Global Farmers Learn Value of Ethanol

corn-couserEach year during World Food Prize week, the Truth About Trade and Technology Global Farmer Roundtable brings farmers from all over the world to visit Couser Cattle Company in Nevada, Iowa.

Owner Bill Couser not only produces cattle, he also grows plenty of corn on his operation and is a big proponent of ethanol as a means of getting the most out of every kernel. “It’s no different than a barrel of crude. We don’t just get gasoline from a barrel of crude. We take it apart and get many different things,” he said. “When we look at corn, we can feed it, we can take it to ethanol plants, we can sell it domestically, we can sell it abroad.”

As a founder of Lincolnway Ethanol plant, Couser is really excited about the cellulosic project with DuPont using corn residue. “We’ve got the residue there and if we manage it correctly, we have a new cash crop,” he said. Interview with Bill Couser

Couser, who is also a former president of Iowa Renewable Fuels Association, showed a powerpoint presentation adding up the multiplier effect of a single acre of corn going to an ethanol plant. When he figured that final amount corn was $7 a bushel and it added up to over $12,000 per acre. But even at $3, it’s still nearly $8,000. Watch the video to see how he determines that.

2013 TATT Global Farmer Roundtable photos

Tune in Live for Great RFS Debate

rfa-ncba-debateRenewable Fuels Association President and CEO Bob Dinneen is live right now on AgriTalk in a debate with National Cattlemen’s Beef Association (NCBA) Executive Director of Legislative Affairs Kristina Butts over the Renewable Fuel Standard (RFS). The Great RFS Debate is being co-hosted by Agri-Pulse.

Dinneen is pictured here, left, as the debate begins. Next to Dinneen is AgriTalk host Mike Adams, Agri-Pulse editor Sara Wyant, and Kristina Butts on the right.

Archived program available here.

Renewable Fuel Standard Debate This Week

Representatives of the National Cattlemen’s Beef Association (NCBA) and the Renewable Fuels Association (RFA) will be squaring off to debate on the Renewable Fuel Standard (RFS) this week in Washington D.C.

AgriTalk and Agri-Pulse will be hosting the debate via broadcast and the web on September 12 starting at 11:00 am Eastern time live from the Longworth Building, Room 1300. Participants will be RFA president and CEO Bob Dinneen and NCBA Vice President Government Affairs Colin Woodall.

RFA-logo-13“The Renewable Fuel Standard is decreasing our dependence on foreign oil, creating jobs, and revitalizing rural communities. I am all geared up to explain the facts and debunk the negative attacks,” Dinneen says. “It is an excellent time for this debate. USDA is expecting a robust corn crop and just last month USDA issued a report showing that food prices are rising at a slower rate than expected.”

ncba-logo“We appreciate the opportunity to discuss the Renewable Fuel Standard (RFS). America’s cattlemen and women are not opposed to renewable fuels; it’s the arbitrary mandate of their use that is at issue,” says Woodall. “This mandates places cattle feeders and the entire cattle sector on an un-level playing field for the finite amount of corn produced.”

Questions from AgriTalk and Agri-Pulse listeners and readers will be included in the debate led by Mike Adams and Sara Wyant. If you have questions on this topic, please submit them to Host@AgriTalk.com or to Sara@Agri-Pulse.com no later than Wednesday, September 11. The Agri-Pulse team will be live tweeting from the event @AgriPulse. Look for the hashtag #RFSdebate.

Impact of RFS on Agriculture

Increased ethanol production has been good for corn growers, bad for poultry producers, but has overall helped increase farm income to record levels according to some testimony given in a House hearing on the Renewable Fuel Standard (RFS) this week.

