U.S. ETHANOL FUELS OUR WORLD

And these days, keeping our world safe with trade means that everyone has a safe supply of fuel as well!  Did you realize how much U.S. ethanol is fueling the vehicles all over the world?

We are already shipping ethanol to Brazil, China, Japan, and to our best friends, Canada and Mexico.  But we’re growing in other markets like the EU, and many countries in Central and South America.

American farmers and ethanol producers are seeing major growth in this area!  And we’re proud to supply a cleaner burning, renewable fuel!

WHEN TRADE WORKS, THE WORLD WINS

I learned something this week about the history of trade that I never knew before.

After World War II, our world got together and tried to figure out how to prevent more world wars.  Making sure that everyone had access to food and that all the countries were relying on each other was a part of that solution.

Since WWII, the United States has negotiated trade agreements with 20 countries.  Other countries have many, many more trade agreements.  And guess what?  It’s working!

Surely trade isn’t the only reason we haven’t had global wars, but it isn’t hurting.

You know what they say: if you don’t remember history, you are doomed to repeat it!

HOW MUCH CORN DO WE GROW AND WHAT’S IT WORTH?

Although corn (or maize, as it’s known throughout much of the world) is grown in nearly all 50 states, production is primarily concentrated in the northern and Midwestern states—collectively known as the U.S. Corn Belt.

Farmers in the Corn Belt grew quite a bit of corn in 2017 – enough to satisfy some pretty large markets with corn to spare!  Corn prices are low right now because farmers keep growing a lot of corn and the market demand isn’t keeping up.  U.S. policies about ethanol and trade are part of that impact.

For the market year September 2016 – July 2017, farmers sold Mexico 21.7 million bushels of corn for just over $6 billion.  They also sold 15.8 million bushels to Japan for $5.5 billion and 8.1 million bushels to South Korea for $2.8 billion.  These three countries are our largest corn importers.

Farmers are proud of the corn they grow and the economic activity they spur for our country.  With these numbers, who wouldn’t be?

MEAT EXPORTS HELP FEED THE WORLD

One of the things that we work on constantly at IL Corn is how to export more commodities to other countries.  This obviously helps farmers because it creates more market opportunities for their products, but also helps other countries that don’t grow or produce enough food to feed all their citizens.

We really enjoy exporting pork, beef, and poultry.  It makes the most sense; sell the corn here in Illinois or at least in the U.S. to another farmer who adds value to the corn by growing beef or pork with it, and then sell that beef or pork to an overseas customer.  This philosophy helps U.S. farmers capture more of the economic opportunity here in the states while still helping to feed the world.

The U.S. Meat Export Federation is one organization that helps us do this.  They have representatives in other countries that understand the culture and food and nutrition demands of the citizens there, and then they help promote U.S. beef and pork in those countries using what they know.

They even work to build demand for the cuts of beef and pork that we don’t use so much of in the U.S. so that we waste less of the animal.  As an example, we love our bacon here in the U.S. so no reason to promote bacon overseas.  Do you know what we love less?  Tongue.  Do you know who likes tongue?  Japan.  It’s a win-win proposition!

Interested in learning more about how we export beef and pork into other countries?  Follow U.S. Meat Export Federation on Facebook!

HOW DO FARMERS FEEL ABOUT THE TRADE AID?

How do farmers feel about the trade aid?  In a word, bad.

Not that I should be putting words in farmers’ mouths, but the majority of farmers that I’ve heard from would rather have good market demand and a good price for their commodities than receive government money to keep their farms in business.

To go back to the beginning and really understand this issue, you must have a good understanding of supply and demand.  The basics are, when supply is high and demand is low (you have a lot of corn and no one wants it), then the commodity price for corn is low.  When demand is high and supply is low (you have very little corn and everyone wants it), the commodity price for corn is high.  What farmers really want is both of those things in moderation – good steady supply and good steady demand.  Both of these things would help maintain farm incomes at a reasonable place for farmers to stay in business and for customers to be able to afford the corn they are growing.

