In a statement issued by the United States Department of Agriculture (USDA), Vilsack said, “We are very encouraged that the results of the tests of E15 in newer model cars have been positive. The Environmental Protection Agency’s (EPA) movement towards developing an effective labeling rule sends a strong signal about the future viability of the biofuels industry. Biofuels are a vital component of America’s energy future, helping to break our dependence on oil. This commitment reflects the Obama Administration’s support for a strong biofuels industry helping to increase income for farmers and jobs in rural America.”
In other news, the industry is still waiting to hear EPA’s announcement of the Renewable Fuel Standard (RFS) for 2010. which were to have been released by November 30. The number for 2009 was 10.21 percent of all gasoline sold or approximately 11 billion gallons. The RFS is used by obligated parties including refiners, importers and blenders to determine their renewable fuels obligation. Compliance is monitored through the Renwable Indentificaion Number, or RINs. The notice is required under section 211(0) of the Clean Air Act as amended by the Energy Independence and Security Act of 2007 which was signed into law on December 17, 2007.
Even though USDA lowered its forecast for 2009 corn production in the latest report out today due to lower yields, farmers are still expected to see record yields and production is still expected to be the second highest on record.
Corn production is forecast at 12.9 billion bushels, down 1 percent from last month but 7 percent higher than 2008. Based on conditions as of November 1, yields are expected to average 162.9 bushels per acre, down 1.3 bushels from October but 9.0 bushels above last year. Despite the drop in yield from October, this yield will be the highest on record if realized. Total production will be second highest on record, only behind 2007.
The harvest continues to be slow throughout the Corn Belt. According to USDA, just 37 percent of the corn had been combined as of Sunday, compared to 82 percent average and even well behind last year’s slow harvest which was 69 percent complete at this time in 2008. Meanwhile, despite moisture issues, corn quality remains strong, up one percent this week to rate 68 percent good to excellent.
While high moisture and low test weights are getting to be major concerns with the crop, ethanol plants are able to utilize the lower quality corn. Arlan Suderman with Farm Futures spoke with Dave Vander Griend, President and CEO of ethanol developer ICM, Inc. of Kansas about the situation last week.
“We can utilize the crop,” says Vander Griend. “A lot of people don’t want it, which means that it will be discounted. Many people in the industry haven’t been through this before, but I’ve been around long enough to have lived through it before and know that it can work. Ethanol plants can usually beat the price of the other discounts being offered and make use of it.”
Suderman notes that Vander Griend emphasized the importance of farmers talking to their local ethanol processor now about how to best care for and deliver lower quality corn.
It looks like soybean-based biodiesel is returning to profitability.
This article from Biodiesel Magazine says the USDA-funded Agricultural Marketing Resource Center model shows that a hypothetical, soy biodiesel plant has reversed a six-month trend of losses and would now be operating in the black.
The overwhelming impact of soybean oil prices, which amount to close to 90 percent of the overall cost of biodiesel production, is shown in the comparison of September’s improving numbers with the poorest month, May 2009. The biodiesel revenue for that month was actually slightly higher than September at $3.10 per gallon. However, soy oil was 38 cents a gallon higher at $2.73 per gallon, natural gas remained the same at 3 cents per gallon and methanol cost was lower in May at 6 cents per gallon. AgMRC’s model plant showed a total breakeven cost per gallon, including variable and fixed costs of $3.32 for that low month of May 2009. The net return over variable costs was 4 cents per gallon in May and the net return over all costs was a negative 22 cents per gallon.
It should be noted that the model indicated negative net returns over all costs for the latter half of 2007 turning to positive in March of 2008 until March of 2009. During that year, biodiesel revenue started at $5.16 per gallon, peaked at $5.51 in June 2008 and dropped to $2.68 per gallon when the net return over all costs dropped into the red. EIA reports the spot diesel price at Chicago a year ago in October, 2008, was $2.85 cents per gallon.