rfs-hearing-pam“The Renewable Fuel Standard is doing exactly what it was intended to do,” said National Corn Growers Association President Pam Johnson of Iowa. “It has positively impacted the agriculture sector by creating jobs and promoting rural development, reducing greenhouse gases and allowing our nation to grow our energy at home.” Pam Johnson Testimony

rfs-chicken National Chicken Council (NCC) Senior Vice President and Chief Economist Bill Roenigk said at the hearing that poultry producers have struggled with rising feed costs. “Since the RFS was implemented in October 2006, the feed costs for chicken, turkey and eggs have gone up $50 billion,” he said. “More troubling than the higher costs is the volatility and trying to outguess the market.” Bill Roenigk Testimony

rfs-hearing-hurtPurdue University agricultural economist Chris Hurt told the hearing that farm income and land values have risen dramatically since implementation of the RFS. “Higher farm incomes on crop farms benefited rural communities as that higher income spread through local purchases of farm and consumer goods and services,” Hurt said. “In addition, expansion of the ethanol industry in rural communities added some employment and related economic activity.” While feed costs have increased and the crop sector has done better than livestock, Hurt said the livestock industries appear to in a recovery phase. Dr. Chris Hurt Testimony

Biodiesel Keeps U.S. Tallow at Home

Livestock eating DDGs Photo CHS IncThe world is seeing less of American tallow as biodiesel makers turn more of the animal grease into the green fuel. This article from Bloomberg says U.S. tallow exports are expected to fall nearly 4 percent because the biodiesel market is squeezing the supply and keeping the price up:

Tallow shipments from the U.S. may decline to 680,000 metric tons in 2013 from 706,000 tons last year, the Hamburg-based industry researcher wrote in an e-mailed report. They’ve dropped from a record 1.32 million tons in 1998, Oil World said.

Tallow is a by-product of beef production, meaning supply is not price sensitive, according to the report. Use of the fat to make biodiesel jumped 60 percent in the past two years, requiring demand rationing in chemistry and for edible purposes.

“Virtually stagnating world supplies and the increasing consumption from the biodiesel industry have considerably squeezed supplies available for other consumers,” Oil World said. “We expect this trend to continue in 2014, keeping tallow prices well supported.”

Around the world, biodiesel is credited with helping push up tallow use to 1.6 million tons last year from 1 million tons in 2010.

Beef Ranches as Biodiesel Refineries

humphreyThe next set of biodiesel refineries will probably continue to be in rural America, but they might be part of livestock operations. This article from BeefProducer.com says Arkansas State University researcher Kevin Humphrey sees real potential for ranchers to produce their own biodiesel from oil seed crops, waste oil or tallow:

“If all you want to do is extract oil and meal, you can do that. If you want to extract and produce meal and then also produce biodiesel, you can do that,” he says.

Humphrey is using waste oil and oil seed crops — soybeans, canola, and camelina — to make biodiesel. He adds he hasn’t used animal fats but that is a viable option.

Matt Roberts, vice president of marketing for Springboard Biodiesel, says if the oil is collected free, as might be beef tallow from rendering, the biodiesel will cost about 95 cents per gallon to make. That price includes the cost of the chemicals to make the biodiesel — methanol, lye, and sulfuric acid.

The article goes on to point out that with many of the biodiesel feedstock oilseeds, especially soybeans, the resulting meal from the crush is a high quality feed. Plus, the glycerin from biodiesel production can be a livestock feed and an ingredient in soaps, lotions and lubricants.

The author also spoke with Darrell Wood, cattle rancher and owner of Leavitt Lake Ranches in Vina, California, who believes a ranch-based biodiesel refinery might just make his place more sustainable.

“It just opens the door for all kinds of possibilities,” Wood says.

Pretty good article. Give it a read here.

USDA Renews Dairy Energy Pact

Agriculture Secretary Vilsack today renewed a historic agreement with U.S. dairy producers to accelerate the adoption of innovative waste-to-energy projects and energy efficiency improvements on U.S. dairy farms, both of which help producers diversify revenues and reduce utility expenses on their operations. The pact extends a Memorandum of Understanding signed in Copenhagen, Denmark, in 2009.

usda-logoUSDA support for agricultural and waste-to-energy research has played a key role in the agreement’s success to date. Since signing the MOU, USDA has made nearly 180 awards that helped finance the development, construction, and biogas production of anaerobic digester systems with Rural Development programs, such as the Rural Energy for America Program (REAP), Bioenergy Program for Advanced Biofuels, Business and Industry Guaranteed Loan Program, Value Added Producer Grants, amongst others. These systems capture methane and produce renewable energy for on-farm use and sale onto the electric grid. Additionally, during this period, USDA awarded approximately 140 REAP loans and grants to help dairy farmers develop other types of renewable energy and energy efficiency systems at their operations.

