Calculator Gives Growers Energy Crop ROI

University of Illinois agricultural economists have been calculating the costs for farmers to produce biomass energy crops, and as a result have created a feedstock cost and profitability calculator for farmers to make their own assessments using their individual agribusiness parameters.

Illinois Ag Economist Madhu Khanna says farmers can customize the costs based on their current farming operation, current returns on the land they are considering converting and determine what it would cost to put the land in production to grow an energy crop. Using these calculations, a grower can then determine the minimum price they would need to be paid in order to make a profit.

Khanna recommends farmers gather information about their current operating expenditures before using the calculator, such as the discount rate. She says if farmers are thinking of growing energy crops purely as an investment decision, then they should be interested in getting the same return from their investment in an energy crop over time as they would get if they put the money in the bank. That is the discount rate they should use, she says, so if the bank would give them four percent then they should at least get a four percent return on growing an energy crop instead.

SG Biofuels Breakthrough

SG Biofuels has expanded it global network of hybrid trial and agronomic research sites with the addition of eight new JMAX Knowledge Centers located in Brazil, Guatemala and India. The company is also expanding it production facility in Guatemala. Current trials are underway in San Diego, California. The company focuses on the the production of Jatropha for use in biofuels, biochemicals and biomaterials.

According to a company statement SG Biofuels’ hybrids are performing better compared to commercial varieties across multiple geographies in terms of plant vigor, health, flowering consistency, stress tolerance and yield. The success validates the ability to produce crude Jatropha oil for less than $99 per barrel in a range of growing conditions.

“The performance of our hybrids in multiple geographies not only validates the strength of our genetics, but our ability to deploy profitable energy crop projects around the world,” said Kirk Haney, president and chief executive officer. “Through our network of JMax Knowledge Centers, we are developing the highest performing hybrids of Jatropha while establishing best agronomic and production practices for deploying those hybrids at commercial scale.”

According to the company, JMax Knowledge Centers are professionally managed trials using experimental design and statistical analysis to evaluate hundreds of hybrids in a range of environmental and agronomic conditions. The centers serve as outdoor classrooms where SGB agronomists and technical teams conduct training and field tours with customers and growers, develop localized agronomic studies and recommendations and develop high performing Jatropha hybrids for commercial deployment. SGB’s hybrids have been developed following five years of research, drawing from a diverse germplasm library including more than 12,000 unique genotypes.

Economist Bruce Johnson To Address NEB Meeting

Professor of Agricultural Economics at the University of Nebraska/Lincoln, Dr. Bruce Johnson, will be addressing the attendees of the Nebraska Ethanol Board (NEB) meeting tomorrow, October 30, 2012 at 10:00 am CDT at the University of Nebraska East Campus Union in Lincoln. He will be discussing the recently released “2010 Economic Impact of the Nebraska Agricultural Production Complex.” The report focuses on the state’s industries involved in growing, processing and transporting agricultural products, which account for nearly one quarter of Nebraska’s total economy. In addition, Dr. Johnson will address the role of the state’s ethanol industry and prospects for future agricultural growth.

According to statements from NEB, the production and use of ethanol strengthens the state’s economy while lowering fuel costs. Ethanol blended fuels are projected to save Nebraska consumers more than $70 million during 2012. Francisco Blanch, a commodities expert for Merrill Lynch, said that biofuels, like ethanol, lower gas prices by at least 15 percent on a nationwide basis.

“Those energy savings are retained in the domestic economy,” said Steve Hanson, Nebraska Ethanol Board chairman. “The high price of oil and gas is driving up the cost of nearly all consumer products but the ethanol industry is helping to keep the Nebraska economy strong amidst nationwide inflation.”

Phil Lampert, former director of the National Ethanol Vehicle Coalition, will also speak at the Nebraska Ethanol Board meeting. Lampert is nationally recognized for his work to expand the use of E85 and other higher percentage ethanol blends. Lampert will provide an overview of ethanol flex fuel infrastructure development.

Internationalists Share Views On US Competitiveness

During the recent 2012 Export Exchange a few key leaders in the international market took the stage in a panel to share their perception on United States competitiveness in grain production.

Adel Yusupov, Southeast Asia Regional Director for US Grains Council, served as the moderator for the panel.

Panelists consisted of:
Willis Wu-Yeh Cheng, Chairman, Charoen Pokphand (Taiwan)
Mousa Wakila, General Manager, National Poultry Al Ahlieh (Jordan)
Jamie Rueda, General Manager, Escala (Colombia)
Dennis Inman, Vice President & Commercial Lead, Cargill, Inc.

