The Case For Cellulosic

Even while tending to his crop on his family’s central Illinois farm, grower Eric Rund has been digging deep into the biofuels market. He’s traveled overseas, hosted foreign visitors, sat with countless experts on the subject, served as a speaker, and closely followed the rapid-fire changes in the constantly evolving biofuels market.

In this article, Rund shares his thoughts on the biofuels market today and the reasons why he thinks biofuel-focused growers will be trading in corn and soybeans for miscanthus and other cellulosic feedstocks.

Q. Why are you so bullish on cellulosic ethanol?

In the short term, we’ll be making ethanol out of corn because we know how to grow corn, and that’s what is being supported right now. But more will be needed than corn alone can support. For example, the Senate version of the Energy Bill is calling for 36 billion gallons of renewable fuel to be produced by the year 2012. Corn growers can realistically produce 15 billion gallons by the year 2012  by increasing yields and adding a few extra acres, but we can’t really do any more than that without pulling corn out of the feed market. So that leaves 21 billion gallons to come from elsewhere. Farmers need to look at that, and try to position themselves to take advantage of that future demand.

The only logical place to fill the gap is cellulosic sources. Both the government and private industry are spending billions to develop systems to convert cellulosic material, and I think that three or four years from now we are going to have the technology available.

Q. But what will be the “feedstock?”

Well, there are only so many wood chips to go around, and in my opinion, based on fuel yield, switchgrass and wheat straw aren’t going to do it. Here in Illinois, I’m working on how we can take advantage of a future market for what we can grow here. And at the University of Illinois, research on miscanthus, a high fuel yielding grass, is showing real promise. A crop like that, if not that crop itself, is one that we as farmers can provide to the market.

The issue with miscanthus is that it will take longer term planning and some vision, and that’s much different than growers in this area usually work. You can’t decide this March to plant it and have a harvestable crop in October. It takes two to three years to get the production going.

Not much miscanthus is grown because it is a sterile plant. The most common way to increase acres is by transplanting the rhizomes. With switchgrass, you plant the seed like with most other crops. And there isn’t a knowledge base on how to grow, harvest, and store it. But the information is coming. BP Amoco has put out a half a billion dollars toward figuring it out — the University of Illinois received $100 million to work on biomass production, while the University of California at Berkeley got the right to work on the processing issue.

Why miscanthus? Right now, the ethanol yield from corn is 500 gallons per acre. Miscanthus can generate 1,500 gallons per acre. It is a perennial, it requires very little fertilizer, and once established, there is no need for herbicide. You harvest the crop once a year between late fall and early spring.

Q. When could miscanthus production actually become a reality?

Well, it’s a chicken and egg thing. No one is growing it because there’s no market for it, and there’s no market for it because no one can produce a steady, large supply of it. So it’s in limbo at this time. Now, there are some ideas that hold promise: Monsanto invested in a company called Mendel that does a lot of miscanthus research, as well as other biomass. And BP Amoco is also invested in the Mendel venture. So there is a lot of big money in research toward developing biomass markets for miscanthus and other crops.

Q. How can the chicken and egg issue be overcome?

I’m not sure how the biofuel market is going to move forward, but we know that it’s not going to turn cellulosic right away because the process is not ready. One way it could move forward faster would be if a biomass could serve to fuel corn ethanol plants in the short term. Installing fluidized bed boilers beside the natural gas boilers in corn ethanol plants allows the flexibility to use the cheapest fuel. Fluidized bed boilers can burn almost anything including coal, dried distillers grain, and any biomass. Not only would this reduce the production cost of ethanol, but a plant so equipped would provide a flexible market for biomass. It would give growers a chance to learn to grow and handle that biomass while creating the power source for the corn ethanol plant. Then four to five years from now when the cellulosic process is more practical, the plant can convert because it has a source of biomass stock.

The other opportunity may come from regulation. Illinois recently passed a renewable fuels portfolio that mandates that a certain percentage of the electricity generated in the state needs to be renewable — 75% is earmarked for wind power, but the other 25% must come from somewhere else. You could burn a biomass such as miscanthus in coal firing plants in Illinois. There are a lot of models for this, particularly in Europe, where it has been done for years. This could be the way biomass gets started.
 
Q. What do you see happening in the near term?

I think we are already starting to see a reduction in the amount of investment in ethanol from corn, and I think the reason is that speculators are seeing what I’ve laid out to you. There is new technology coming in, and if we invest in corn technology we may not be able to get our money out before the new vision gets here. That has cooled the heels of a lot of guys who want to throw money at it.

I think you could still get your money back in five years if you started now, but the cost of construction has gone up, interest rates are up … it’s cut into the exuberance over corn ethanol. I think that healthier investing is going on right now, with more consideration to goals for returns. 