Anaerobic digester technology is a proven method of capturing methane from waste products, such as manure, and converting into heat and electricity. The technology utilizes generators that are fueled by the captured methane. Dairy operations with anaerobic digesters routinely generate enough electricity to power hundreds of homes per year.

The Secretary was joined on a conference call to make the announcement by The Innovation Center for U.S. Dairy CEO Tom Gallagher and Doug Young, a farmer from NY who has benefited from this MOU.

Listen to that call here: USDA/Dairy MOU press call

American Farm Bureau Supports RFS

AFBF President Bob Stallman Press ConferenceDelegates for the American Farm Bureau Federation (AFBF) last week voted overwhelmingly to support continuation of the Renewable Fuels Standard (RFS), despite the fact that membership in the organization includes a substantial percentage of livestock producers.

“The livestock guys still have concerns about high feed costs, and I’m one of them, I’m a beef producer,” said AFBF president Bob Stallman. “On the other hand, we have this renewable fuels infrastructure that’s in place, a very large industry that employs lots of people and provides a market for a lot of products, so we need to be very careful not to have policies trying to dismantle that.”

There were 362 voting delegates at the 94th AFBF Annual meeting in Nashville last week representing every crop and livestock sector in the 50 states and Puerto Rico. The policies approved at the annual meeting will guide the nation’s largest general farm organization in its legislative and regulatory efforts throughout 2013.

DF Cast: Biodiesel Helps Livestock Producers

We’ve known for quite a while that biodiesel is helping the bottom lines of feedstock producers, in particular, the nation’s soybean growers. But a new study from the National Biodiesel Board says livestock producers are also sticking more green in their pockets thanks to the green fuel.

In this edition of the Domestic Fuel Cast, we hear from the NBB’s senior advisor for economic issues, Alan Weber, and NBB member and Nebraska farmer and livestock producer Greg Anderson, who explain the bottom line results from a new study.

Check out the NBB’s reports here: AF T BD Demand Impact Final and SBM Analysis Feb 2011 Final

You can listen to the Domestic Fuel Cast here: Domestic Fuel Cast - Biodiesel and Livestock

You can also subscribe to the DomesticFuel Cast here.

RFA Reacts to RFS Decision

The president and CEO of the Renewable Fuels Association (RFA) says they are very pleased with the decision today by the Environmental Protection Agency (EPA) to reject a request to waive the Renewable Fuel Standard (RFS).

Ethanol Report PodcastIn an interview immediately after the announcement was made by EPA, Bob Dinneen said he gave the agency credit for sticking to the science and doing sound analysis on the issue. “I was somewhat surprised that the petitioners never really presented EPA with a lot of analysis,” said Dinneen. “That was telling me all along that this was more about politics than about substance.”

Dinneen said the industry has maintained all along that it was not the RFS that caused higher prices for livestock feed this year. “It’s Mother Nature – it was this drought – and what we ought to be doing it sitting down and having a more constructive discussion about (this).”

Dinneen notes that the market has responded to the higher corn prices and lower supply. “The ethanol industry is down about 11 or 12% in terms of our production, our corn consumption, and you’re seeing exports being reduced some, other industrial uses being reduced some, and feeders looking for other sources of feed,” he said.

The ethanol industry is anticipating that the RFS will continue to face challenges by the oil industry and others opposed to the use of corn ethanol. “I don’t believe that they will be successful because in any objective review of this program, it has been an unmitigated success,” said Dinneen.

Listen to this edition of the Ethanol Report with Bob Dinneen. Ethanol Report on RFS Waiver Denial

Subscribe to “The Ethanol Report” with this link.

Visiting Farmers See Cattle/Ethanol Operation

A group of 17 farmers from Canada, Honduras, India, Mexico, New Zealand, Philippines, South Africa, Swaziland, United Kingdom, Uruguay, US, Zambia, and Zimbabwe had the chance to visit a livestock operation with an ethanol plant next door.

