Crumbling Infrastructure Hurting Rural Ethanol & Biodiesel Industries

Rural America’s infrastructure challenges cut to the heart of the six challenges outlined during this morning’s session of the Farm Foundation’s Food and Agriculture Policy Summit being held in Washington, D.C.

As you might have read on my earlier post over on AgWired.com, this morning, Farm Foundation Pres. Neil Conklin outlined the six major areas of challenges facing agriculture over the next 30 years: 1. Global financial markets and recession, 2. Global food security, 3. Global energy security, 4. Climate change, 5. Competition for natural resources, and 6. Global economic development. Gene Griffin with the Upper Great Plains Transportation Institute at North Dakota State University told the group attending today’s Farm Foundation session that a crumbling rural infrastructure, in particular, the roads, touches each one of these six challenges and threatens to make them even worse.

“The engineers will tell you [the pavements] look OK on the surface, but underneath it is starting to crumble.” Griffin says by the time the damage is clearly noticeable, it costs two to three times as opposed to normal maintenance and repair.

“Just getting the political will of people to pay for systems they want to use… but they’ve gotten used to the idea they don’t necessarily have to pay for it. And I think those are two huge problems.”

Griffin says in his home state, where rural roads are seeing a huge amount of big trucks working the biodiesel and ethanol industries and North Dakota’s burgeoning petroleum industry is also taking a toll, that infrastructure needs the funding… although it might not see the same amount of traffic a higher-density population area would see. He says if the cities want the fuels that are produced in rural areas, we need to develop a system that links the high-density traffic areas with the low-density ones.

He says it comes down to deciding if we’re going to pay for the infrastructure that will help us be more energy independent now at a lower price or at a much higher price… down the road.

Listen to my entire conversation with Gene here:

Download the audio here.

ADM: We Can Have it All… Food & Fuel

The world’s population will grow by 33 percent by the year 2040, but the amount of farmland to feed and fuel that growing demand won’t have to grow by that same one-third… that’s what attendees at the Farm Foundation’s Food and Agriculture Policy Summit in Washington, D.C. heard this morning.

Greg Webb from Archer Daniels Midland gave that optimistic assessment as he told the group increasing efficiencies in production agriculture would help meet the growing demands while adding only a disproportional smaller amount of land to the production mix.

“Agriculture’s role is not one of conflict between food or fuel. It is one that is quite compatible. Producing more food results in more fuel being produced as well.”

Webb says more efficient practices will give farmers, who are already are being pretty efficient compared to just recent history, an even greater opportunity to produce both the food and fuel the world demands, as long policies don’t get in the way.

“We need to have policies that allow those innovations and investments express themselves.”

Webb adds Pres.-elect Obama’s new Cabinet will have a great impact on how those policies play out.

You can hear my conversation with Greg by clicking here:

Download the audio here.

Ethanol Fuels Big Three Bail Out Caravan

The Big Three auto makers traveled to Washington this week to ask for a bailout in fuel efficient, high mileage cars, including flex fuel vehicles that run on up to 85 percent ethanol.

car makersGeneral Motors’ Rick Wagoner (left) made the trip in a black hybrid Chevrolet Malibu, accompanied by a flex fuel Buick Lucerne, which runs on fuel that is 85 percent ethanol, and the high mileage Chevy Cobalt XFE. “Part of this is being done to showcase fuel-efficient and environment-friendly vehicles,” said GM spokesman Tom Wilkinson.

Ford HybridFord’s Chief Executive Alan Mulally (center) traveled to the nation’s capital in a Ford Escape hybrid, which also runs on up to 85 percent ethanol. No word in the news reports what Robert Nardelli, chairman and chief executive of Chrysler, was driving.

The main reason for the car makers driving to the capitol this week was because of the flack they caught a few weeks ago for flying in on corporate jets with hat in hand to ask for billions in a federal bailout.

Biodiesel Board Blasts Biofuel Plantations Report

The National Biodiesel Board is taking exception with a report that seems to equate unsustainable practices to produce biodiesel in some parts of the world with what American biodiesel producers are doing

In a statement from Manning Feraci, Vice President of Federal Affairs at the NBB, the group takes aim at the report titled, “Biofuel Plantations on Forested Lands: Double Jeopardy for Biodiversity and Climate” :

“The U.S. biodiesel industry does not support or condone practices that cause the destruction of sensitive ecosystems such as rainforests in Southeast Asia. In fact, credible science has repeatedly shown that the vegetable oils and animal fats produced in the U.S. and used for biodiesel production are sustainable and significantly reduce greenhouse gas emissions when compared to fossil fuels. This information was unfortunately not acknowledged in this study.