The panelists were asked to share their candid thoughts on how the United States ranks in grain production and what attributes are most important to them when buying grain. Prices were at the top of all their lists, but they also want reliable market research and stressed that logistics were always a concern. Other items on the list included: consistency, a strong relationship and predictability.

Listen to the International Panel’s presentation here: International Panel at Export Exchange

You can find photos from this years Export Exchange here: 2012 Export Exchange

Green Plains Renewable Energy to Sell Grain Elevators

Green Plains Renewable Energy has entered into an asset purchase agreement to sell 12 grain elevators located in northwestern Iowa and western Tennessee to The Andersons

The sale involves approximately 32.6 million bushels, or 83%, of the Company’s reported agribusiness grain storage capacity and all of its agronomy and retail petroleum operations.

The estimated sales price for the facilities and certain related working capital is $133.1 million, including the assumption at closing of term debt of approximately $28.3 million. In addition, the Company expects to realize net proceeds from the liquidation of retained working capital of approximately $86.7 million before the repayment of approximately $85.2 million under a revolving credit facility and inventory financing arrangements. Working capital and amounts outstanding under debt and inventory financing arrangements are based on September 30, 2012 balances and will be adjusted to final amounts at closing. Net cash proceeds, including working capital liquidation, are expected to be approximately $103.8 million.

“We continually evaluate options to maximize shareholder value and this transaction is about opportunistically realizing that value,” stated Todd Becker, President and CEO of Green Plains. “While we have referred to this as a strategic part of our business, we are by no means exiting U.S. agriculture. We will continue to participate with our remaining grain handling assets and through future grain storage expansions at or near our ethanol plants. Once closed, this transaction will add more than $100 million in cash to our balance sheet and reduce outstanding debt by more than $113 million. Our continued focus is to ensure that Green Plains is positioned to take advantage of growth opportunities throughout our platform.”

Green Plains Renewable Energy is North America’s fourth largest ethanol producer.

Read more from GPRE.

Winterize Farm Equipment With Slip Plate

With the fall harvest ending in the near future it’s time to look at winterizing all that equipment. That means you need a good lubricant and that means you might want to check out Slip Plate. You can find out all they ways you can use this product from Superior Graphite on their website. Go ahead. Visit now. Here are a few places where you can use Slip Plate:

SLIP Plate dry film graphite coatings (SLIP Plate No. 1, SLIP Plate No. 3, SLIP Plate No. 4, and SLIP Plate Aerosol) significantly reduce sliding friction on corn picker heads, combine cutter bars, hay elevators, planter plates, hay bailers, gravity wagons, and many more applications around the farm.

Slip Plate is a dry lubricant that is very environmentally friendly unlike petroleum based products. More reasons to use Slip Plate!

I visited with Barry Lee, Superior Graphite, once again to talk about Slip Plate products for the agricultural market. This is part of a periodic series of interviews I’m doing to help the ag industry come to know this company and their products. In our interview Barry not only talks about products for specific farm applications but also one I think you hunters out there should know about and that is Black Ice.

A unique formulation combining a unique solvent cleaner with a friction reducing mineral that first cleans the surface, and then deposits a layer of pure, lubricous graphite powder.

This makes it perfect for gun cleaning!

Our discussion also focused on “What’s inside a can of graphite?” You might think all cans of graphite are the same but they are not. Barry did some research on this subject that finds two things that govern the performance of the graphite product you are using: amount of graphite and the type of graphite. You can find details of his research findings on the Slip Plate website.

Listen to my interview with Barry here: Interview with Barry Lee

World Grain Buyers Get US Producer Perspectives

Grain buyers from around the world in attendance at the 2012 Export Exchange had the opportunity to embrace the US producers perspective on the 2012 crop through a producer panel during the opening general session. Key panelists were Ron Gray, Illinois farmer and Secretary/Treasurer of the US Grains Council, and John Mages, Minnesota farmer and Chairman of the Minnesota Corn Research & Promotion Council.

They shared their personal experiences overcoming the 2012 drought and assured buyers of their fight and passion to raise a consistent and quality product.

Listen to the entire Producers Panel here: Producer Panel at Export Exchange

Following the opening session I took the time to talk with Ron Gray, where he summed up the 2012 corn crop and how farming for him is more than a job, its a personal endeavor.

