Bullish Times

The biofuel movement in this country is a modern day gold rush for agriculture — with high returns to be had by all, says Travis Dickinson, head of marketing at Syngenta. He believes crop input suppliers are offering the picks and shovels needed for the work.

“For people in production agriculture, these soaring new sources of crop demand are pretty heady stuff,” agrees Keith Collins, USDA chief economist. “They are creating ethanol euphoria, similar to the export euphoria of the 1970s when the former Soviet Union first started importing our grain.”

A Good Thing

Many in the ag community, at least, are familiar with the benefits of biofuels. For one, these products burn cleaner, reducing carbon monoxide, greenhouse gas, and other toxic emissions. The fuels are also celebrated for their promise to reduce dependence on foreign oil.

Biofuels can be a boon to our domestic economy, particularly rural areas. “This is a home-grown, renewable energy source. It’s grown in America, refined in America, and used in America,” says Bob Thompson, sales and marketing manager at Town & Country Co-op, a Medina, OH-based retailer that serves both ag and the general public in 14 counties.

Shirley Ball, farmer and executive director of Eth­anol Producers and Consumers (EPAC), says the benefits can really come “home” if farmers “can get a fair price for their commodity and be co-owners of processing plants.”

Biofuel advocates see no need to take sides, pitting corn-based fuels against soybean-based ones. “Many players in the renewable fuel industry realize that to make a larger dent in our intake of foreign oil, we need to provide all the renewable energies we can, in concert,” says Amber Pearson, communications specialist, National Biodiesel Board (NBB). “We see ourselves as team players rather than competitors.”

Meeting The Demand

USDA’s Collins estimates that to meet the growing ethanol demand, farmers will need to plant 90 million corn acres by 2010, 10 million more than this year.

Where are these extra acres going to come from? Pat Steiner, 25-year industry veteran and brand manager with Syngenta, suggests three possibilities: wheat acreage, Conservation Reserve Program (CRP) lands, and soybean holdings. He doubts a move away from wheat — but USDA’s Collins believes 7.2 million current CRP acres could be used to grow corn or soybeans “in a sustainable way.” However, much of the CRP’s 36 million acres are located in the northern Great Plains, where the dry climate does not favor corn, points out Robert Wisner, economist with Iowa State Uni­versity Extension, in Illinois Farm Bureau’s Farmweek.

What about those soybeans? “I think that with the additional alcohol plants going up around us, the farmers have more market choices. I can see them planting more corn and less soybeans,” says Rick Peterson, general manager of Farmers 4-County Coop, Belle Plaine, IA. “The number of plants being built has certainly changed the landscape of corn marketing in the whole state.”

Then too, necessary crop gains won’t come strictly from increasing planted acreage. Breeding work continues to push higher yields and now, traits such as drought tolerance and better processing qualities are being tailored for the biofuel landscape.

How Did We Get Here?

Ethanol has been used as a fuel for going on two centuries now. In 1860, Nicholas Otto — best known for developing the modern internal combustion engine — used ethanol as a fuel in one of his engines. In 1898, when Rudolph Diesel demonstrated his compression engine at the World’s Exhibition in Paris, he used peanut oil, the original biodiesel.

In 1908, Henry Ford’s Model T was designed to run on a mix of gasoline and alcohol, a compound he prophetically called the fuel of the future. Hemp was the first ethanol biomass source. Vegetable oils were used in diesel engines until the 1920s when a change was made to the engine, allowing it to use a petroleum residue, now known as diesel #2.

During Prohibition (1919-33), ethanol could only be sold when mixed with petroleum. And during both World Wars, ethanol use increased temporarily with shortages of oil.

Come the 1970s, oil supply disruptions in the Middle East and environmental concerns brought renewed interest in biofuels, prompting Congress to enact a series of tax benefits to ethanol and biodiesel producers and blenders. This 25-year history of federal support for alternative energy also has meant monies for research, development, and construction of biofuel technologies.