Topics:

Leave a Reply

Crop Inputs Stories

Crop InputsPlatform Specialty Products To Acquire Arysta LifeScience
October 20, 2014
Once the acquisition is complete, Platform Specialty Products will combine Arysta LifeScience with previously acquired companies Agriphar and Chemtura Crop Solutions. Read More
MicronutrientsMicronutrients Going Macro
September 9, 2014
Between 2014’s fantastic growing conditions and a heightened awareness on plant nutrition, the major players in micronutrients are gearing up for another big year. Read More
FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More
FungicidesSudden Death Syndrome, Brown Stem Rot Reported In Indiana Soybeans
September 3, 2014
Farmers and retailers should be watching for symptoms of these two diseases over the next few weeks as they are best managed through preventative methods. Read More

Trending Articles

HerbicidesAdjusting To The New Reality Of Weed Control
November 4, 2014
Even with new cropping systems being readied for market introductions, weed control will remain a challenge for many. Read More
StewardshipResponsibleAg Begins Auditor Training
October 31, 2014
ResponsibleAg auditor training is now underway at the Ford B. West Center for Responsible Agriculture in Owensboro, KY. Read More
InsecticidesNew Research Study Shows The Value Of Neonics
October 29, 2014
The study evaluated seed treatment, soil and foliar uses of neonicotinoid insecticides in the U.S. and Canada. Read More
Crop InputsPlatform Specialty Products To Acquire Arysta LifeScience
October 20, 2014
Once the acquisition is complete, Platform Specialty Products will combine Arysta LifeScience with previously acquired companies Agriphar and Chemtura Crop Solutions. Read More
Seed/BiotechMonsanto Offers New Support For Ferguson, Area Communities
October 8, 2014
Monsanto Co. has committed $1 million in new support for several collaborative efforts in Ferguson, MO, and surrounding communities in North St. Louis County. Read More
Seed/BiotechUnapproved Genetically Modified Wheat Found In Montana
October 3, 2014
USDA reports that one year after discovery of Monsanto's unapproved wheat in a single Oregon field disrupted U.S. wheat export sales, the GMO wheat has again been found in Montana. Read More

Latest News

soybean field
Crop InputsABM Patents Microbial R&D Technique
November 25, 2014
Focused Microbial Diversity (FMD) is a newly patented technique employed by Advanced Biological Marketing (ABM) to research and develop microbials that will be used in ABM products Read More
Crop InputsStorage Options Help Grain Growers Go To Market
November 24, 2014
While on-farm storage in a traditional upright storage bin is one possibility for storing grain, it may not be for everyone. Read More
Eric SfiligojGiving Thanks For Another Great Year
November 24, 2014
As Thanksgiving Day 2014 arrives, agriculture has plenty to be thankful for. Read More
Crop InputsSyngenta Cost-Cutting Program To Affect 1,800 Jobs
November 24, 2014
The company's Accelerating Operational Leverage program will result in job reductions and relocations totaling around 1,800 across the company, the majority of which will occur in 2015. Read More
EquipmentAGCO Announces Operator Of The Year Finalists
November 20, 2014
Four custom applicators have been selected by AGCO Application Equipment as finalists for 2014 Operator of the Year, an honor that recognizes them as being among the top professionals in their industry throughout North America. Read More
MicronutrientsH.J. Baker Expands Tiger-Sul Business
November 20, 2014
H.J. Baker has created and filled two strategic positions in business development and sales within its Crop Performance Division. Read More
soybean field
FertilizerGeneral Mills Honors United Suppliers For Nitrogen Opti…
November 19, 2014
United Suppliers winning proposal detailed SUSTAIN, a consulting network that provides customized products and services for farmers using a needs-based system approach. Read More
EmployeesOhio AgriBusiness Association Awards $25,000 In Scholar…
November 19, 2014
Each year, the Ohio AgriBusiness Association Educational Trust scholarship program awards scholarship dollars to students enrolled in an agriculture-related field attending several state colleges. Read More
ManagementServi-Tech Names New CEO
November 17, 2014
Servi-Tech has named Greg Ruehle its new president and CEO. Read More
CropLife 100Pinnacle Ag Acquires Colorado Aerial Application Outlet
November 17, 2014
Ft. Lupton, CO-based Reck Aviation — a full-service chemical application company providing aerial crop applications of fertilizers and crop protection products — will operate as part of Pinnacle's AgOne Application Services brand. Read More
Eric SfiligojMcDonald’s Message: Biotech Crops Scarier Than Cancer
November 17, 2014
Despite their potential health benefits, one of the world’s largest potato users will pass on a new biotech offering. Read More
MicronutrientsWinField Releases 2014 NutriSolutions Results
November 14, 2014
A number of significant regional and national crop deficiency trends emerged from the 2014 WinField NutriSolutions tissue sampling program. Read More
FertilizerH.J. Baker Opens Chinese Production Lines
November 14, 2014
The occasion was the official launch of the Tiger-Sul sulphur Bentonite production line of two much anticipated fertilizer products in China, T90CR sulphur fertilizer and TZinc micronutrient enhanced sulphur fertilizer. Read More
ManagementOhio Certified Crop Adviser Program Accepting Nominatio…
November 14, 2014
The award recognizes an individual who delivers exceptional customer service for farmer clients in nutrient management, soil and water management, integrated pest management and crop production in Ohio. Read More
HerbicidesSyngenta Announces Acuron Trial Plot Results
November 14, 2014
Acuron was tested at 167 trial locations across 35 states. Trials included 95 Syngenta locations, 54 university locations and 18 distributor locations. Read More
Crop InputsVerdesian Expands Sales Force
November 13, 2014
The new sales representatives will work with growers, retail partners and distributors to oversee technical training and product education. Read More
EquipmentAGCO Raises $100K For Wounded Warrior Project
November 13, 2014
AGCO Corp. partnered with local AGCO dealers across the U.S. and Canada to raise nearly $100,000 in support of wounded service veterans. Read More
HerbicidesDow AgroSciences Announces Launch Of Enlist Duo Herbici…
November 12, 2014
It will be launched in conjunction with a stewarded introduction of Enlist corn, and seed production of Enlist soybeans in 2015. Read More