The only piece of this equation that farmers can really control is supply.  But when farmers are growing crops for a supply that they thought existed, and then the government screws the demand side of the equation up, all of the sudden there’s no demand for the steady supply farmers were providing when they put their seeds in the ground.

That’s what happened here.  Farmers were growing for a very exciting and vibrant export market when they put their seeds in the ground, but now those markets aren’t there.  All the additional supply without the vibrant demand is sending corn prices into a hole.

Because the export demand failure is not the fault of the farmer, President Trump is trying to keep them in business another year with a trade aid package.

Is this what farmers really want?  No.

Will farmers take the few cents offered to them?  Yes.

If a big tax refund were planned for 2019, wouldn’t you take that cash even if you thought the politics behind the cash were wrong?

The bottom line?  This trade aid stinks and farmers don’t want to see the government outspending itself any more than the next guy.  But tariffs stink too and if farmers have to live with tariffs, they will also have to live with the trade aid.

What are your thoughts?

Lindsay Mitchell
ICGA/ICMB Marketing Director

 

A FUN LITTLE GRILLING COMPETITION WITH U.S. MEATS

IL Corn works with other associations to promote U.S. corn, ethanol, DDGS, beef, poultry, and pork in other countries.  We often fund educational, fun, and meaningful opportunities for chefs or average consumers to experience the difference with U.S. products.

This video shows a fun event in Mexico promoting U.S. beef and pork, hosted by the U.S. Meat Export Federation.  IL Corn didn’t happen to fund this particular event, but you’ll see how much fun we have showing folks the YUM factor with U.S. meats!

FORGET CORN & ETHANOL, EVEN DDGS TRADE IS PROFITABLE!

We talk a lot about corn and ethanol on this blog, but what about DDGS?  We sell a considerable amount of DDGS overseas – worth $2.34 billion!  And that’s worth talking about!

DDGS stands for Dried Distillers Grains with Solubles.  DDGS are what’s left over after corn has been made into ethanol.   Corn-based distillers grains from the ethanol industry are commonly sold as a high protein livestock feed that increases efficiency and lowers the risk of subacute acidosis in beef cattle.

IL farmer Lou Lamoreux shows the DDGS he feeds his cattle.

Those are a lot of big words, but the main point here is that after we make ethanol out of the corn, what’s left can be fed to livestock and it’s becoming increasingly important in the livestock industry, both in the U.S. and around the world.

So important, in fact, that DDGS are sold and trade just like corn, ethanol, and other commodities.

It’s recycling at its best!  We don’t waste a bit of that precious Illinois corn!

Lindsay Mitchell
ICGA/ICMB Marketing Director

 

 

For more information, watch this video!  DDGS are a bit of a dry topic (pun intended!) but for the folks that are interested, you can learn a ton here!

LEARNING BY DOING HELPS INDIAN AGRICULTURE THRIVE

On this blog, we talk a lot about agriculture in the U.S. and in Illinois, but we don’t often think about what agriculture looks like in other countries.  I found this article on Indian agriculture interesting.  We have to acknowledge where other farmers are and meet them there in order to raise all farmers to that very important level of sustainability and food security for all.

LEARNING BY DOING HELPS INDIAN AGRICULTURE THRIVE
this article originally posted at Global Farmer Network

Farmers must educate each other: That’s the best way we can learn to thrive, adopting the new technologies and sustainable practices that both conserve resources and improve productivity.

The fate of India depends on our success—and I’m trying to do my part to help from my farm in the southern state of Tamil Nadu.

I grow three crops per year on about 50 acres near the village of Ulundhai. I use a common method of rotation, starting with cereals (such as corn), followed by vegetables (brinjal and broccoli), and finally by pulses (green, red, and black gram).

