Ethanol from beet-derived sugar - AgMinute for December 6, 2013

BURLEY, Idaho — Pacific Ethanol plants in Burley, Boardman, Ore., and Stockton, Calif., have started making ethanol for the first time utilizing beet-derived sugar. Click here for the full story

AgMinute for Sept. 4, 2012

Secretary of Agriculture Tom Vilsack says the federal Renewable Fuel Standard, which faces growing opposition among livestock groups, has several upsides. Critics say it has driven up the cost of livestock feed.


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No salve for ethanol's burn — Podcast for Aug. 24, 2012

In this podcast, editors and reporters talk about the plight of California ranchers facing widespread wildfires, the response of dryland wheat farmers to ongoing drought in southern Idaho, and the Capital Press editorial board’s position on how to cope with soaring feed costs.

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AgMinute for Aug. 24, 2012

Waiving the Renewable Fuel Standard could reduce corn prices by as much as $1.30 a bushel or not at all, according to an analysis by the Farm Foundation and economists at Purdue University.

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AgMinute for Aug. 21, 2012

The market impact of USDA's plan to buy $170 million worth of meat to "relieve pressure" on drought-stricken livestock producers will likely be minor and short-lived, economists say. And it won't impact high feed costs that are keeping many producers from making a profit.

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Podcast: Feeling the burn of ethanol subsidies

As lawmakers in Washington, D.C., spar over federal spending and taxes, attention has focused on farm subsidies — including the various federal support programs for corn-based ethanol.

Reporter Tim Hearden and copy editor Will Koenig discuss how different groups see ethanol subsidies and how federal supports affect livestock producers.

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What do you want lawmakers to do on ethanol policy?

Groups react to EPA ethanol ruling

Sent to Capital Press this morning by the American Meat Institute and National Chicken Council:

Diverse Coalition Responds to EPA Decision on E15

(WASHINGTON, DC) - A coalition of business, environmental, budget watchdog and public interest groups issued the following statements in response to today's Environmental Protection Agency (EPA) decision to expand the scope of its October, 2010 decision to allow a 50 percent increase—from 10 percent (E10) to 15 percent (E15)—in the amount of ethanol permitted in gasoline. Today's decision by the EPA broadens its earlier decision to allow E15 gasoline in model year 2007 or newer automobiles. The new higher ethanol-content fuel will now be available for use in millions of cars in model years 2001 to 2006 as well.

Statements

“EPA’s decision to increase the ethanol blend to E15 will further increase volatility in the grain markets. This could hasten the reduction in wheat acres and raise Americans’ food bills. U.S. cropland is already stretched to its limit. Increasing the blend has the potential to further impact commodity stocks and ultimately food prices. The grain markets are currently experiencing near record volatility and prices have edged closer to the record levels of 2008.”

-Robb MacKie, President and CEO, American Bakers Association

“Why is the government forcing consumers to use an inefficient fuel that causes the price of food to skyrocket? Corn ethanol gets less miles per gallon, and is less efficient than gasoline. Now that more cars are ‘approved’ to use E15, according to the EPA, then we can expect the price of regular gasoline to increase to encourage use of this inefficient fuel. All subsidies and mandates to use ethanol should be repealed.”

-Bill Wilson, President, Americans for Limited Government

“Increased pressure on the corn supply has again pushed corn above $6.00 a bushel, levels not seen since 2008. This announcement only means that more corn will be diverted from an already thinning supply and increased pressure will be put on the meat and poultry sector which is already facing near record high feed costs. For consumers who are concerned about food prices, this decision will further increase prices at the grocery store. Burning our food and feed as fuel is not a sustainable approach to solving this country’s long-term energy needs.”

-J. Patrick Boyle, President and CEO, American Meat Institute

“With this decision, the Obama administration has just voided car warranties for millions of Americans at the behest of the corn and ethanol lobby. The confusion at the pump will be unimaginable, as will the costly burden placed on taxpayers as cars and small engines not made to burn corn ethanol break down after misfueling. Taxpayers have invested billions in a fuel that does little to reduce our dependence on foreign oil while tearing up the land and polluting fresh water."

-Shelia Karpf, Legislative and Policy Analyst, Environmental Working Group

"The EPA's decision amounts to a New Year's gift to corporate ethanol interests that is bad for consumers and bad for the environment. Corn ethanol is a highly polluting fuel that causes more climate-damaging emissions than regular gasoline, according to the EPA's own scientific analysis. Consumers are bound to get confused at the pump, and using more ethanol in engines not configured to run on ethanol could lead to engine damage and increased emissions of toxic air pollutants."

