Ethanol Secrets of the Bovine

This one is common sense. Cattle have been utilizing roughage since they were created.

Secret for efficient ethanol in cows' stomachs?
Professor: Enzyme that helps digestion could be the key
(complete article here)

Ethanol Battle Not Over

Livestock producers are suffering from high feed prices. Soon, we will likely see a reduction in numbers in our livestock herd which will translate ultimately to higher protein prices for consumers.

This issue is not just domestic in nature. U.S. corn prices have an impact on the world market. Most other countries that use our corn do so for human consumption. In places like Africa, the effect of high U.S. corn prices is a contributor to famine conditions.


Ethanol battle unlikely to fade

Livestock, food industries discuss intensifying push to change law

By BRETT CLANTON
Copyright 2008 Houston Chronicle
Aug. 8, 2008, 10:08PM

Efforts to cut or freeze U.S. corn ethanol requirements are unlikely to end with the federal government's denial Thursday of Texas Gov. Rick Perry's plea to waive half of this year's mandate.

Livestock and food industry groups that backed the request already are talking about increased lobbying efforts in Washington to change the law.

Legislation under discussion in the Senate could...(complete article here).

EPA Blows The Call on This One

The corn grower's lobby wins another one.

EPA rejects Texas request to cut ethanol waiver

WASHINGTON (Reuters) - The U.S. Environmental Protection Agency said on Thursday it denied a request by Texas to cut the federal ethanol mandate requiring 9 billion gallons of ethanol and other renewable fuels to be blended into gasoline this year.

The EPA said...(complete article here).

Switchgrass and Corn Stover for Cellulosic Ethanol

This article discusses some of the economic comparisons between corn stover and switchgrass for cellulosic ethanol production.

Economist: Take 'stalk' in corn stover as state's ethanol future

WEST LAFAYETTE, Ind. - Cellulosic ethanol made from corn stover and switchgrass could be the next big thing in liquefied energy. The biggest of the big - at least in Corn Belt states like Indiana - would likely be corn stover, a Purdue University study finds.

Corn stover is plentiful in Indiana because...(complete article here).

How to Break Link Between Food and Biofuels

Iowa State continues its leadership role in research related to food and biofuels.

Breaking the Link between Food and Biofuels

Bruce A. BabcockJuly 2008 [08-BP 53]

Production of biofuels from feedstocks that are diverted from food production or that are grown on land that could grow crops has two important drawbacks: higher food prices and decreased reduction in greenhouse gas emissions. If U.S. policy were to...(complete news release here).

Corn: Food or Fuel?

The food versus fuel debate continues. The corn farmers are happy.


Siphoning off corn to fuel our cars

As farmers feed ethanol plants, a costly link is forged between food and oil

By Steven Mufson

CHARLES CITY, Iowa - Erwin Johnson picks up a clump of the dark, rich soil that he has farmed for 35 years, like his father and grandfather before him. In a few months, this flat expanse of northern Iowa will be crowded with corn ready to be trucked to market.

A year ago, that market got a little closer -- and a lot better. Instead of sending his corn to a barge company to be shipped down the Mississippi River for export, Johnson now loads it into an open truck and sends it two miles up the gravel road to a hulking new ethanol distillery that he can see from his field. The plant is paying him $5.50 or more a bushel, more than twice as much as Johnson could get just a couple of years ago.

"This is a fantastic time to be farming," Johnson says. "I'm 65, but I can't quit now."

Across the country, ethanol plants are swallowing more and more of the nation's corn crop. This year, about a quarter of U.S. corn will go to feeding ethanol plants instead of poultry or livestock. That has...(complete article here).

Tyson CEO Speaks Out On Ethanol

The voice for ending ethanol subsidies is getting louder....

Tyson CEO Bond Calls For End To Ethanol Subsidies

CHICAGO (Dow Jones)--The call from the head of Tyson Foods Inc. (TSN) for most ethanol subsidies to be swept away promises to re-ignite the food-versus-fuel debate among U.S. agribusiness companies.

Dick Bond, Tyson's president and chief executive, said on an earnings call Monday that Congress should reduce or drop a federal tax subsidy and end import tariffs on sugar-based ethanol.

Tyson has been...(complete article here).

The Decline of U.S. Wheat Production

Shifting acres from wheat to corn and soybeans is changing the landscape of the Great Plains.

Emptying the breadbasket

Decades of Great Plains' wheat as king and low prices everywhere are over

By Dan Morgan

At Stephen Fleishman's busy Bethesda shop, the era of the 95-cent bagel is coming to an end.