The article adds that this model doesn’t tell the whole soy biodiesel story, admitting that a drop in petroleum prices has pushed regular diesel to prices significantly lower than biodiesel… if the $1 per gallon blenders tax credit is not taken off the price of a gallon of biodiesel. But the report does give hope that some of the pressure on the biodiesel industry is letting up.
USDA Deputy Secretary Dr. Kathleen Merrigan will get some first hand knowledge of Iowa’s ethanol industry during a tour scheduled for October 20. During her visit, Dr. Merrigan will learn about ethanol production, utilization of co-products and biodiesel research.
Merrigan will first visit Lincolnway Energy, a 50-million gallon per year ethanol plant with a corn oil extraction process. Next, she will tour Couser Cattle Company’s 5,000 head operation which utilizes distillers grains as livestock feed. Finally, Deputy Secretary Merrigan will tour Renewable Energy Group’s Research Center which houses industry-leading biodiesel programs, including cutting-edge corn oil-to-biodiesel commercialization research.
Greensburg, Kansas, literally destroyed by a tornado in May, 2007, is getting some help from the government to have a green energy source supply the power for the town as it continues to rebuild.
The USDA has announced a $17.4 million loan to Greensburg Wind Farm, LLC, to provide financing for the 10 wind turbine project that will supply power to the community:
The total project cost is estimated at $23.3 million. Approximately, $17.4 million will come in the form of a loan to Greensburg Wind Farm, LLC, a subsidiary of John Deere Renewables, with the remaining $5.8 million, or 25 percent of the total project cost, being provided through an equity investment by Deere & Company. The loan will support the 10 wind turbine project that will generate 12.5 MWs of electricity that will serve the electric needs of the City of Greensburg and other rural communities through the Kansas Power Pool.
“I am proud of the long standing commitment by USDA Rural Development’s Rural Utilities Service toward working with community-based electric cooperatives to find new and more energy independent ways to power rural America,” said Rural Development Under Secretary Dallas Tonsager.
The USDA claims it has provided the town with about $20 million in financing to help with the community rebuilding efforts.
Secretary of Agriculture Tom Vilsack, White House Council on Environmental Quality Chair Nancy Sutley, and Wisconsin Governor Jim Doyle will tour Crave Brothers Farm and Dairy Operation in Waterloo, Wisconsin Friday to see bioenergy in action.
Crave Brothers is an example of a successful modern dairy, using green energy sources to power the farm, cheese factory and 120 area homes. Crave Brothers Dairy Farm and its cheesemaking enterprise, Crave Brothers Farmstead Cheese, have a sophisticated, computer-controlled anaerobic digestion system that generates electricity that runs on organic waste from their 750 pampered and productive Holsteins.
The Administration and State officials will discuss the opportunities for rural America to embrace science and lead efforts to create clean energy jobs, achieve energy independence, mitigate climate change, and transition to a clean energy economy.
At the University of Minnesota-Morris Biomass Gasification Facility, for example, gasification researcher Jim Barbour and ARS soil scientist Jane Johnson (pictured) are evaluating potential biomass feedstocks, including pressed corn stover.
The Agricultural Research Service has scientists in 18 states involved in the Renewable Energy Assessment Project (REAP) which is trying to determine the balance between how much crop residue can be used to produce ethanol and other biofuels and how much should be left on the ground to protect soil from erosion, maintain soil organisms, and store carbon in the soil.
Because corn is currently the most widely used biofuel crop, the REAP team is especially interested in determining where, when, and how much corn stover can be harvested without harming soil productivity. The work involves not only looking at how much plant residue is needed to maintain soil carbon than to control soil erosion, but also using perennial groundcover roots and shoots as alternative sources of organic material to offset the carbon lost when stover is removed.
This edition of “The Ethanol Report” features comments from Geoff Cooper with the Renewable Fuels Association on today’s increased corn crop forecast from USDA, how it disputes the indirect land use change theory and food versus fuel debate. Cooper also comments on the importance of ethanol to our national security as we remember the anniversary of the 9-11 terrorist attacks and celebrate the grand opening of a new ethanol plant in Minnesota.