“It is interesting that throughout this study, the authors repeatedly acknowledge shortcomings in the data necessary to make definitive determinations on greenhouse gas emissions. Specifically, the paper notes:

‘Our study has some important limitations. First, the analysis of greenhouse gas emissions contains uncertainties because of necessary assumptions and the limited empirical basis of some published figures.’

NBB officials say that biodiesel, produced from sustainable U.S. feedstocks, can be a key part of America’s strategy to reduce its dependence on foreign oil. They fault the researchers for trying to use inexact science and incomplete data to possibly to try affect America’s commitment to biofuels.

Biofuels Key Part of Conversation at Farm Foundation Meeting

It was a pretty amazing event today at the Farm Foundation’s Food and Agriculture Policy Summit in Washington, D.C. today.

Seven former Secretaries of Agriculture (six in-person and one by videotape) debated the future of agriculture in America, especially what the immediate future would hold for the next person to head the U.S. Department of Agriculture.

A big part of this historic, bipartisan conversation was the role of biodiesel and ethanol, as well as other sources of renewable fuels.

John Block, who served as Pres. Ronald Reagan’s Ag Chief, said there’s too much infighting within the agriculture community over renewable energy.

“We’re one family in agriculture. We shouldn’t be fighting each other. I think there’s been too much fighting in the family over this food and fuel issue.”

Block says we can’t take our eye off the ball of getting energy from all sources. He says the recent drop in oil prices won’t last.

Listen to Block’s comments here:

Download the audio here. (mp3)

Top Ethanol Producer Addresses Farm Forum

The head of the world’s largest ethanol producing company was keynote speaker at 12th Annual Farm Journal Forum in Washington D.C. today.

POETPOET CEO Jeff Broin says his company is considering various options to purchase ethanol plants, although he would not specifically comment on rumors that they might buy the bankrupt VeraSun or any of its assets.

“There are a lot of opportunities out there. We have looked at dozens of options over the last six months and we will continue to look at all of the options,” Broin said.

Broin remains optimistic about the ethanol industry despite shrinking margains that are now making ethanol more expensive than gasoline.

“I’ve personally produced ethanol at $10 per barrel oil,” Broin said. “At $4 corn, we can beat $60 oil prices. As oil falls below that it will have some effect on grain prices.” Today oil futures were $47 a barrel while December corn futures were just over $3.48 a bushel.

While the short term may look bleak, Broin says long term he expects to see a very successful industry.

Court Rules VeraSun Can Reject Corn Contracts

Corn growers were happy to have their day in U.S. Bankruptcy Court Tuesday for VeraSun Energy Corporation but the outcome was not favorable.

VeraSunAs expected, bankruptcy law and the ruling will allow VeraSun to reject any contracts that are economically disadvantageous to VeraSun, including corn growers’ contracts.

According to National Corn Growers Association (NCGA) Chairman Ron Litterer of Iowa, they just wanted to have their say to address issues of concern to growers. “It was doubtful that we could influence the courts to require VeraSun to pay the contracted price for our corn,” Litterer said.

“We will continue to advocate for the interests of all corn suppliers and play a role to help make the best of a bad situation,” said Litterer. “As providers of corn to VeraSun, corn growers want fair payment under fair terms for their corn, as well as a positive conclusion that allows VeraSun to stay viable as a long-term customer for our corn.”

NCGA helped form an advisory committee in November to make certain that the views, expertise, and interests of corn growers in the VeraSun case were effectively represented before the U.S. Bankruptcy Court in Delaware. The advisory committee is made up of corn growers from Iowa, Michigan, Nebraska, North Dakota, Ohio, and South Dakota.

MN Extends Biodiesel Grants Deadline

The Minnesota Department of Agriculture has extended its deadline to apply for grants to help the state’s biodiesel industry.

This press release from the department says the new deadline is Friday, December 12, 2008:

A total of $300,000 in funds is available to the owners of facilities that supply petroleum products to customers who sell, use, or transport fuel in the state of Minnesota. The facilities should be located on or near a petroleum terminal and have an infrastructure that can be designed to blend cold weather biodiesel with conventional diesel fuels. Cold weather biodiesel is a high-quality biodiesel blend that can be used successfully year-round, even in the coldest climates.

Grant funds may be used to offset the cost of necessary infrastructure equipment including but not limited to tank, pipe, valves, meters, pumps, and heating equipment plus the cost of engineering, fabrication, and installation.

Officials admit that they received no applications by the Nov. 28th, 2008 deadline… the day after Thanksgiving… but many had expressed an interest and said they just needed more time to do their applications.

More information is available at the Minnesota Department of Agriculture web site: www.mda.state.mn.us. Click on Grants, Loans & Financing.

