 (flex fuel) vehicles available for 2009. Check out that list here. New to the list this year are a couple of models from Toyota.

Cattle and ethanol a ‘tremendous’ opportunity

We've known for a long time that distillers grains - produced by corn ethanol plants - is an outstanding feed ingredient, especially when fed "wet" to cattle.

One cattle producer, as reported here, noted that distillers grains has helped strengthen Nebraska’s economy and increased cattle feeding efficiencies in the state.

"Distillers grains has brought Nebraska back to the forefront of cattle production because it increases gains and performance of cattle on feed while maintaining carcass quality. It also provides a boost for cow-calf operators because it works so well in getting cows ready to breed," said Craig Uden of Darr Feedlot in Cozad, Neb.

Uden said distillers grains gives Nebraska cattle producers an advantage over most other states and added that ethanol and cattle "are the best combination we’ve seen in many years to provide an economic boost to the state. It’s just tremendous."

For links to the latest corn co-product manuals from the Nebraska Corn Board, including feeding and storing distillers grains, click here.

But don't forget that distillers grains are a good feed for swine and poultry, too. Many hog and poultry companies include distillers grains in rations - at 10 percent or more depending on the stage of growth. For information on these other species, click here.

October 2, 2008

Oil refiner sues California over ethanol

Tesoro Corp. - an oil company based in Texas with operations in California - has filed suit against the California Air Resources Board in an attempt to prevent the amount of ethanol blended into the state’s gasoline increasing from the current 5.7 percent to 10 percent by the end of 2009.

The oil company says it has “concerns” about the impact of ethanol on everything from greenhouse gas emissions to food prices. Yet the lawsuit, according to this report from the LA Times, says “precious little” about food and focuses instead on things that may impact the company’s own bottom line. (No surprise there.)

Tesoro apparently missed the Environmental Protection Agency’s decision about the Renewable Fuels Standard and food prices. Maybe company execs don’t read the local papers, since that challenge came from Texas, too.

And maybe it hasn’t seen the research showing that ethanol:
  • Reduces tailpipe carbon monoxide emissions by as much as 30 percent
  • Reduces exhaust volatile organic compounds emissions by 12 percent
  • Reduces toxic emissions by 30 percent
  • Reduces particulate matter emissions by more than 25 percent
  • Ethanol use in 2006 reduced carbon dioxide-equivalent greenhouse gas emissions by about 8 million tons. (That’s like taking 1.2 million cars off the road.)
The LA Times article gets it right:

The problem for Tesoro and other refiners is that the whole move to biofuels is eating away demand for its products. That might have something to do with the company's sudden concern about ethanol's impact on the environment and the nation's food supply.

Or maybe the oil company really believes that the best alternative to oil is ... more oil.

Million dollar house from grain elevator timbers

Okay - so this isn't about corn (directly) or Nebraska. But it is interesting.

Bob Armstrong of Regina, Saskatchewan, has built a 2,900 square foot, $1.5 million house entirely out of timber salvaged from grain elevators that were being torn down across the Canadian Prairies. There's a lot of good wood to be reclaimed from those structures.

He even drug a 1913 scale out of one elevator's rubble and converted it to a bathroom scale. He notes that "it's deadly accurate."

Click here for the story and picture of the house.

This also got me thinking about Bruce Selyem. He takes pictures of old (and new) grain elevators. Lots of pictures. His wife, Barbara, writes stories for Grain Journal about these old structures. (The two met after a she saw a story about him in an ag newspaper; the wedding was in an grain elevator.) They even formed the Country Grain Elevator Historical Society.

The photo at the left is a Selyem photo from somewhere in Nebraska.

Do you know where?

October 1, 2008

Ethanol pipline project moving forward

Provided everything goes as planned - which includes no more hurricanes in the region - Kinder Morgan Energy Partners will provide an update of its ethanol pipeline project November 1, according to a Podcast by Biofuels Journal. Click here to listen.

In the Podcast, Jim Lelio, director of business development for Kinder Morgan, discusses a 105-mile, 16-inch pipeline between Tampa and Orlando, Florida. The pipeline currently handles gasoline but is being configured to ship ethanol batched between gasoline.

Lelio said the company has replaced incompatible parts and is currently cleaning the line. The first test will be conducted in the next week or two.

He also noted that the test is "is customer driven. The customers have asked that we look for ways to ship ethanol via pipeline." He added that if the pipeline is a success, "we’ll look to take those lessons and apply it to other markets."

There has been talk of an ethanol pipeline in Nebraska - moving ethanol to a regional terminal. And another that would move ethanol from Iowa to the Northeast. If this test is successful, maybe interest will grow in this possibility. Shipping via pipeline could conceivably reduce distribution costs and more quickly move ethanol from the Midwest to population centers, where it could be blended with regular gasoline.