Breaking the dollar barrier "scares me," said the Bronx-born owner of Bethesda Bagels. But with 100-pound bags of North Dakota flour now above $50 -- more than double what they were a few months ago -- he sees no alternative to a hefty increase in the price of his signature product, a bagel made by hand in the back of the store.

"I've never seen anything like this in 20 years," he said. "It's a nightmare."

Fleishman and his customers are hardly alone. Across America, turmoil in the world wheat markets has sent prices of bread, pasta, noodles, pizza, pastry and bagels skittering upward, bringing protests from consumers.

But underlying this food inflation are changes that are transforming U.S. agriculture and...(complete article here).

Texas Requests Ethanol Cutback

I know this particular move was politically motivated and relatively safe in Texas because corn is not on of the biggest crops -- although there is a lot of it grown in the Corpus Christi area as well as the Panhandle. Beef on the other hand is huge and there is significant swine and poultry production as well. He is correct in his statement that the ethanol mandates are misguided. I don't expect anything to come of this but it is good to see his effort.

Texas seeks U.S. ethanol cutbacks; cites corn costs

By Joan Gralla

NEW YORK (Reuters) - Texas Gov. Rick Perry on Friday asked the U.S. government to cut "skyrocketing" food prices by waiving half of the renewable fuel standard for ethanol made from grain.

The Republican governor from the oil-producing state said in a statement that such a waiver was "the best, quickest way" to ease rising food costs before lasting damage was done.

"We're diversifying our state's energy portfolio at a rapid rate, but this misguided mandate is...(complete article here).

Complexity of the Global Food Crisis

The article linked below from the BBC is one of the more thoughtful that I've found on the "global food crisis." It discusses the complexity of issues that have contributed to rising food prices rather than seeking to place blame on a particular factor.

How to solve the global food crisis

By Kaushik Basu
Professor of economics, Cornell University

The world economy has many problems but none more pressing than what is happening to food prices.

There have been food riots in Haiti, the Philippines, Ethiopia, Indonesia and several other nations.

Twenty thousand desperate textile workers in Bangladesh went on a rampage, giving rise to fears of wider instability, since the garment industry accounts for three-fourths of the country's exports.

Global food prices have been rising over the last three years; but in the last few months they have spiralled out of control.

Over the last 12 months the...(complete article here).

Human Behavior's Impact on Food Prices

Below is linked a thoughtful article on the rising price of basic food grains throughout the world. There is only one factor discussed with which I would take exception. That is the impact of biofuels on the prices of wheat and rice. Although there could arguably be a point at which competition for acres will impact production of these two crops, I do not believe that it has occurred at this point.

Traditionally, in the U.S., corn is primarily destined for cattle feed. In the southern part of the wheat growing areas of the country -- such as Texas and Oklahoma -- cattle often graze wheat pasture (stocker phase) prior to entering the feed lot for finishing. The cattle are removed from the wheat pasture at an early date so that the wheat can continue to mature and produce grain. These are complementary enterprises. With the high prices for corn due to competing demands from ethanol production, it would be assumed that cattle would remain in this stocker phase of production longer -- thus taking the wheat acreage out of harvest for grain. High prices for wheat have actually had the opposite effect. Farmers are electing to forego income from stocker cattle in the hopes of harvesting even more wheat from their planted acres. This is a purely economic decision on the part of the farmers who often lease their land to cattlemen for grazing.

My point is that in spite of the potential for ethanol production taking acreage away from wheat production, it has not in fact occurred due to other market factors. If allowed to operate, free enterprise will allocate resources in the most efficient manner possible. Rising food prices are certainly a part of that mechanism, but they are not the driving force. Fuel prices are driving the issue and they are a function of many factors. (see this post)

How Countries Worsen the Food Price Crisis

By Kent Garber

Since early 2007, when food prices began marching noticeably upward, there have been violent riots in more than a dozen countries, growing malaise in developed areas, including the United States, and a fluid debate about the origins of the spike. On the last point, a consensus has emerged. A slew of factors--record fuel prices, ethanol production, unprecedented demand, the effects of climate change--have been blamed, creating a sort of perfect storm for the world's food supply.

Although each merits attention, another culprit must now be added: the human reaction to the crisis.

Since the first of the year, additional jumps in food prices have bred not only uneasiness and widespread fear but also...(complete article here).

New Competition for Beef

While traveling in Kansas this past week I had the opportunity to meet with several cattlemen and feedlot managers. The mood among them is somber to say the least. The market doesn’t seem to be adjusting to the realities of the new energy economy very quickly.

Transportation cost is one of the biggest factors impacting every industry across the country -- especially livestock feeding. When trucking companies are dealing with diesel prices in the neighborhood of $4.00/gallon, the cost of moving grain or animals or boxed beef becomes significant. If calves are being shipped from the Southeast to feedlots in the Plains, the cost of transportation must be figured into the price of those calves. The same issue affects corn – if it can be purchased at all.