Most recently, the Energy Policy Act of 2005 (EPAct) increases the amount of biofuel, usually ethanol, that must be mixed with gasoline sold in the U.S., tripling the current requirement (7.5 billion gallons by 2012). The act also gives per-gallon tax credits to both biodiesel and ethanol producers, and offers a 30% credit to gas stations to install clean-fuel equipment and pumps.

Biofuels gained another benchmark of support in 2006 when President George W. Bush announced the Advanced Energy Initiative (AEI) in his State of the Union address. The measure aims to accelerate the development of domestic, renewable alternatives such as biofuel, solar, wind, and hydrogen power as well as better use of coal.

Biodiesel is now used in over 200 major fleets in the U.S., including those run by the U.S. Post Office, U.S. military, metropolitan transit systems, and school districts. “The support and enthusiasm for biofuels coming from federal and state government is overwhelming,” says Tom Slunecka, executive director of the Ethanol Promotion and Information Council (EPIC). He attended the first-ever Renewable Energy Conference in St. Louis, MO, last month. Speakers included none other than President Bush, Secretary of Agriculture Michael Johanns, and Secretary of Energy Samuel Bodman.

Individually, states such as Iowa and Minnesota are getting into the fray. New legislation in Iowa, for instance, requires 25% of the state’s energy come from renewable resources by 2025.

Company Contributions

Auto manufacturers are further advancing the technology. “The Big 3 have all made public commitments to ramp up the number of E85 vehicles they have,” Slunecka says. Currently more than 6 million E85 vehicles are on the road today, with more than 1,000 E85 stations to be in place by the end of the year.
NBB’s Pearson notes that while “only about 3% of the passenger vehicles on the U.S. market are diesel — vastly different from Europe, where about 50% are — that is set to change, according to JD Power and Associates. By about a decade from now, that 3% should be up to 10%. Of course, the tables turn when you’re talking about farm implements/machinery and more industrial-sized vehicles, which are largely diesel.”

Slunecka says that while ethanol is clearly ahead on the infrastructure curve, “biodiesel is coming on strong, extremely fast.” There will be nearly 80 biodiesel facilities operating in two years.

Education is key. Many consumers don’t realize they have “flex-fuel” vehicles that can run on ethanol (see www.e85fuel.com/e85101/flexfuelvehicles.php for a list). Slunecka outlined a few of EPIC’s plans for upcoming promotions, including talking with fans as they exit National Football League games on the East Coast and posting a Jumbotron ethanol ad in the middle of New York City during the month of November (and Macy’s Thanksgiving Day Parade). At EPIC’s Web site is an online learning module to train auto mechanics on “the ins and outs of using ethanol.” At the site, too, ethanol supporters can purchase hats, shirts, bumper stickers, and the like “because everybody in agriculture needs to be an advocate and tell their cousins and relations in the city that they need to make sure they’re purchasing ethanol,” Slunecka says.

Possible Problems

Can anything throw the biofuel boom off track?

“Not much,” thinks Syngenta’s Steiner. The cost of producing the fuels continues to go down as technologies improve — developments which could quell protests that ethanol production is not energy-efficient enough.

In contrast, the technology to get ethanol from other cellulose sources such as wood chips, stalks, and switch­grass (less field production-intensive than corn) is developing very slowly, though President Bush’s AEI earmarks $150 million for research here.

Can those who fear ethanol will leave the world hungry derail the market? “The American farmer has proven over and over again he can step up to the challenge of producing more and more fuel and fiber,” comments Slunecka. And EPAC’s Ball points out that if developed, there could be a great human-food market for distillers dried grain, a byproduct of ethanol production. The distilling process creates a tidy package that still contains all the crop’s nutrients, including protein, fiber, germ, and vitamins, she explains. These products could then be used to enhance all kinds of food in the U.S. and abroad.

