Domestic Fuel

USDA’s latest crop production forecast calls for a U.S. corn crop of 11-billion bushels this year. While that’s seven-percent below 2004, it’s still an increase of two-percent from October and is on track to be the second largest corn crop on record – despite many major production states having drought conditions during a critical point in the growing season this year. This month’s outlook for 2005/06 U.S. corn is for increased production, higher domestic consumption, larger stocks, and lower prices. The good news is that more corn is going into ethanol production, according to Gerald Bange, chairman of USDA’s World Outlook Board. “We’re now looking at an ethanol usage number of 1.575 billion bushels, an increase of 75 million bushels over our previous forecast…that would provide for the production of about another 200 million gallons of ethanol.” Bange says the total ethanol production estimate for 2005 is 4.25 billion gallons. Last year, U.S. ethanol production totaled 3.4 billion gallons from 1.22 billion bushels of corn.

A bill introduced in the U.S. Senate last week would require all U.S. marketed vehicles to be manufactured as Flexible Fuel Vehicles (FFVs) within ten years. The Fuel Security and Consumer Choice Act, introduced by U.S. Sens. Dick Lugar (R-IN), Tom Harkin (D-IA) and Barack Obama (D-IL), would mean that all cars sold in the United States after 2016 would be capable of running on both regular gasoline and E-85 renewable fuel.
In a release from his office, Lugar said, “Flexible Fuel Vehicles play an important role in increasing our use of renewable fuels and decreasing our dependence on foreign oil. America’s insatiable appetite for oil places our nation in a precarious situation of reliability on regions that have become increasingly hostile to us. This bill would complement the exciting advances in the energy bill that Congress passed earlier this year that more than doubled the production and use of domestic renewable fuels. Passage of this legislation would send an important signal to the market that renewable fuels, such as those produced in Indiana, will be fully embraced by our nation.”

Getting more E-85 fueling stations and more flex-fuel vehicles on the road are goals of the National Ethanol Vehicle Coalition, based in Jefferson City, the beautiful capitol city of Missouri. NEVC is a non-profit membership organization that serves as the nation’s primary advocacy group promoting the use of 85% ethanol as a form of alternative transportation fuel, according to their website. The organization was one of 98 companies, groups, and government agencies that had booths at the National Association of Farm Broadcaster’s “Trade Talk” where they were interviewed by about a hundred or so ag journalists from around the country. The lovely and talented Michelle Kautz, NEVC communications director, celebrated a milestone birthday (we won’t tell which one!) at Trade Talk doing interviews. I think I was the last interview for her of the day – click here to listen.

There are lots of organizations that are involved in some aspect of domestic fuels. I had the opportunity to talk with two of them this week in Kansas City at the National Association of Farm Broadcasters meeting. The first is the Renewable Fuels Association. According to their website, RFA was started in 1981 to be a voice for the ethanol industry “providing advocacy, authoritative analysis, and important industry data to its members, Congress, federal and state government agencies, strategic partners, the media and other opinion-leader audiences.” RFA lobbies on behalf of renewable fuels on the national level and was very involved in the drive for comprenensive energy legislation to help the industry. Click here to listen to my interview RFA President Bob Dinneen at NAFB. Bob did many interviews on Thursday in Kansas City with farm broadcasters from all over the country. RFA recently announced a new feature for their website – archived audio and video clips! The “Video Archives” and “Audio Comments,” located under the Media Center menu, will provide video clips of important industry events as well as audio versions of the latest news from RFA. Both media formats may be downloaded for later viewing or use in news reports. That’s a great way to use the website to get information out to both the media and the general public!

It has been noted that ethanol production is changing the way grain is marketed… now someone is doing something about it. It’s called the Dynamic Pricing Platform (patent pending, according to the release) and the folks who are making it happen are Farms Technology, LLC, Overland Park, KS., and United Bio Energy (UBE), Wichita, KS. According to the press release:
The DPP gives producers the ability to create, manage and monitor target priced cash grain offers that are evaluated in real-time with every tick of the futures market. Growers no longer need to be by a phone to call their local buyer at the right time on the right day to get the best prices. In addition to target offers, a variety of online marketing tools are available around-the-clock. These include: average pricing contracts, futures fixed contracts, basis contracts along with historical cash pricing data, cash bid sheets, and local buyer commentaries.
Basically, DPP is an “on-line tool for cash grain sellers.
Ron Hansen, Vice President of United Bio Energy Management, Wichita, KS says, “UBE is committed to offering our ethanol plant partners innovative and efficient methods of conducting traditional business. After listening to our ethanol plant partners and their corn suppliers, we have chosen to offer the DPP technology to provide them with the ability to sell either by traditional means, or by this new and convenient way to sell grain. The DPP will help us service more customers in a cost-effective manner. Our suppliers can offer us their grain at the cash price they choose, and really put the power of the market to work for them online at anytime, day or night, when it’s most convenient.”
The first plant to use the system will be East Kansas Agri-Energy in Garnett, KS.

