AN EVEN TRADE?

The Renewable Fuels Association released a report yesterday regarding U.S. ethanol exports. According to the report, our ethanol exports are surging partly because the U.S. is the lowest cost producer right now and also because we have extra ethanol we can’t use within our country.

Both of these concepts might come as a shock to you so let me give a brief explanation. Ethanol produced in Iowa is currently $1 cheaper per gallon than ethanol produced in Brazil. Blending 10% ethanol from Iowa into a gallon of gasoline would be $0.11 cheaper than the same blend containing ethanol from Brazil.

I’m not shocked that U.S. farmers and ethanol producers are the most efficient in the world, but I’m sure some are.

And in regards to the second point, we do have additional gallons of ethanol that we can’t use in the U.S. right now. Since the U.S. Environmental Protection Agency will only allow a 10% of each gallon of gasoline to be ethanol, we simply don’t have any more gallons of gasoline to blend into.

But all the summaries and background information aside (you can read that here), there are a couple of take home messages from this data that I just can’t ignore.

First, I wish the world, the government, and the American consumer would notice that American corn farmers are doing EXACTLY as we said they would – they are producing more than enough corn to feed and fuel the world. Corn farmers have grown enough corn to feed all the livestock in the U.S., to export corn to other countries to feed their livestock, to fulfill the needs of all the food markets in our country, to produce all the ethanol that our entire nation can use, and now to ship our ethanol to other countries.

Why did anyone doubt us and when is someone going to notice? American corn farmers can produce corn. They can produce exponential yields using less fertilizer, fewer chemicals, and contributing to minimal soil erosion. When is someone going to stand up and give the corn farmer credit for this incredible story of production and environmental stewardship?

Secondly, and maybe more importantly, why are we shipping ethanol to other countries at the expense of our own energy security!?

To quote the RFA report, “As long as domestic ethanol usage is restricted by the regulatory limitation on 10% blends, the U.S. ethanol industry will be forced to look to the global marketplace for new demand sources. And, as a result, Americans will miss out on the opportunity for greater fuel savings and a healthier, more secure domestic energy supply.”

I admit that I obviously have a bias because I love corn farmers, I love corn, and I love ethanol. But am I the only one thinking that trading our safety, our health, and our cash for more oil overseas because of government rhetoric is crazy?

Dave Loos
ICGA/ICMB Technology & Business Development Director
(and ethanol expert!)

ETHANOL PRODUCTION DOES NOT IMPACT INCREASING NITROGEN AND PHOSPHORUS RUNOFF

Corn needs nitrogen and phosphorus in the soil to produce quality grain. For years, farmers have added these nutrients to the soil through manure applications and, more recently, directly injecting them into the soil.

However, the actual use of nitrogen and phosphorus per bushel has decreased in recent years. Corn yields are going up and nutrient applications are decreasing, allowing farmers to use 36 percent less fertilizer for their crops than they did only three decades ago.  In addition, new tillage practices are reducing soil erosion which, in turn, decreases nutrient run off. If you look at their numbers, there is less phosphorus and nitrogen per bushel of corn now than ever before.

Currently there are two projects starting in Illinois that are addressing the movement of nitrogen and phosphorus by studying tillage, application dates and amounts. These studies will be a collaborative effort between the Environmental Defense Fund, American Farmland Trust, and University of Illinois researchers.

Increased ethanol production has had no impact on phosphorus and nitrogen run off.
Recent information is now looking at “legacy phosphorus and nitrogen” – a term coined by the EPA to indicate nutrients that were washed into the streams and rivers and deposited 50 years ago and are now being moved downstream by the heavy rainfall events of the last few years. It is estimated that it may take 30-50 years before this huge reservoir of sediment and nutrients will be washed out of the River system. Thus the significant reduction in applied nutrients/bushel currently is actually keeping the levels of nutrients in our water systems from being as high as they could be.

Mike Plumer
Ex Officio Director, ICGA & U of I Extension Specialist

WHAT QUALIFIES AS GLUTTONOUS PROFITS? HOW ABOUT 8,000%!

If you’re looking for a good read, I think you might have just stumbled across one.

Take a look at this article by Marc J. Rauch, Executive Vice President of The Auto Channel which claims to be the “largest independent automotive information resource.” I don’t know about that, but I do know that Mr. Rauch is in favor of calling a spade, a spade.

The article quickly chronicles the arrival of a news tip in his inbox entitled Automakers Concerns with E15, and his thoughts on the folks that wrote the article, their lack of facts, and their unbiased support of the oil industry.

He offers some great quotes. For one, “The story’s byline claims that its author is with the ‘Ethanol Transparency Project,’ a sponsored program of “The Agribusiness Council.” After perusing information about The Agribusiness Council I would say that its name is as ill-conceived in describing its real purpose as “National Socialism” was to describe Hitler’s Nazi Party.”

And he summarizes the article by saying, “Except for those people who make gluttonous profits from the petroleum oil, it is in everyone’s best interests to destroy OPEC and the ruling hierarchy of the gasoline companies. Energy independence from foreign dictators and terrorism supporters can be had, and there are economically viable alternatives to gasoline that are available right now. Alcohol (ethanol) is one, and it may be as close to a viable single source solution to oil as is possible.”

I won’t ruin it for you. Come check it out here.

By: Lindsay Mitchell
ICGA/ICMB Marketing Director

FAPRI Response to “Stop Big Corn” in Washington Times

Ethanol Fumes

The editorial “Stop ‘Big Corn’ ” (Opinion, Monday) did not accurately describe the analysis of ethanol policy conducted by our institute.

The editorial says we at the University of Missouri’s Food and Agricultural Policy Research Institute estimate that the ethanol blender’s tax credit increases the price of corn by “18 cents per barrel.” This appears to be a reference to a report we issued in March that looked at the impact of extending the 45-cents-per-gallon ethanol tax credit, the 54-cents-per-gallon ethanol tariff and the $1-per-gallon biodiesel credit. We estimated that the combined effect of these three policies would be to raise the average producer price of corn by 18 cents per bushel during the 2011-12 corn-marketing year. Individually, each of these policies would have a smaller impact on corn prices.

In addition, the editorial says the Environmental Protection Agency is deciding whether to “boost existing requirements that gasoline contain 10 percent ethanol to 15 percent.” The EPA is actually considering whether to allow 15 percent blends, not whether to require them.

Finally, you cite the cost of the blender’s tax credit as $16 billion per year. That would be the eventual cost of the credit if ethanol consumption reached 36 billion gallons per year and the tax credit were maintained at its current level. We project actual ethanol use in 2010 to be a little more than 12 billion gallons, suggesting that the direct fiscal cost of the credit this year will be less than $6 billion. Without legislative action, the blender’s credit will expire at the end of 2010.

PATRICK WESTHOFF
Co-director, Food and Agricultural Policy Research Institute
University of Missouri
Columbia, Mo.

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