State & Federal Money Help MO Biodiesel Startups

The construction industry might be struggling a bit these days, but biodiesel plants are still being built… with some help from federal and state programs that are backing the capital to get these startups going.

As an example, a Missouri-based biodiesel maker has received some help to get their proposed biodiesel plant and soybean crushing facility off the ground. This story from Biodiesel Magazine has details:

Moberly, Mo.-based Producers’ Choice Soy Energy LLC has received a $9.5 million construction loan from Advantage Capital Partners, a venture capital and small business finance firm. The loan was made possible through state and federal tax programs, including the Missouri New Markets Development program, that are designed to stimulate growth in underserved communities.

The funding will be used to support the construction and operational needs of a soybean processing plant and 5 MMgy biodiesel production facility. The soybean crush will process up to 250 tons of soybeans per day for use in biodiesel processing. In addition, 65,000 tons of extruded soybean meal will be produced annually.

The plant is scheduled to be finished this coming February.

Biofuels Part of Policy Summit

The Food and Agriculture Policy Summit, co-hosted by Farm Foundation and Farm Journal Media this week is focusing on the wide range of domestic and global issues facing the food system and agriculture today, including biofuels.

Farm Foundation SummitThe summit kicks off today with the Farm Journal Forum on “What Will Change Bring? Impacts of a New Congress and Administration in the New Era of Agriculture” which continues through Wednesday. The keynote speaker for that event will be POET CEO Jeff Broin who will discuss the potential for ethanol production amid changes in Congress and the new administration of President-elect Barack Obama.

Wednesday afternoon will be a joint event between both Farm Journal and Farm Foundation – “A Conversation with the Secretaries. “We’ve invited all nine of the living past Secretaries of Agriculture to participate in a conversation to talk about what advice they might give a new secretary of agriculture and just what their perspectives are on the challenges we face today,” said Farm Foundation president Conklin. Almost all have agreed to either appear in person or provide a statement by video. They include Clifford Hardin (Nixon), Bob Bergland (Carter), John Block (Reagen), Clayton Yuetter (Bush 1), Mike Espy and Dan Glickman (Clinton) and Ann Veneman and Mike Johanns (Bush 2).

On Thursday, Farm Foundation will examine Agriculture’s Strategic Role in Feeding and Fueling a Growing World. “We will be releasing a report that looks at the challenge of the next 30 years with growing population and rising incomes around the world and the increasing demands being put on agriculture,” said Conklin.

Listen to my interview with Neil about the event here:

Indy Ethanol Fallout

Several different groups are pressuring the Indy Racing League to rethink its decision to partner with Brazil for ethanol to fuel the Indy Car Series.

Among them is a conservative, free market group called American Future Fund (AFF) which launched a radio ad which urging Hoosiers and others to call the IRL and tell them to continue using American ethanol in its race cars.

“It’s amazing that amid all the progress we have made toward energy independence, the IRL decides to set us back,” said AFF Communications Director Tim Albrecht. “It’s mind-boggling as to why the league would take this action in an economic downturn. This is a slap in the face to American farmers and workers.”

“Our hope is that local citizens will stick up for what’s right, and demand the IRL rescind its deal with Brazil,” continued Albrecht. “This is a matter of energy independence and keeping our jobs here at home. The IRL may turn its back on the people of Indiana and the Midwest, but AFF will steadfastly stand with America’s energy producers.”

Indiana corn growers are also calling on the IRL to continue using domestically-produced ethanol. “We encourage the citizens of Indiana to make your opinion known to the IRL if you feel this decision was a mistake and not in the best interest of our country, Indiana farmers, and the local economies that benefit from the growing ethanol industry in our state,” said Mike Shuter, president of the Indiana Corn Marketing Council.

The actual contract has apparently yet to be signed, but IRL officials have said the Brazilian deal calls for them to use a US ethanol supplier for the first year of the multi-year agreement. The Ethanol Promotion and Information Council, through its producer members, has been the fuel sponsor of the Indy Car Series for the past three years but decided not to renew the contract for the coming season.

Lower Oil Prices Make Biodiesel Producers Struggle

Rising oil prices were a boon to biodiesel producers this summer, as near-$150/barrel prices for crude oil made it more and more profitable to produce biodiesel from a variety of feedstocks. However, with that same barrel of oil now costing less than $50, margins have tightened up for makers of the green fuel.

This story in the Tampa (FL) Tribune highlights how biodiesel producers have had to get more innovative to keep bottom lines in the black:

[Last summer], producers said they were limited only by how much $3-a-gallon chicken fat they could truck into the plant.