The annual Global Farmer Roundtable, organized by Truth About Trade & Technology (TATT), makes Couser Cattle Company a regular stop for the international farmers each year. TATT Chairman Emeritus Dean Kleckner, former president of the American Farm Bureau Federation, is a big supporter of ethanol himself. “I’m a believer in ethanol from corn,” said Kleckner during an interview at World Food Prize, where the roundtable is held each year. “The corn that is used for ethanol, a lot of that comes back to farmers in the form of distillers grains.”

Couser Cattle Company owner Bill Couser was instrumental in starting the farmer-owned Lincolnway Energy ethanol plant in Nevada, Iowa, which is located next to his operation so he can take full advantage of using distillers grains as feed for his livestock.

Study Indicates RFS Waiver Could Increase Feed Prices

On the eve of the deadline for providing comments to the Environmental Protection Agency on the Renewable Fuel Standard (RFS) waiver request, the ethanol industry has released a new study that indicates a waiver could actually increase the cost of feed for livestock and poultry producers.

The analysis, conducted by Cardno-ENTRIX and commissioned by the Renewable Fuels Association (RFA), finds that if a waiver of the RFS resulted in reduced biofuel output, the minor reductions in corn prices would be partially or fully offset by increased prices for other feed ingredients like distillers grains (DDGS) and soybean meal, according to a release from RFA.

“When viewed in the context of changes in the prices for other key feed ingredients such as distillers dried grains with solubles (DDGS) and soybean meal, the change in total net feed costs for livestock, dairy and poultry feeders would either increase slightly or decrease by a negligible amount if a waiver was granted,” according to the study, conducted by economist John Urbanchuk. “This is due to the fact that if a waiver reduced biofuel output, it would also reduce the available supply of DDGS and soybean meal, which would naturally lead to higher prices for those key feed ingredients.”

The analysis shows that if ethanol and biodiesel production were each reduced 500 million gallons in 2013 under a waiver of the RFS, total feed costs would increase 4.1 percent for dairy, 0.8 percent for layers, 0.5 percent for hogs, and 0.2 percent for broilers. For beef cattle, feed costs might fall by just 0.6 percent with a waiver.

These results are corroborated directionally by a recent study by the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri. FAPRI found a 1.3 percent reduction in ethanol output under a waiver could lead to slightly higher distillers grains and soybean meal prices. According to FAPRI, “Lower corn price means lower feed costs for livestock producers, unless offset by slightly higher soybean meal and distillers grains prices.”

Cardno-ENTRIX RFS analysis

Thursday, October 11, is the deadline for providing comments to the Environmental Protection Agency on the Renewable Fuel Standard (RFS) waiver request and stakeholders are urged to make their voices heard before the end of the day tomorrow. More information on how to make comments to EPA can be found at ChooseEthanol.com.

Vilsack Defends Ethanol at Dairy Expo

Secretary of Agriculture Tom Vilsack held a town hall meeting at World Dairy Expo in Madison, Wisconsin this week and took questions from the audience, one of which concerned ethanol and the impact it has had on livestock producers.

The questioner, who was from California, said ethanol was “not a very popular word” with dairy farmers in her state. “Where I come from ethanol is not a four letter word,” Vilsack responded, noting that ethanol has not only helped increase profitability and production for farmers but also helped the economy, national security, and the environment. “Those are the benefits – jobs, higher incomes, lower gas costs, environmental benefits and reduction of our reliance on foreign oil,” said Vilsack.

The secretary also carefully explained that because ethanol returns livestock feed to the market in the form of distillers grains (DDGS). “We hear a lot of people say that 40% of the corn crop is being used for fuel production but it’s not really 40% because a third of it comes back in DDGS which is used by the livestock industry,” he said. “So, it’s less than 40%, more like 27 percent.”

In addition, Vilsack talked about how USDA is helping the industry move into the production of advanced ethanol using feedstocks beyond corn. “We have financed at USDA nine separate biorefineries that use corn stover, algae, switchgrass, woody biomass, agricultural waste, municipal waste,” he said.