Australia is getting into the ethanol business. Dalby Bio-Refinery Limited has announced it will commence Stage One construction of an ethanol plant, worth $54 million, near Dalby during the first half of 2006.
Chris Harrison, Director of Dalby Bio-Refinery Limited, said the first stage of the project would produce 40 million litres of ethanol while the full project will have annual production of a minimum of 80 million litres. “We are constructing the plant in two stages, to allow our project to grow with the market,” he said. “We are using proven grain to ethanol technology from an industry leader in the US fuel ethanol industry, Delta-T Corporation of Williamsburg, Virginia.” It will be the first Dry Mill grain to ethanol plant constructed in Australia and the first plant built specifically for the production of ethanol for fuel since the Second World War. The refinery will produce ethanol from sorghum and wheat, but can also utilise other grains such as corn and barley.

On Monday, November 7, the farmer-leaders of southeast Missouri announced Bootheel Agri-Energy, a pioneering effort to build an innovative 100 million gallon, coal-fired ethanol plant. Near as I can tell, 100 million gallons a year is about the most any ethanol plant in the country produces, and it’s twice the capacity of any already operating or planned for Missouri. Missouri Corn Merchandising Council chairman Mike Geske, a farmer from the bootheel area, says they are very excited about the plans for an ethanol plant in that region. “There’s a lot of production down here – one of the largest corn production areas in the state. It was very much a gap in our ethanol production ability in the state of Missouri.” I interviewed Mike about the plans for this week’s Missouri Corn Growers CornTalk.

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Ford Motor Co. announced on Friday a partnership with South Dakota renewable energy company VeraSun Energy Corp. aimed at expanding support for vehicles capable of running on up to 85 percent ethanol, known as E85.
The partnership will concentrate on growing the ethanol infrastructure in 2006 and converting existing fuel pumps to VeraSun’s branded E85 in existing retail outlets. A consumer awareness campaign will also be launched.

An ethanol plant is coming to Sioux City, IA. Mayor Karen Van de Steeg and the city council proudly made the announcement this morning that an $80 million plant will be built near Sioux Gateway airport. Baard Renewables LLC, a subsidiary of Baard Energy of Vancover, WA, will construct the plant which company officials say will produce 60-million gallons of ethanol every year. The operation will create 48 permanent jobs that pay between 40 and 140-thousand dollars a year. Construction is expected to begin next September with completion set for one year later.

Groundbreaking ceremonies are being held within the next few days in two states for two new ethanol plants.
Siouxland Ethanol will break ground on a plant in Jackson, NE on Friday, November 4. When completed, Siouxland Ethanol will produce 50 million gallons of ethanol annually using 18 million bushels of corn from the region. The plant will provide 32-36 news jobs for the local area. Fagen, Inc. of Granite Falls, Minnesota is handling both construction and management of the project. ICM, Inc. of Colwich, Kansas will provide the process design. According to the American Coalition for Ethanol release, Nebraska is the nation’s third largest producer of ethanol.

Then on Monday, November 7, ground will be broken for the Missouri Ethanol, LLC plant in Laddonia, MO. That plant is a partnership between East Central Ag Products (ECAP), Northeast Missouri Grain, LLC and Broin Companies. Missouri Governor Matt Blunt and other state and national dignitaries will be on hand for that event. Accoring to Missouri Ethanol President David Vogt they hope to begin ethanol production next fall. “The plant should produce about 45 million gallons of ethanol and 134,000 tons of distiller’s grains,” said Vogt. He adds that it will use about 17 million bushels of corn a year and provide about 40 jobs in the area. I interviewed David Vogt about the project for the Missouri Corn Growers Association’s weekly CornTalk program, which you can listen to here.

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