[Pensacola-based] Agri-Source’s investment [to turn chicken fat into biodiesel] earned it an Industry of the Year award from the Pasco Economic Development Council. Two months later, though, Agri-Source has slashed its production by half as plummeting oil prices and its fixed cost for raw materials have turned the company’s bottom line from black to red.

“The profitability has really weakened,” said Agri-Source president Rick Higdon. “We have the ability to ride it out, but it’s no fun.”…

The key to the industry’s future will be developing new sources of raw materials, said Robert McCormick, principle engineer in the fuel performance group at the National Renewable Fuels Laboratory in Colorado.

“If you could sell B20 for a nickel or 3 cents less than petroleum diesel, you could probably sell all you could make,” McCormick said. “They haven’t been able to do that.”

Industry leaders say the $1-a-gallon federal credit they’re getting is helping for now, and the 500 million gallon mandate for biodiesel that kicks in next year will give the market a floor. But they also realize they need to make a profit to stay viable.

I’m sure some of you are reading this and saying, “See, it’s not working!” But keep in mind, it’s those 500 million gallons of petroleum diesel that biodiesel will replace next year… and more in subsequent years… that will help keep the price of petroleum down. As biodiesel refining technologies… helped by those subsidies and mandates… are made more efficient, it will cost less and less to produce biodiesel, making it less reliant on any tax dollars for support. Less expensive, more sustainable feedstocks will replace the more expensive, less sustainable ones. Survey after survey show Americans want to support domestically-produced alternative energies. Right now, the industry just needs a little leg up. Isn’t it better to help out these guys making the green fuel, than to subsidize million-dollar retreats for bankers who can’t balance their balance sheets or give money to carmakers who make cars people don’t want to buy? And if we save the planet in the process, all the better.

Iowa Opens 100th Retail E85 Station

The Kum & Go #62 at 6130 NW 86th Street in Johnston, IA is the state’s 100th E85 facility to open to the public. On November 24, the station, which installed two dedicated E85 fuel dispensers, celebrated the occasion with a grand opening event hosted by the Clean Air Choice Team.

E85 sold for $1.00 per gallon during the four hour celebration. Consumers also had the chance to win several prizes including ethanol fuel gift cards. A ribbon cutting ceremony kicked off the event. Iowa Secretary of Agriculture Bill Northey was in attendance.

[The event] had a good deal of interest,” said Lucy Norton, Iowa Renewable Fuels Association’s managing director. “Many attended the formal program and ribbon cutting ceremony.” According to Norton, grand opening events – such as this one – are part of an ongoing program sponsored through a partnership of the Clean Air Choice Team, which includes the IRFA, the American Lung Association, Iowa Corn Growers, General Motors Corp. and Kum & Go.

Cellulosic Ethanol Company Changes Name

There is something new under the sun.

Massachusettes-based SunEthanol has changed its name to Qteros, after its Q microbe technology, which may be a key to commercializing cellulosic ethanol.

The company has raised $25 million from a diverse group of investors in a Series B round of financing. Among the investors are British Petroleum (BP) and a management group led by billionaire George Soros.

Indy Defends Ethanol Choice

The Brazilian ethanol industry will remain the fuel sponsor of the Indy Racing League in 2009, but the ethanol will come from the United States – at least for the first year.

That is a compromise of sorts announced by IRL after meeting with corn ethanol industry representatives.

The multi-year partnership between the IndyCar Series and APEX-Brasil — a trade promotion agency that will be the official ethanol supplier to the series beginning in 2009 – includes cooperation from UNICA (the Brazilian Sugarcane Industry Association) to identify those interested in supplying ethanol.

Initially, UNICA will look to partner with a U.S. company to supply the IndyCar Series with American-produced corn-based ethanol.

Corn growers are other domestic ethanol interests are unhappy with the Brazilian deal, but ultimately it came down to a decision by the Ethanol Promotion and Information Council (EPIC) to not sponsor the racing series for the next season. EPIC is “ceasing operation,” as the IRL statement notes, in that it will no longer exist as EPIC but as part of the newly formed Growth Energy group. However, the decision to stop sponsorship was made independently of that new direction – not just because it was expensive, but also because it had essentially served it’s purpose in proving ethanol as a performance fuel.

Terry Angstadt, president of the commercial division of the Indy Racing League, said they made the deal with Brazil because “No one from any other part of the American-based ethanol community stepped forward with a substantial proposal” although several other producers reportedly offered their services as suppliers last week.

Angstadt says opportunities still exist for American ethanol companies and organizations to continue involvement in the IndyCar Series. “We look forward to working with American producers and Brazilian producers of ethanol to promote ethanol as a renewable energy source and part of the solution to lessen the United States’ reliance on Middle Eastern oil,” he said.