Vilsack also defended the Renewable Fuel Standard (RFS) and the current request before EPA to waive that standard, noting that Congress passing a new food, farm and jobs bill would do more to help livestock producers impacted by high feed costs due to the drought than waiving the RFS would.

Listen to or download Vilsack’s comments here: Ag Secretary Vilsack on ethanol at Dairy Expo

RFA Expects RFS Waiver to be Denied

Responding to plans by livestock and poultry groups to seek a waiver of the Renewable Fuel Standard, the head of the Renewable Fuels Association (RFA) expects the request to be denied.

“Given the flexibilities inherent to the RFS, and the fact that waiving the program would not result in any meaningful impacts on corn prices, we fully expect Administrator Jackson to deny any waiver request,” said Bob Dinneen, RFA president and CEO. “A dispassionate review of the facts can lead to only one conclusion: a waiver of the RFS would simply reward oil companies that have long sought to repeal this very important and successful program. The RFS has reduced our dependence on imported oil and saved consumers at the pump.”

RFA“This summer’s hot, dry weather conditions have caused significant challenges for all users of grain,” Dinneen said. “We understand the hardships facing the agriculture industry this summer are serious. From extremely poor pasture conditions to heat stress on animals to reduced crop yield potential, this summer’s circumstances have been difficult. However, waiving the RFS won’t bring the type of relief the livestock groups are seeking, nor will it result in significantly lower feed prices. In fact, because ethanol plants also produce a high protein feed, limiting ethanol production will only further complicate drought related feed issues and costs.”

“The marketplace is the most efficient mechanism to ration demand, not the government, and that is already happening,” Dinneen continued. Dinneen pointed out that the ethanol industry has already begun to respond to sharply higher corn prices by significantly reducing production. The industry’s consumption of corn last week was the lowest in over two years and down nearly 14% in just the last six weeks.

Still, despite the downturn in production and continued demand rationing by the ethanol industry, obligated parties (petroleum refiners and blenders) should have no problem meeting the RFS. The ability of obligated parties to “bank” excess Renewable Identification Number (RIN) credits and use them for compliance in the following year provides a significant measure of flexibility that takes pressure off of the corn market in the event of a short crop. It is estimated that some 2.4 to 2.6 billion excess renewable fuel RIN credits are currently available to obligated parties, equivalent to nearly 20 percent of this year’s RFS renewable fuel requirement.

Ethanol Co-Product Prices Higher

Tight corn supplies, higher corn prices, low ethanol processing margins, export demand and high soybean meal prices are among the factors contributing to higher prices for dried distillers grains plus solubles (DDGS), the ethanol co-product used as livestock feed.

South Dakota State University economics professor Darrell Mark says price for distillers grains usually declines going into summer as cattle feedlot inventories decline and more cow herds and stockers are turned out to pasture. This year, however, distillers grains prices have been increasing going into summer.

“The average price for dried distillers grains plus solubles (DDGS) in South Dakota increased about $3/ton during each week of May although it did moderate some in the first two weeks of June. While domestic demand from the cattle industry is not substantially deviating from normal seasonal trends, several other supply and demand factors have driven the price increases in recent weeks and are likely to continue through the summer months,” said Mark, a market analyst for iGrow.org.

“With high corn prices, ethanol producers have struggled to maintain margins, and are finding incentive to run at reduced capacity and shut down plants for longer periods of time for maintenance, etc.,” Mark said. “Doing so can lessen their losses, but it does reduce the amount of distillers grain produced as well. Thus, with lower supply of distillers grains, prices tend to rise, as have been seen throughout 2012.”

Mark encourages producers to discuss this issue with their current distillers grain suppliers and understand their plant production schedule. He also suggests they purchase product from two or more plants to help offset risk associated with losing distillers grain from one particular plant.

Higher soybean meal prices and export demand for DDGs is also helping to boost prices but Mark expects the impact of the high old crop corn prices and soybean meal prices to lessen by early fall as U.S. corn and soybean supplies become available.

“With the prospects for a record large corn crop and lower prices, ethanol production is likely to increase as margins improve, thus increasing distillers grain production,” he said.