What if oil prices reverse substantially (though OPEC officials seem loathe to see it go below $50-some per barrel)? “I think even if crude prices dropped by 50% today, the market will continue to grow,” says ag retailer Thompson. “I think Americans are so skeptical … they’re just tired of being yanked around like a yo-yo by overseas oil-producing nations, many of which are not friendly to our government or our way of life.”

Retailers Believe

Many ag retailers are strong believers in the promise of biofuels. Thompson says his co-op began offering E85 this summer, and reports that sales have been “better than expected. We hope to break even with it in a year.” Town & Country has been selling biodiesel for several years and has a 12,000-gallon tank dedicated to storing soy methyl ester for blending with diesel fuel.

Sunrise Cooperative, Norwalk, OH, started offering biodiesel back in 2001, handling 55-gallon drums. “We now have bulk heated storage for 40,000 gallons and purchase over 500,000 gallons of pure soy methyl ester that we sell as straight biodiesel or as blends with regular diesel fuel,” explains Dwight Gessner, energy division manager. This blending accounts for over 6 million gallons of fuel per year.

Sunrise was ready to sell E85 at its retail site last year, but demand on ethanol caused the price to be too high to be competitive. Now, supplies are improving — and sales have been “fair. We need more flex-fuel cars at the consumer level,” says Gessner.