-Kate McMahon, Biofuels Campaign Coordinator, Friends of the Earth

"Today's decision will divert even more food and feed to fuel, increasing food prices at a time when food prices are already rising. We urge EPA and the Obama Administration to put the needs of ordinary Americans ahead of the needs of the ethanol industry and reverse this decision."

-Geoff Moody, Director, Energy and Environmental Policy, Grocery Manufacturers Association

“Dairy processors and farmers are increasingly aware of the impact that ethanol policies are having on feed costs and ultimately what consumers are paying for dairy products. EPA’s decision is unfortunately another step in the wrong direction. “

-Jerry Slominski, Sr. Vice President, International Dairy Foods Association

“EPA’s decision is another giveaway to the ethanol interests and again demonstrates EPA cannot or will not balance the broad national interests on this issue. E15 may be good for ethanol producers and corn farmers but it is clearly detrimental to all other interested parties. To the extent EPA and the ethanol industry actually manage to force more ethanol into the nation’s motor gasoline, they will put even more pressure on the already very tight supply of corn. When consumers ask why their food costs are higher, it will be difficult for EPA to explain that today’s decision had no impact on the food shopper’s dollar.”

-Bill Roenigk, Senior Vice President and Chief Economist, National Chicken Council.

“This decision literally takes food out of the mouths of American consumers in order to increase the profits of the ethanol industry. When corn and all the food products derived from it are diverted away from the dinner table, that drives up the cost of a meal for every American family whether they are eating in a restaurant or at home. Turning corn into ethanol and burning it as fuel should not take priority over feeding families at an affordable price.”

-Scott Vinson, Vice President, National Council of Chain Restaurants

"This decision to increase the ethanol blend in gasoline is environmentally shortsighted and virtually guaranteed to negatively impact U.S. food security."

- Barry Carpenter, CEO, National Meat Association

“For several decades now, Washington has propped up ethanol through subsidies, sweetheart tax deals, mandates, and other schemes. The EPA shouldn't encourage this dash for cash even further by using its authority to expand E15's usage. Taxpayers are already groaning under the weight of past mistakes with ethanol policy; it's time for government to stop breaking their backs.”

-Pete Sepp, Executive Vice President, National Taxpayers Union

“EPA’s decision completely disregarded significant scientific and economic evidence surrounding E15 and its potentially disastrous impact. It sends a terrible signal to an already volatile market at a time when corn supplies are very tight. The long-term potential for diverting even larger amounts of corn away from food and feed is a recipe for that could result in consumers paying more for food.”

-Joel Brandenberger, President, National Turkey Federation

With friends like these ...

Western ranchers, you have a new ally in your push to end the federal ethanol subsidies that many believe contribute greatly to escalating input costs. Want to know who it is?

Wait for it.

Wait for it ...

Al Gore.

"It is not a good policy to have these massive subsidies for first-generation ethanol," Reuters quoted Gore saying of the U.S. policy that is about to come up for congressional review. "First-generation ethanol I think was a mistake. The energy conversion ratios are at best very small.

"One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president," the wire service reported Gore saying.

Of course, never mind that he thinks emissions from your livestock are destroying the planet. He'll help you cut your feed costs, at least.

Today's vocab word: Agflation

The Economist takes an in-depth look at the rising costs of key agricultural products (wheat, corn, beef and the like) and what it means for the world economy. As for causes, the magazine — never a big fan of subsidies or trade barriers — doesn't hesitate to take U.S. policy to task:

With agflation, policy has reached a new level of self-parody. Take America's supposedly verdant ethanol subsidies. It is not just that they are supporting a relatively dirty version of ethanol (far better to import Brazil's sugar-based liquor); they are also offsetting older grain subsidies that lowered prices by encouraging overproduction. Intervention multiplies like lies. Now countries such as Russia and Venezuela have imposed price controls—an aid to consumers—to offset America's aid to ethanol producers.

The surge in income for farmers is good, the magazine reports, and is the perfect time to end subsidies and price supports in America and Europe, for the benefit of all:

Cutting rich-world subsidies and trade barriers would help taxpayers; it could revive the stalled Doha round of world trade talks, boosting the world economy; and, most important, it would directly help many of the world's poor. In terms of economic policy, it is hard to think of a greater good.

What do you think?