“For us the 2012 crop started out with all the hope of an extraordinary crop. We planted early, the crop went in very well, emergence was good. Then it didn’t rain. Beginning the second week of May through the first week of August we only had about three inches of total rainfall and because of that our corn crop was severely reduced in production. Our farm probably averaged 50 bushels an acre, which is approximately 1/3 of our normal production. The rainfall did come later and the soybean crop is a fairly good crop, but the corn crop was devastated.”

Listen to my interview with Ron here: Ron Gray Interview

Beyond simply listening to producers, international grain buyers had the opportunity to visit farms across the United States. The goal was to gain information, assess the current US corn crop, explore the availability of other grains such as sorghum and barley, and build relationships leading to future sales.

Many participants expressed a preference for buying US grains due to the consistency and quality of the grain. They also appreciate the transparency and reliability of the US marketing and delivery systems. Clearly price and availability hindered US exports this year, but buyers are looking forward to a better crop next year.

You can find photos from this years Export Exchange here: 2012 Export Exchange

Export Exchange: Bringing Buyers & Sellers Together

The key purpose for the 2012 Export Exchange was for buyers and sellers to meet and establish important relationships. The event sponsored by the US Grain Council and Renewable Fuels Association focused on getting answers, making contacts and building business. During the conference I had the opportunity to talk with Tom Sleight, President & CEO of the US Grains Council, about what this event means for the DDGS and the worlds grain supply.

“What we’re telling customers around the world is how the US producers will be there for them. The US farmers will be there for them now and in the future. Yes, we have droughts, thats a problem we have, but for the future the US has always responded to production challenges with more acres, greater production. Our message to the international community is that the US farmer is there in the international market for keeps.”

“I think out biggest thing is being all around, having boots on the ground, representatives that are selling these grains, bringing the buyers in. That’s what we are doing today with over 200 buyers from around the world. Bringing them in, making contacts and making sales. It is a different kind of business and it takes being there and extending your influence and representing producers interest all around the world. That’s what US Grains Council is doing.”

Listen to my entire interview with Tom here: Tom Sleight at Export Exchange

The US Grains Council also announced the official approval of the Syngenta corn variety MIR 162 Agrisure Vipterra in the European Union. This opens the way for exports of US corn co-products, including DDGS and corn gluten free.

Cary Sifferath, USGC senior regional director based in Tunis, said “This approval is a great success as it opens the window of opportunity for U.S. products, including DDGS and CGF, to enter the EU market. This is especially attractive in big markets like Ireland, Spain, Portugal and the Netherlands. Their ability to import these high-protein feed ingredients is critical at a time of crop shortage in Europe and high prices. Everyone is looking for alternatives,”

You can find photos from this years Export Exchange here: 2012 Export Exchange

Geoff Cooper Addresses Attendees at Export Exchange

Attendees for the 2012 Export Exchange were the audience for Geoff Cooper of the Renewable Fuels Association (RFA). Cooper, who serves as RFA’s Vice President for Research and Analysis, spoke to over 500 of the worlds feed producers, marketers and buyers. He explained that distillers grains and other ethanol co-products have become a tremendously important component of the global animal feed market.

“The American ethanol industry produced nearly 39 million tons of nutrient-dense animal feed in the 2011/12 marketing year, meaning the ethanol industry has surpassed the U.S. soybean crushing industry in terms of feed production,” Cooper said. “The feed produced by the ethanol industry is nourishing beef, dairy, swine, poultry, and fish around the world. About one-quarter of the feed co-products generated last year were exported to more than 50 countries.”

Cooper also explained that the U.S. ethanol industry has responded to the historic drought of 2012 by curtailing its consumption of corn. “There is a false notion out there that the ethanol industry is somehow insulated from the effects of the drought and high corn prices because of the Renewable Fuel Standard (RFS),” Cooper said. “That simply isn’t true. As crop conditions deteriorated in July and August and corn prices increased, corn use for ethanol dropped by almost 15 percent. That means the ethanol industry reduced its corn consumption by about 600-700 million bushels on an annualized basis in less than two months’ time. Without a doubt, the ethanol industry has not been spared from the effects of the drought.”

Listen to Geoff’s comments here: Geoff Cooper Comments

You can find photos from this years Export Exchange here: 2012 Export Exchange

Governors Decline Iowa Hospitality

Despite planned trips to Iowa, Texas Governor Rick Perry and Virginia Governor Robert McDonnell declined invitations to visit an Iowa ethanol plant and cattle operation from the Iowa Renewable Fuels Association (IRFA). Both governors were part of a group that filed for waivers of the Renewable Fuel Standard (RFS2) for 2012 and 2013. At this time, the Environmental Protection Agency  (EPA) has not make a decision.