On the other end of the supply chain we have the consumer. When gasoline prices are at record levels, groceries is one area where household costs are cut. We should be looking at ways to drive less or improve fuel efficiency but instead, we cut back on spending for higher priced food items such as beef. We don’t give up our gas guzzling habits very easily.

The result is that packing plants are looking at cold storage filled with boxes of unsold beef; the feedlots are looking at cattle that need to go to market but the packing plants aren’t willing to give them a price at which the feeder can make any money; cattle feeders are unwilling to buy calves to put on feed – and on and on. It all is driven by fuel in one form or another.

What is driving the fuel prices? I am amazed that our Congressional leaders in all of their wisdom feel compelled to bring the heads of multiple oil companies to Washington to berate them over the cost of fuel. Of course, most of the Congressmen and Senators don’t have much training in economics. In fact, I think they must be trained in anti-economics – or at least anti-free enterprise. Most of the laws coming out of Washington seem to hinder business rather than help. The cost of every regulation and every hair-brained pork-barrel scheme gets passed on to the consumer in some form or fashion. Sometimes it is a direct tax but more often than not, it as an indirect tax created through regulatory action on business.

It is the growing economies in India and China, domestic regulations concerning fuel additives, mandatory targets for bio-fuels, market uncertainty due to political unrest, burdensome regulation on building new refineries and infrastructure, the high cost of building refineries, environmental regulations, closure of certain areas to oil exploration, the devaluation of the dollar, and all of the other global factors that impact the energy business that are driving fuel prices. Why do we think we can solve the problem by making ethanol from corn? Oh, and did I mention the booming economies of India and China? A few hundred million individuals with the most disposable income at their finger tips that has been seen in those countries ever – want to spend it on some of the finer things in life – like automobiles and meat.

Our consumer spending habits are enabling those countries to build thriving economies that produce goods that must be transported to the U.S. by ships burning diesel. I’m happy their economies are growing. We just have to realize that we are paying for that growth.

The current ethanol mandates drive up the price of corn. That’s really all they do for our energy situation. Has the price of gasoline come down? The high price of corn was good for corn farmers – last year. The cost of farm inputs has now normalized (adjusted) due to the higher fuel costs and the margins for farmers will be much slimmer this year. Their business is extremely fuel intensive. Their input costs – such as for fertilizer and diesel – have gone through the roof.

The mandates are hurting cattle producers. They are suppressing demand for beef because now – put this in your pipe and smoke it – beef is competing against energy. The consumer dollar will choose energy over beef because of the need to heat and cool our homes and drive to and from work. In the past, beef competed with pork and poultry. Now it must also compete with energy because the primary cattle feed ingredient is being converted to fuel.

Isn’t it great what misguided regulations do for you?

Key Reports from the USDA

Some Key Reports from the USDA:



Grain Stocks



Prospective Plantings



Rice Stocks



These are all important indicators of price movement of important food and feed grains over the coming months.

Decisions, Decisions, Decisions

It seems to me that a contra-strategy often works. Swim upstream.

Expert advises farmers to plant corn in fields not yet committed

WEST LAFAYETTE, Ind. - Market incentives all winter have indicated that farmers should plant more soybeans, but a reversal in the new crop futures has occurred, said a Purdue University agricultural economist.

"The March 31 Prospective Plantings report is going to suggest that producers will plant...(complete article here).

Texas Panhandle Ethanol Plants

Since I am frequently in Hereford, I have watched both the White Energy and Panda plants through the construction phase. What I find most interesting is that the White Energy plant seems to be a stream-lined, no-frills operation that is designed for efficiency. Although I don't know much about either plant, it appears that the Panda plant is a little more elaborate. They also seem to have experienced some major construction delays. I am amazed at how much electricity they must be consuming because at night it is lit up like an electrical power plant. I admit that I don't know much about their business, but from appearances alone, I would say the White Energy plant will make money when others, such as their neighbor down the road, will not.

Texas poised to become regional hub for ethanol

Panhandle alone will have four big plants soon

By BRETT CLANTON
Copyright 2008 Houston Chronicle

HEREFORD — Texas may be a latecomer to the ethanol business, but it is about to announce its arrival in a big way.

At a ceremony today in this small town near Amarillo, where cattle far outnumber residents and the brown, flat land extends forever in all directions, a Dallas company will formally open the state's first large-scale ethanol plant. It is one of the nation's biggest.

Yet it won't have bragging rights long. Three more major...(complete article here).