Western response optimistic to proposed Farm Bill, although cuts still being examined

At first reaction, the agricultural community — particularly in the West — was positive about what Agriculture Secretary Mike Johanns outlined for the 2007 Farm Bill.

Considered the diversity of geography and commodities in the country, it’s remarkable that any Farm Bill can get a favorable response from across the country.

The tendency in the past was some areas, such as Western specialty crop growers, were left out when farm programs were being developed.

As usual, corn, soybeans, wheat, rice and cotton remain the biggest winners when it comes to continued subsidy payments proposed by the Farm Bill. While some of those crops are grown in the West, it’s generally the Midwest and Southern states that benefit the most from the Farm Bill programs.

However, thank the patient, steady lobbying efforts of farm and commodity organizations in the West for the inclusion of specialty crops in this version of the Farm Bill. Whenever they have had the chance, they have stressed how important this was to farmers here.

Johanns agreed: almost $5 billion has been committed to research, marketing programs and trade expansion for those specialty crops.

Western Growers spokesman Tim Chelling summarized the reaction of a lot of vegetable and fruit growers: “We’re extremely pleased with this kind of recognition of this portion of American agriculture, which is roughly half of U.S. crop agriculture. Finally the government and the Farm Bill recognizes the place of specialty crop agriculture in the nation’s agriculture policy, and that alone is a significant milestone.”

The other areas that Westerners looked at as priorities for more money included conservation, and resources to support farm trade and fight international trade barriers. Johanns came through on those, too: $7.8 billion for conservation, and $400 million regarding the trade issues.

Farmers also wanted a commitment to biomass research, the development of ethanol, and renewable energy, and the Farm Bill included proposals in those areas.
The agricultural community will be still digesting all the details of the Farm Bill, especially since Johanns said farm spending would be reduced by $18 billion over the next five years. The farm programs part of the proposed 2007 Farm Bill would cost $87.3 billion over 5 years, according to Johanns. This is down from $105 billion for the programs in the 2002 Farm Bill.

The main change appears to be that subsidy payments will be limited to those who make less than $200,000 in adjusted gross income annually. That’s down from the current income cap of $2.5 million, and would impact 80,000 producers who collect about 4.5 percent of overall farm payments in the country. Johanns estimated this would save about $1.5 billion in the next decade.

However, farmers will be looking carefully where the other billions of dollars will be saved and how it will impact them personally.
As late as a day before Johanns made his announcement, a broad coalition of about 100 groups that included the American Farm Bureau Federation, the National Farmers Union, but also just about every national organization representing crops, fruits and vegetables, nurseries, viticulture, dairy, and even banks united to formally ask that farm bill spending be increased.

In their letter to the Senate and House Budget Committees, they wrote “Given the cuts agricultural programs have already sustained over the last several years, and the substantial savings as a result of farm bill programs, we ask that you adopt mandatory and discretionary spending levels that provide for additional funding and resist efforts to force further budget reductions on agricultural, food assistance, conservation and other critical programs.”

Whether that coalition will stay united and support Johann’s proposals remains to be seen.

Whenever a new Farm Bill is introduced, questions arise from the public on why should there be support for farmers in the first place.

This year, one of the strongest arguments came just before Johanns made his announcement.

The USDA’s Economic Research Service released its statistics that American families and individuals currently spend an average of just under 10 percent of their disposable personal income for food: in other words, an average household can pay for its full year of food with its disposable income after about 36 days of employment.

“Compared to food, Americans work longer each year to pay for their housing, federal taxes and medical care,” said Anne Rigor, Chair of the Oregon Farm Bureau Women’s Advisory Council, in a press release. The Oregon Farm Bureau is marking Feb. 4-10, 2007, as Food Check-Out Week to help people understand and celebrate the affordable, healthy and safe food that farmers produce in this country.

“According to the Tax Foundation, Americans must work 52 days each year to pay for health and medical care, 62 days to pay for housing/household operation and 77 days to pay their federal taxes,” said the release.

The public benefits when farmers and ranchers can afford to stay on the land and expect income support when they need it, whether it’s from weather disasters or international trade disputes, as well as support for rural development.

While debate continues on what should be in the final Farm Bill to be adopted later this year, Johanns made some good steps to ensure Western farmers feel more respected and protected in what they do for the nation.

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What's the impact from ethanol announcement?

While reaction was generally positive to the president supporting ethanol and reducing America’s dependency on foreign oil supplies, there has been some caution emerging about some of the goals George W. Bush outlined in his State of the Union speech Tuesday night.