“Given that both governors made formal requests to abandon the RFS, one of the most successful energy policies in U.S. history, IRFA was very disappointed to learn that Gov. Perry and Gov. McDonnell have declined our invitation for a quick visit to an Iowa ethanol plant and family cattle operation while in the state,” stated IRFA Executive Director Monte Shaw. “IRFA respects the governors’ right to act in the best interest of their states as they see it, but given their national profile this would have been an excellent opportunity for them to hear the other side of the story – a side they’re not hearing from the special interests in their home states.”

Iowa is the leader in ethanol and biodiesel production with 41 ethanol biorefineries with the capacity to produce nearly 3.7 billion gallons of ethanal each year.

In the invitation to the Perry and McDonnell, who are both making political stops in Iowa this week, said, “IRFA would love to show you an ethanol plant in action as well as a neighboring cattle operation to demonstrate how these two important agriculture segments benefit each other, even during challenging times such as the current drought. We are certain this experience will respectfully challenge the sincere, but faulty assertions made to you regarding the need for an RFS waiver request.”

USDA Funds 244 Agribusiness Projects

USDA Secretary Tom Vilsack has announced the funding for 244 projects across the United States that are focused on helping agricultural producers and rural small businesses. The projects will help to lower energy consumption and costs using renewable technologies. The funding is part of USDA’s Rural Energy for America Program (REAP).

“As part of President Obama’s “all of the above” energy strategy, USDA has partnered with thousands of America’s farmers, ranchers and rural businesses to help them save energy and improve their bottom line,” said Vilsack. “This effort is helping to provide stable energy costs that create an environment for sustainable job growth in rural America.”

For example, grower Matthew Gabler, based in Augusta, Wisconsin, was awarded a grant to install a new 11 kilowatt wind turbine that is estimated to produced nearly 29,000 kilo-watt hours a year for his farm.

Another example is Edaleen Cow power LLC, located in Whatcom County, Washington, has awarded a REAP loan and grant combination of $2,638,000 to install an anaerobic digester. The renewable energy project is estimated to generate 4,635 megawatt hours per year with the dairy’s 2,450-head herd as the sole manure source. The agribusiness will sell the extra electricity to the local utility and will also benefit from the bedding byproduct the digester produces.

In combination, USDA announced over $16 million in investments across the 244 projects. For a full list of awards, click here.

Ethanol Industry Pumps $5B Into MN State Economy

According to a new report from the Minnesota Department of Agriculture (MDA), the state’s ethanol industry generated more than $5 billion in total economic activity in 2011. In addition, the ethanol industry supported more than 12,600 jobs. The state is 5th nationwide in ethanol production with 21 ethanol biorefineries.

According to the MDA report, ethanol added $912 million to the value of the state’s corn crop in 2011, a second record high. For every bushel of corn processed into ethanol, $2.07 was generated in additional revenue. The report also shows that for every dollar invested into the ethanol plants, more than eight dollars were generated for the Minnesota economy.

“While there have been ups and downs in the ethanol industry, the fact is it’s a huge advantage for us to keep more of the value of the corn we produce rather than ship it to another state or country as a raw commodity,” said Su Ye, the author of the report. “The ethanol industry is an important economic driver that adds value to every bushel of corn grown by the roughly 11,000 farmers who supply it to the plants.”

Last year, of the 1.2 billion bushels of corn harvested by Minnesota growers, 440 million bushels were put into production of ethanol and its co-products including distillers grains. Forty-two percent of the corn is exported and 39 percent is processed. In comparison, 12 percent of the total U.S. corn crop is exported and 50 percent is processed. Ye says the ethanol industry continues to have a critical role in bringing increased returns to the state’s largest agricultural crop.

Report: Distillers Grains Enhance Cattle Diet

According to research conducted by a team from the Department of Animal Science at the University of Nebraska, cattle feed of treated corn stover mixed with distillers grains (DDGS) from ethanol plants can reduce feed costs for cattle feeders. The goal of the research is to continue to provide livestock feeders with options for optimizing feeding efficiency.

The current project included a pretreatment for corn stover, calcium hydroxide, designed to enhance digestibility. The calcium is needed by cattle in feedlot diets. When combined with DDGS, treated corn stover increases digestibility and creates a more efficient feed ration. The research shows that this feed mix offers the livestock industry another feed option.