Like most of my neighbors, I’m always in the field with something, even though our climate brings the challenges of drenching monsoons as well as periods of drought.

Despite the hard work, Indian farmers operate at only a fraction of the productivity of farmers in industrialized countries. This means that for India’s population of more than 1 billion, food costs are high—and an unacceptable number of people are malnourished.

When people don’t eat enough, they suffer. This is especially true for children, who are in the formative stages of life. The irreversible damage to their physical and mental wellbeing scars them for life.

These impairments hurt us all. They hold back my entire country.

So we have to do better.

It starts with the sharing of information. I spend a portion of my time training fellow farmers and young people in proper agricultural practices. The main theme of my workshops is: Learning by doing.

People come to my farm and participate in the work. Then they take what they’ve learned and apply it to their own fields.

Books and classrooms are excellent sources of education, but nothing is better than the experience of doing something—and that’s how we approach our farming education here. This is doubly important in my region, where many farmers are illiterate. They can’t read books, so we distribute pictorial pamphlets in the local language that transmit knowledge in simple ways that can be understood and followed.

Mostly, however, we demonstrate. We have to move slowly, taking things step-by-step. At my workshops, for example, I like to say that knowing how to operate a tractor doesn’t mean that you can hop into a Ferrari and drive to the city. Without proper awareness and instruction, you’ll hurt yourself and others—and it won’t be the fault of the Ferrari!

A farmer’s tools aren’t as a fancy as a Ferrari, of course. Some are mechanized, like tractors. Others are made for traditional manual labor. All tools, however, require at least some education so that farmers can learn how to handle devices for seeding, weeding, and fertilizing. I believe strongly that tools will enhance our man-power efficiency. This is an absolute need for a productive farming sector.

Modern farming is a science. We have to analyze the soil for nutrients and balance the fertility levels for specific kinds of crops. We must be careful about where fertilizer is placed, making sure it goes into the root zone for efficient uptake. Then there’s the challenge of pest and weed management, which means defeating insects and invasive plants through the appropriate use of crop-protection products.

Most Indian farmers don’t yet enjoy access to GMO technology, except for cotton, which means that we can’t take advantage of this technology for any of our food crops. Personally, I’d love to plant GMO corn and brinjal. A good seed sandwiched with precise crop production techniques will enhance the yield to its optimum. I am confident it would boost my farm’s productivity and help feed my country.

We’d also have to train farmers in the proper use of this technology. This can be done—it would not be too hard—but we would have to commit ourselves to the project, and once again engage in the strategy of learning by doing.

As I conduct workshops for entrepreneurs, my goal is to present agriculture as a profession, lifting it up from being viewed as a lowly occupation to an industrial activity. If we gain better access to tools and technology and perform the education that must go along with it, farmers will produce more food and consumers will have the means to buy more of it.

All of India would be much better off.

Rajaram Madhavan grows three different crops a year on his farm near Ulundhai Village, Tamil Nadu, India. Madhavan has several patents for farmer-friendly farm tools, conducts workshops that encourage entrepreneurs to take up agriculture as a profession.

READ WHAT THESE EXPERTS HAVE TO SAY ABOUT TRADE

“The trade data make it clear that over the past 15 years, the value of U.S. agricultural exports has expanded dramatically with our three largest agricultural trading partners: China, Canada and Mexico. While a few lingering trade barriers among these countries remain in place, most have been dramatically lowered over the last 15 years, helping facilitate this substantial increase in trade. Where trade deficits for agricultural products occur with Canada and Mexico, they are small relative to the total value of agricultural trade, can largely be attributed to the rise in the value of the U.S. dollar, and the drop in the price of some of our key exports. The real threat to agricultural exports now comes from rising trade tensions with all three of these countries who are our largest agricultural markets.”

Steve BurakKathy Baylis, and Jonathan Coppess
University of Illinois
Full article found here

“In response to the administration’s tariffs on selected products, especially steel and aluminum, China, Canada and Mexico have announced increased tariffs on a range of goods produced in the U.S. The European Union will also respond to increased U.S. tariffs.