The U.S. Department of Agriculture increased the forecast for the nation’s corn crop by two percent in the September crop production report out Friday morning. The forecast is now an even 13 billion bushels, just 100 million bushels short of the 2007 record crop. The soybean crop, already expected to be the biggest ever, was boosted another one percent in the forecast to 3.25 billion bushels.
USDA is now saying yields are expected to average 161.9 bushels per acre, up 2.4 bushels from August and 8.0 bushels above last year. Yield forecasts increased from last month across the western Corn Belt and the northern half of the Great Plains as mild temperatures and adequate soil moisture supplies provided favorable growing conditions.
Some analysts believe the corn crop could ultimately be the largest ever. Even though both crop progress remains far behind normal, the weather forecast is calling for generally warm, mostly dry weather stretching into next week or so, which is great news for producers.
A Missouri plant that turns agricultural waste products into fuel pellets is the first to receive a payment from the USDA’s Farm Service Agency’s new Biomass Crop Assistance Program (BCAP).
This USDA press release says the Show Me Energy Cooperative of Missouri conversion facility will get the funds aimed at paying producers for biomass materials for collection, harvest, storage and transportation:
“As the Obama Administration continues laying the foundation for a stronger, revitalized economy, biomass has great potential to create new, green jobs for American workers,” said Vilsack. “Biomass also has important environmental benefits to produce cleaner energy and reduce greenhouse gases.”
“Show Me Energy completed an agreement soon after our July 29th announcement and had biomass producers waiting,” said FSA Administrator Jonathan Coppess. “Agriculture Secretary Vilsack had a chance to see first hand the company’s successful operation during a recent visit to Missouri. He was impressed and excited about the opportunities that BCAP presents for agriculture, the
environment and the nation.”
According to Show Me Energy Cooperative CEO Kurt Herman, “Our plant produces fuel pellets from agricultural waste products, but could expand to produce cellulosic liquid fuels.”
The pellets, made from switchgrass, straw, corn stover, sawdust, woodchips and other biomass materials from more than 500 producers, will be used to heat homes and livestock facilities. It’s being tested at a power plant to see if it could supplement coal for electrical production.
FSA is urging other biomass conversion facility operators are encourage to sign agreements to get the same funds themeselves. MOre information is available at www.fsa.usda.gov.
Agriculture Secretary Tom Vilsack says the biomass facility is taking wood, corn stalks and other crop residue and converting it into pellets that can be used to produce energy or a substitute for propane on the farm.
“We have seen plants like this one that are using it as a substitute for propane, we have seen plants that are in the process of trying to use corn cobs for producing anhydrous ammonia,” Vilsack said. “It is continually amazing to me how innovative this country is and how innovative rural America is and can be with a little bit of incentive.”
Vilsack says the small plant costs about $8 million to replicate. “It takes crop residue from about a 50-100 mile radius, creates a new market for farmers, an opportunity for them to increase their bottom line, and at the same time, a chance for a local utility to meet its renewable energy portfolio standard requirements.”
Earlier in the week, Vilsack took the Rural Tour to his home state of Iowa where he served as governor for eight years. During an interview with the Des Moines Register, Vilsack discussed a variety of topics, including ethanol. The secretary stressed the need for higher ethanol blends and more FFVs. “This is a supply issue. What we need are more vehicles that have flex-fuel capability (to use up to 85 percent ethanol), more retail stations with blender pumps that allow the motorist to adjust to the blend they want.”
The Administration’s Rural Tour has been traveling around the country since June.