Bob Krauter, of Capital Press, reported that Matt Schmitt, a managing partner in Calgren Renewable Fuels, a company that is building a California ethanol plant, welcomed the news but the proposed mandate may be too ambitious for ethanol producers.

Bush’s goals require 35 billion gallons of renewable and alternative fuels in 2017 — nearly five times the current target.

“I think ethanol has a saturation point of 15 billion gallons,” Schmitt said. “The rest would come from biodiesel, which means 15- to 20-billion gallons of biodiesel, which I think will be a tough call to have as much biodiesel as ethanol.”

According to DesMoines Register in Iowa, another Californian who expressed concern is Tad Patzek, an engineer at the University of California at Berkeley. The newspaper called him a “ leading critic of the ethanol industry” and reporting him saying “ the nation will never produce the amount of fuel Bush wants because of technology issues, land availability and other obstacles.”

The article added that Patzek stressed, “our politicians need to start talking about cutting energy use by a factor of two,” he said.

In several of the states that have seen great growth in their ethanol industries, they welcomed the comments by Bush. Their ethanol leaders also admitted it was ambitious, but appeared confident that production will be expanded and needs will be met.

One of the questions will be what will fuel the country: will corn continue to be the main product used in ethanol? The goal outlined for ethanol by Bush would mean using seven times the amount of ethanol distilled from corn last year, and the agricultural industry has already been buzzing about what ethanol is doing to corn prices.

Corn prices have doubled in the last 13 months, reaching a 10-year high, and farmers who depend on corn for feed for livestock have been worried as their profit margins have shrunk and supplies become harder to find.

It’s not just America that is affected by higher corn prices. Last week, according to Associated Press, Mexico’s president Felipe Calderon “signed an accord with businesses Thursday to curb soaring tortilla prices and protect Mexico's poor from speculative sellers and a surge in the cost of corn driven by the U.S. ethanol industry.”

The story went on to say “The corn tortilla is the basic staple of the Mexican diet and is especially crucial for the poor. The accord limits tortilla prices to 8.50 pesos ($0.78) per kilogram and threatens to use existing laws to achieve prison sentences of up to 10 years for company officials found hoarding corn. Some stores have been selling tortillas for as much as 10 pesos ($0.91) per kilogram.”

While corn prices rose here in the U.S., it was tortilla prices that soared in Mexico.

“Tortilla prices rose by 14 percent in 2006, more than three times the inflation rate, and they have continued to surge in the first weeks of 2007. The rise is partly due to U.S. ethanol plants gobbling corn supplies and pushing prices as high as $3.40 a bushel, the highest in more than a decade.”

The U.S. ethanol industry cannot accept all the blame for what is happening with Mexico’s tortilla prices and how it affects the poor families there, since corrupt Mexicans appear to be taking advantage of those who can least afford large increases in the price of their staple food.

But the U.S. should be aware that the world continues to watch closely what direction the president wants the ethanol industry to grow here, what impact will it have on agriculture directly and indirectly, and if the country can even meet the ambitious goals he has set.


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State of the Union speech

Western farmers will watch if Bush follows through on promises

It was a more reserved, less smug president that addressed the Republicans and Democrats Tuesday night in Washington, D.C. during his State of the Union address.

George W. Bush pleaded for support of his plan to add additional troops in Iraq, and emphasized the role that America needs to serve in international affairs while still protecting itself at home against terrorism.

The tone was different than speeches made by the president during the last few years: there wasn’t the air of defiance against critics, the bragging of success, the vows to defeat the axis of evil or unflinching cheerleading by his fellow Republicans.

While there were plenty of standing ovations and considerable applause, the support didn’t break down along the tradition lines of the president’s own party supporting all he said. This was especially clear on issues such as when he stressed the need for a temporary workers program, when he noted that there’s a serious problem of global climate change, and when he discussed the plan to send more troops to Iraq.

While there was the expected harsh words from Democrats later criticizing Bush’s foreign policy and failed objectives on the domestic agenda from his years thus far as president, there still appeared to be some acknowledgement that there needs to be change and cooperation to get things done — and cautious commitment made to work with the president if he indeed is serious on dealing with health, education, immigration and energy issues in the next two years.

Bush sadly ignored the Farm Bill, international trade and those areas impacted by weather disasters as priorities in his speech at a time when they deserved attention.

What can the West’s farmers and ranchers expect for help from Bush’s speech and the direction he wants to influence the House and Senate?