Bioenergy Mandates Will Continue to Support Prices

The corn farmers should be happy...

2008 FAPRI Outlook Shows New Bioenergy Mandates Sustain Historically High Commodity Prices

Contacts:
Jacinto Fabiosa; jfabiosa@iastate.edu
Dermot Hayes; dhayes@iastate.edu
Sandra Clarke; sclarke@iastate.edu

March 5, 2008

WASHINGTON — Continuing high crude-oil prices and new bioenergy mandates, such as the U.S. Energy Independence and Security Act of 2007, are expected to sustain prices at historic highs across all agricultural commodities over the next decade. This is according to analysts with the Food and Agricultural Policy Research Institute, or FAPRI, who briefed Congress this week on their new 10-year projections for U.S. and international commodity markets.

Global net trade in ethanol is projected to increase by 2.53 billion gallons, reaching...(complete article here).

Economic Feasibility of Ethanol From Sugar Crops

This research out of LSU indicates that, at least for now, corn is the most economically feasible feedstock for ethanol production in the U.S.

The Economic Feasibility of Ethanol Production from Sugar Crops

Michael E. Salassi

Ethanol is a high-octane fuel used primarily as a gasoline additive and extender. Since the late 1970s, methyl tertiary butyl ether (MTBE) has replaced lead as the primary gasoline additive in the United States. Over the past few years, however, several states have banned the use of MTBE as a gasoline additive because of its environmental problems resulting in groundwater contamination. The reduction in use of MTBE and recent surging prices for petroleum-based fuels are dramatically increasing the demand for ethanol and the interest in ethanol production in the United States.

Ethanol can be produced from carbohydrates such as...(complete article here).

Food vs Fuel: The Saga Continues

Corn-to-fuel putting burden on food-grain markets

Bloomberg News

U.S. plans to replace 15 percent of gasoline consumption with crop-based fuels including ethanol are already leading to some unintended consequences as food prices and fertilizer costs increase.

About 33 percent of U.S. corn will be used for fuel during the next decade, up from 11 percent in 2002, the Agriculture Department estimates. Corn rose...(complete article here).

Corn/Oil Price Linkages and Farm Decision-making

OK. This one is a bit complex and certainly, at least for a non-economist, difficult to follow. Essentially, it discusses the linkage between the ethanol subsidy, the price of oil, and the amount of ethanol produced -- as well as the cost of that subsidy to the consumer at various oil price levels. Corn prices and oil prices are now closely correlated whereas prior to the ethanol mandates, that was not necessarily the case. In the future, a corn farmer may decide how much corn to plant based on projected oil prices, not loan rates, defficiency payments, export markets, etc.

Policies key as ethanol 'revolution' links agriculture, energy sectors

WEST LAFAYETTE, Ind. - The recent boom in production of ethanol from corn grain has tightly linked the agriculture and energy sectors in an unprecedented fashion.

Purdue University researchers developed a model, based on a range of possible oil prices, that predicts impacts of federal economic policies on future consumer and government costs, ethanol production and many other aspects of the two sectors.

"We are living through a...(complete article here).

Carbon Accounting in Ethanol Studies

Below is another interesting article from Iowa State. This one discusses how carbon is accounted for by researchers when studying the impact of something like corn-based ethanol production.

Is Corn Ethanol a Low-Carbon Fuel?

Bruce A. Babcock babcock@iastate.edu 515-294-6785
Ofir Rubin rubino@iastate.edu 515-294-5452
Hongli Feng hfeng@iastate.edu 515-294-6307

Reports of disappearing glaciers, shrinking arctic ice, rising sea levels, stronger hurricanes, and unprecedented European heat waves combined with an inexorable buildup in atmospheric carbon dioxide levels is increasing pressure on governments to respond with new greenhouse gas initiatives. California and other states are providing policy leadership in the United States.

Of particular interest to the biofuels industry is Governor Arnold Schwarzenegger’s January 2007 executive order that requires a 10 percent reduction in the carbon content of California’s transportation fuels by 2020. In contrast to federal renewable fuel standards, which mandate levels of use of biofuels, California’s fuel standard does not tell fuel suppliers (oil companies) how they should meet the new requirements. Alternative fuels will have to compete in terms of cost and carbon content. Only those fuels that can reduce carbon content at reasonable cost will be included in California fuel blends. Given that ethanol from corn comprises more than 90 percent of U.S. alternative fuels, a key determinant of the feasibility of meeting California’s ambitious goals is the extent to which corn ethanol reduces greenhouse gas emissions.

Accounting for Corn Ethanol’s Greenhouse Gas Emissions

Whether corn ethanol reduces net greenhouse gas emissions...(complete article here).