And the money keeps a coming. U.S. Department of Agriculture Secretary Tom Vilsack and U.S. Department of Energy Secretary Steven Chu today announced the joint selection of awards of up to $6.3 million towards fundamental genomics-enabled research leading to the improved use of plant feedstocks or biofuel production. The seven projects announced came after the end of the green jobs and renewable energy Rural Tour event which took place last weekend in Virgina. The goal of these investments is to further the Obama Administration’s efforts to broaden the nation’s energy portfolio while decreasing our dependence on foreign oil.
Vilsack said, “Helping expand and diversify production of biofuels is an example of the Obama Administration’s commitment to developing a sustainable domestic biofuels industry that can help strengthen rural America while decreasing our dependence on foreign oil.”
Chu added, “Part of the solution to the energy problem will be home-grown energy crops.” These projects will help us unlock the true potential of advanced biofuels, decrease our dependence on foreign oil, and create new jobs and a thriving biofuels industry in America.”
These grants will be awarded under a joint DOE-USDA program begun in 2006; the DOE will provide $4 million in funding for four projects, while USDA will award $2.3 million to fund three projects. Initial funding will support research projects for up to three years.
Awards recipients include:
• USDA-ARS Northern Plains Area (Lincoln, NE), $1,182,000
• USDA-ARS Western Regional Research Center (Albany, CA), $1,300,000
• University of Georgia (Athens, GA), $1,200,000
• University of Georgia (Athens, GA), $705,000
• Michigan Technological University (Houghton, MI), $900,000
• University of Florida (Gainesville, FL), $643,000
• University of Nebraska (Lincoln, NE), $390,000
Click here for more information on the individual projects and the DOE-USDA biomass genomics research program.
The U.S. Department of Agriculture lowered the forecast for corn expected to be used for ethanol this marketing year in the latest report out on Friday.
Corn for ethanol use in 2008-2009 was lowered by 100 million bushels in USDA’s July World Agricultural Supply and Demand report, to 3.65 billion – which is still up more than 600 million bushels from last year and about 500 million less than they are forecasting for next year.
USDA Chief Economist Joe Glauber says the financial situation for ethanol producers is better than it was earlier this year. “We have seen positive margins come back for the ethanol industry, particularly with the lower prices for corn and higher prices for gasoline, those margins have come back very strong,” he said. “But, if we look at ethanol production and gasoline consumption in the U.S., both those have been off a bit.” Which means reduced production of gasoline blends with ethanol in May and June, based on the most recent weekly data.
The prediction for next marketing year is that ethanol production will use 4.1 million bushels of corn – up almost 12 percent from this year.
There has been speculation as to when some of the funds dedicated to developing renewable energy will come to fruition. It looks like this is finally happening. Farmers, ranchers and rural business owners have until July 31, 2009 to apply for the USDA Rural Energy for America Program (REAP) grants. The grants provide funds to purchase and install small wind turbines (or other renewable energy systems). These grants will cover 25% of the total installed cost of the small wind turbine system, and when used in conjunction with the Federal Investment Tax Credit (ITC), can help a farmer install a small wind turbine system for roughly 50% of the normal cost.
These incentives, when coupled with the cost savings from generating your own electricity, can result in impressive investment prospects. For example, according to David Shirkey of Renewable Options & Investments (ROI), in locations with 11 mph average wind speeds and with utility rates of $0.12 per kWh, a farmer could realize a 12 percent annual rate of return on his investment and a payback of eight years. In addition, some local utility cooperatives are also offering rebates to its members installing wind power.
Some farmers might be eligible for federal grants to cover the cost of putting in a wind energy turbine.
This ZDNet blog entry says farmers and ranchers in rural areas with fewer than 15 employees have until July 31, 2009 to apply for the USDA Rural Energy for America Program (REAP) grants:
The grants can be used to cover 25 percent of the total installed cost of a small wind turbine system, or another renewable energy system for that matter. They can be used in conjunction with the Federal Investment Tax Credit that applies to renewable energy technology investments. Caution, in the information I’m reading about this program, it could take up to two weeks to pull together an application, so you probably don’t want to wait until July 30 to start filling this out.