“Farm products and products processed from agricultural commodities, such as wine and whiskey, have been singled out. As things currently stand, with the exception of pork and sorghum, the impacts should be manageable.

“However, if the situation deteriorates, and a full-scale trade war breaks out, the farm sector could fall into a full-blown depression. The farm sector has slowly been recovering from a period of low prices and incomes during the mid-2010s, and the current dispute and concerns about a widening trade war has added uncertainty in agricultural markets.”

William Knudson, Michigan State University
Full article can be found here

 

Alan Greenspan: We’re on the edge of a trade war from CNBC.

WHY GLOBAL AGRICULTURAL TRADE AFFECTS YOU

Photo by Erwan Hesry on Unsplash

Do you remember that one thing you loved as a kid? Everyone else may have looked at it thinking it was silly. Maybe looking back, you do too, but, at the time, it meant the world to you. Twelve years ago, I found myself in the middle of a dramatic discussion about my one thing. This group of 8 or 9 kids would get together every day and argue to the point that people weren’t sure whether or not we were all friends. So, what was so important that 3rd graders were upset and that, at one time, were sent to the principal’s office?

Trade.

We’d gather in the gym, each with two or three LEGOs, hoping to trade for the one figure we needed. The ones everyone wanted were Star Wars characters (obviously), followed by aliens, and this little LEGO monkey we called Norm. Looking back, this is one of those things I view as silly. Even though our group eventually got shut down, we still practiced some trading basics.

If you have flipped on the T.V. in past months, you’ve likely heard of the trade war. Trade is very important for many people and has serious implications for many sectors, especially agriculture. According to the USDA, 20% of a farmer’s income is the result of global trade. With all that on the line, here’s a rundown of what trade issues are concerning people.

NAFTA

The North American Free Trade Agreement is the largest trade deal in the world. This deal between the United States, Canada, and Mexico was unlike anything we’d seen prior. Every state (except for Wyoming and Kentucky) trades at least $10 million worth of goods every year because of NAFTA. Just here in Illinois, over $2 million of ag goods are shipped to Mexico and Canada each year. To read more about each state’s relationship with NAFTA check out this Iowa State Publication.

TPP

The Trans-Pacific Partnership is a trade deal that got a lot of people in agriculture excited. Expanding and increasing exports of ag goods is something that could pick up a down ag economy. The deal was set to involve twelve countries that border the Pacific Ocean. The deal was never ratified. Then, last year the U.S. pulled out of the deal. Now the remaining countries are still in negotiations under the name Comprehensive and Progressive Trans-Pacific Partnership. Even though we withdrew from TPP, recent talks have mentioned the U.S. rejoining. If that happens, net farm income could increase by $6 billion (Michigan Farm Bureau). The renegotiated deal is expected to be signed soon allowing the United States to join later.

China

One of the hottest topics in trade has been the escalating discussions between the U.S. and China. According to the USDA, China is the second largest importer of U.S. ag products totaling $19.6 billion. With that much on the line, it is very important to agriculture that we continue to trade with China or find other markets to sell our products.

What a Regression in Trade Would Mean

The U.S. produces more food than we can use. So, we sell what food is left over. As I learned in 3rd grade making deals, to sell a product, someone must be willing to buy it. Ideally, many people will want to buy it (like Norm the LEGO monkey) and the seller can charge a higher price because of its value to so many people (I grossly overpaid for that monkey). If the U.S. successfully does creates a condition where many countries want U.S. ag products, the economy grows healthier. Additionally, when farmers receive fair prices and make money, they can invest in machinery, seed, technology, and practices that result in a healthier and safer food supply. This further stimulates the ag economy.

These reasons are just a few on the list of why trade is so important to farmers.

JC Campbell
Legislative Intern
Illinois Corn Growers Association