There is hope that something will be done about immigration issues and the challenge to have the workforce that segments of the agricultural community need so much.

Bush brought up that border patrols will not do enough to secure America’s border, but that a temporary worker program is needed. “We should establish a legal and orderly path for foreign workers to enter our country to work on a temporary basis. As a result, they won’t have to try to sneak in — and that will leave border agents free to chase down drug smugglers, and criminals, and terrorists.

“We will enforce our immigration laws at the worksite, and give employers the tools to verify the legal status of their workers — so there is no excuse left for violating the law,” Bush said. And then he touched on what many wanted to hear.

“And we need to resolve the status of the illegal immigrants who are already in our country — without animosity and without amnesty.”

It was obvious not everyone in his own party or in the Democratic party supported him as he announced this. The media dutifully recorded politicians that did not applaud or stand up in support. Bush expected and acknowledged this in his speech.

“Convictions run deep in this Capitol when it comes to immigration. Let us have a serious, civil, and conclusive debate — so that you can pass, and I can sign, comprehensive immigration reform into law.”

Westerners will applaud Washington’s politicians finally confronting the immigration issue head on, resolving the problems that exist: there is a need for a legal work force, but most importantly, there needs to be a labor force in place when and where it’s needed. Too many commodities were hurt this year when there was a worker shortage at crucial harvest times. Fruit and vegetable growers were particularly vulnerable and frustrated.

An area where Bush did find more support on from the politicians he courted during his speech was when he urged his country to be less dependent on foreign oil supplies.

This is not a new direction, but it renewed hope that perhaps something will finally be done about it, and there was hope that agriculture can provide the alternative energy sources needed.

“It is in our vital interest to diversify America’s energy supply — and the way forward is through technology. We must continue changing the way America generates electric power — by even greater use of clean coal technology ... solar and wind energy ... and clean, safe nuclear power. We need to press on with battery research for plug-in and hybrid vehicles, and expand the use of clean diesel vehicles and biodiesel fuel. We must continue investing in new methods of producing ethanol — using everything from wood chips, to grasses, to agricultural wastes,” Bush said.

More specifically, Bush challenged everyone: “Let us build on the work we have done and reduce gasoline usage in the United States by 20 percent in the next 10 years — thereby cutting our total imports by the equivalent of three-quarters of all the oil we now import from the Middle East.

“To reach this goal, we must increase the supply of alternative fuels, by setting a mandatory Fuels Standard to require 35 billion gallons of renewable and alternative fuels in 2017 — this is nearly five times the current target. At the same time, we need to reform and modernize fuel economy standards for cars the way we did for light trucks — and conserve up to eight and a half billion more gallons of gasoline by 2017.”

Education, healthcare and the economy were other domestic issues on Bush’s agenda that deserved and received attention in his speech.

But for agricultural community in the West, if the farmers can’t find the workers when they need them, or afford their fuel for their machinery, the transportation costs to get to market, and the heat for their business operations or even their homes, it’s tough to think about some of the other domestic issues.


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I need something to wash this down

So, it goes to reason that if crop prices go up, that should be a good thing for agriculture. But a couple of news items this morning leave me wondering.

One story from Associated Press came from yesterday's earnings report from Tyson Foods. Tyson was reporting their third consecutive quarterly loss. The reason, in part, was blamed on higher corn prices. The chickens and cows that become the foods in Tyson Foods are costing more to feed, which is likely to mean it's going to cost consumers more to feed their families.

Why? Corn liquor. Or more accurately, corn fuel. Ethanol. Increased demand for ethanol is contributing to a 10-year high in price for corn.

But on the flip side of the supply-demand ledger, fewer people are eating meat. So, Tyson says it's paying more and selling less.

So while Midwest corn growers may be in hog heaven, cattle and poultry ranchers may not be quite so happy.

You know who is happy? The folks who do seem to be making money in the confusing economic morass are those on Wall Street. In a story broadcast this morning (click here for a link to the video on today.msnbc.com) on the Today show from CNBC, the five largest Wall Street firms alone will pay out $36 billion in bonuses this year, which would set a new record. The bonus bonanza is attributed to a robust and rejuvenated stock market. It will eclipse the record set in 2005 when $21.5 billion in bonus cash was awarded.

So, how many farmers and ranchers out there, who produce the raw materials for the American economy, are having all-time record grown when also absorbing higher fuel and fertilizer costs, higher wage costs and other rising expenses?

It's something to chew on.

Agriculture
Food prices
Ethanol
Wall Street
Economics
Profits