Nebraska is one of the largest ethanol producing states in the country and a by-product of ethanol production is high-protein distillers grains. When combined with poor quality roughage, researchers say, the feed ration still provides excellent results. This is especially important in drought years, such as this year, as availability of distillers grains have provided a valuable option for livestock feeders.

The evolving University of Nebraska research suggests that the practice of using an alkaline pretreatment on corn residues may offset corn in feedlot diets. This practice is expected to receive close attention by livestock feeders who may wish to offset corn use in livestock diets with other feed ingredients that are less expensive but in some cases more efficient.

Iowa Bioenergy Tour Huge Success

The 4th Annual Biofuels: Science and Sustainability Tour took place recently hosted by the Iowa Renewable Fuels Association (IRFA). The three-day tour brought several Washington, D.C. policymakers and regulators to Iowa for a inside and hands on look at the renewable fuels and agricultural industry in the state.  Participants had the opportunity to talk with many renewable fuels experts, agriculture leaders and state and university officials on important policy matters, regulatory concerns and technical issues facing the renewable fuels industry.

Several key areas of discussion were the current and future impacts of the drought, Renewable Fuels Standard (RFS2), E15, tax policy, biodiesel and advanced biofuels, the 2012 Farm Bill, food and fuel, distillers grains, seed research, crop yield trends, improved environmental practices in agriculture and renewable fuels production, biomass crops, the future of cellulosic ethanol, and the impediments to consumer fuel choice posed by the federal petroleum mandate.

The Tour included visits to:

  • Renewable Energy Group headquarters in Ames, IA
  • Iowa State University’s Sorenson Farm & Biocentury Research Farm in Boone, IA
  • Kevin Jurgens’ family farm in Thornton, IA
  • Soy Energy biodiesel refinery in Mason City, IA
  • Golden Grain Energy ethanol refinery in Mason City, IA
  • Sukup Manufacturing in Sheffield, IA
  • Pioneer DuPont Beaver Creek Research Center in Johnston, IA
  • Pioneer DuPont Carver Center in Johnston, IA
  • Magellan Refined Products Terminal in Des Moines, IA

The Tour was hosted and sponsored by Iowa State University Bioeconomy Institute, Iowa Renewable Fuels Association, National Biodiesel Foundation, Renewable Fuels Foundation, Golden Grain Energy, Iowa Corn Growers Association, Renewable Product Marketing Group, Sukup Manufacturing, and Iowa State University College of Agriculture and Life Sciences.

Click here for more information, presentations and photos from the event.

States Battle Over ‘Food Before Fuel’

According to an analysis by the Biotechnology Industry Organization (BIO), “food before fuel” is a fight between states. After reviewing eight waiver requests from governors submitted to the U.S. Environmental Protection Agency (EPA), a common argument was farmers in other states have to provide their states’ livestock industries corn. The waivers request a halt, or lowering, of the amount of ethanol that should be blended into fuel as mandated by the Renewable Fuel Standard (RFS). The current drought that has impacted the majority of the U.S. is causing heated discussions about who should get the corn.

It wasn’t until recent years that farmers in the U.S. could grow corn at a profit. Instead, most had to rely on federal payments or subsidies. Interestingly, while corn farmers in the Midwest created a new and growing market with ethanol and its by-products, those in Southern states where the waivers were primarily filed, lagged behind the U.S. average in achieving profitability. The core reason: growers were focused on only one market, the livestock industry.

It should be stressed that the corn used for livestock feed and ethanol is NOT the corn used in your corn tortilla. That said, yes, humans are indirectly eating the corn when eating meat (unless the animal was grass fed). But what many don’t understand or choose not to acknowledge, is that one by-product of ethanol production is a high protein based distillers grain, or high-protein animal feed. So you are not losing the entirety of the corn bushel to produce ethanol – that same bushel is also producing feed. In otherwords, a bushel of corn produces food AND feed AND fiber.

The analysis points out, rightly so, that what the growers in the Southeastern states should be looking for ways to increase their profitability. “Additional markets for corn – such as conventional biofuel production – could add value to corn grown in Southern Seaboard states.”

The wonderful thing about market dynamics, and the way the RFS was written, is that they are working. The marketplace is sorting out the difference between supply and demand and to intervene would only create a more negative impact than the drought has already.

Click here to read BIO’s RFA Waiver Analysis.