Leave a Reply

Management Stories

ManagementThe Latest Dow-DuPont Rumor, Product of the Year Voting Update, and CropLife 100 Preview
October 20, 2016
CropLife Editor Eric Sfiligoj shares a new rumor about the Dow-DuPont merger and updates on two CropLife-driven programs, the CropLife Read More
ManagementHarvest and Crop Price Updates; EPA and Crop Protection Reviews
October 13, 2016
Glyphosate and atrazine get public comment support from ARA as each is reviewed by EPA, and the latest on the Read More
ManagementVision Conference Preview, Monsanto Earnings, and Product of the Year Voting
October 7, 2016
Editors Paul Schrimpf and Eric Sfiligoj talk about the upcoming PrecisionAg Vision meeting in Arizona, Monsanto’s latest revenue numbers, and Read More
EmployeesOABA Program Develops Future Generation Of Agribusiness Leaders
September 29, 2016
The Ohio AgriBusiness Association will select up to 25 promising leaders to participate in a leadership enhancement program early next Read More
Trending Articles
AGCO RG700 cab
OpinionRoadblocks To Precision Ag Innovation
October 5, 2016
On August 29, I got to preside over the PrecisionAg Innovation Series event, “Game-Changing Advances in Precision Farming Technology,” developed Read More
J.C. Ramsdell containment system
EquipmentClear Opportunity In The Tank Market
October 4, 2016
Crop prices may be down, but steel prices are too — and that’s good news for retailers looking to add some Read More
WinField booth Farm Progress
Special ReportsTalking Weed Management Strategies At Farm Progress 2016
October 2, 2016
The annual Farm Progress Show — this year staged in Boone, IA — is always a great place to catch Read More
Corn Field
Eric SfiligojFacing Ag Industry Challenges
September 26, 2016
At the 2016 annual Mid America CropLife Association (MACA) meeting in September, a pair of crop protection company representatives discussed Read More
Bayer Monsanto
Crop InputsBayer-Monsanto Mega-Merger: 6 Things You Need To Know
September 14, 2016
Mega mergers have become almost routine in the agricultural industry. Right on the heels of Monday’s news that fertilizer giants Potash Read More
Potash Corp Agrium
Crop InputsAgrium, Potash Corp To Merge To Create $36 Billion Company
September 12, 2016
Canada’s Agrium Inc. and Potash Corp of Saskatchewan Inc. have agreed to combine in a deal that would create a Read More
Latest News
Kennebec Grain terminal
CropLife 100Wheat Growers Kennebec Facility Loads First Rail Cars
October 21, 2016
In a season of firsts for Wheat Growers’ Kennebec Grain Terminal, the first 115-car unit train was loaded with soybeans Read More
ManagementThe Latest Dow-DuPont Rumor, Product of the Year Voting…
October 20, 2016
CropLife Editor Eric Sfiligoj shares a new rumor about the Dow-DuPont merger and updates on two CropLife-driven programs, the CropLife Read More
Soybean Closeup
FungicidesFMC Begins Registration Process For New Fungicide Activ…
October 19, 2016
FMC Agricultural Solutions has begun the joint U.S. EPA and Canadian Pest Management Regulatory Agency registration process for bixafen, a new Read More
Soil Young Corn
Industry NewsAgribusiness Search Firm Appoints New Managing Partner
October 18, 2016
Morris Bixby Group, a leading agribusiness search firm providing the highest quality professional recruiting and career advancement services since 2000, Read More
Wheat Field North Dakota
FertilizerUnited Suppliers Acquires Kansas Fertilizer Business
October 17, 2016
United Suppliers, Inc. has purchased the assets of Evans Enterprises, LLC, an ammonium chloride fertilizer business based in Olathe, KS. Read More
Corn Field
Industry NewsFMC Launches New Operations In Argentina, Exits Joint V…
October 17, 2016
FMC Corp. has exited its joint venture with Ruralco Soluciones S.A. FMC has launched new commercial operations, FMC Quimica S.A., Read More
Dow AgroSciences
InsecticidesRenewed Registration Issued For Products Containing Sul…
October 17, 2016
On October 14, 2016, the U.S. EPA re-established the registration of products containing sulfoxaflor (Isoclast Active), including Transform WG, Closer Read More
Eric SfiligojThe Whys Of Agriculture
October 17, 2016
During 2016, there have been myriad challenges facing the whole agricultural industry. Such wide ranging issues as water protection, sustainable Read More
Young Corn Field
FertilizerImproved Phosphorus Management Essential To Feeding Wor…
October 14, 2016
With a global population expected to reach 9 billion people by 2050, improved management of key essential nutrients such as Read More
ManagementHarvest and Crop Price Updates; EPA and Crop Protection…
October 13, 2016
Glyphosate and atrazine get public comment support from ARA as each is reviewed by EPA, and the latest on the Read More
Matt Hopkins15 Twitter Accounts Every Ag Professional Must Follow
October 13, 2016
What do singer Katy Perry and the President of the United States have in common? They are two of the Read More
Corn Field
Industry NewsArysta LifeScience Adds Two Key Account Managers
October 13, 2016
Arysta LifeScience North America recently announced the addition of two key account managers: Doug Hoberty and Rob Wier. Hoberty and Read More
EquipmentDeere Announces Development Deal with Scherer Design
October 12, 2016
Deere & Co. announces a joint development agreement with Scherer Design Engineering, Inc. to develop and commercialize kernel processing solutions Read More
Crop InputsMarrone Bio Innovations Celebrates 10 Years Of Innovati…
October 12, 2016
Richard Rominger, former Deputy Secretary of the USDA and former agricultural secretary of California, emceed a 10th anniversary luncheon celebration on Read More
Photo credit: The United Soybean Board/The Soybean Checkoff.
Industry NewsVive Crop Protection Closes Financing To Support Corpor…
October 11, 2016
Vive Crop Protection has announced the closing of growth financing to support 2017 commercial expansion. The financing was led by Read More
SoftwareHD Precision Analytics Launches New Mobile App For Agri…
October 11, 2016
AGSentry from HD Precision Analytics is a Software-as-a-Service (SaaS) platform that offers simple data service and actionable analytics tool. It focuses Read More
HerbicidesWeed Control And Soil Health Go Hand-in-Hand
October 10, 2016
Although many landowners may not give much thought to weed control as a soil health measure, Gared Shaffer, South Dakota Read More
Students Soybean Field
Eric Sfiligoj2016 Young Leaders Speak
October 10, 2016
One of the consistent cries in agriculture today is the need to try and connect with the younger generations, attempting Read More