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Experts optimistic about continued renewable fuel boom

Government energy and economic experts expressed enthusiasm about the continued growth of ethanol markets and the potential of other renewable fuels at the American Farm Bureau Federation’s 88th annual meeting.

Keith Collins, USDA chief economist, addressed the booming demand for ethanol, while Carol Tombari of the Energy Department, emphasized the economic opportunities renewable fuels present to farmers and ranchers, as well as the potential to temper the impact of rising fuel costs with alternative energy sources.

Tombari said the United States’ reliance on foreign oil and an overextended system of electrical grids pose numerous risks to human health, the environment and domestic energy security.

She said while electric energy and the central station power plants used to produce it will always be part of the energy equation, by embracing alternatives, growers can improve their energy efficiency and perhaps even profit.

“There is no technology silver bullet,” Tombari said. “But is there a silver buckshot? Yes.”

Among the energy efficiency opportunities available to farmers are biomass energy produced from wood, crops and manure, and solar water and space heating.

Tombari also suggested farmers and ranchers consider harvesting wind for energy.

“Wind doesn’t always blow, but it is highly predictable,” she said.

Along with reducing energy costs on an operation, windmills can also be a business opportunity when farmers create cooperatives or even go solo in providing energy to others.

Collins spoke in-depth about biofuels, particularly ethanol. “All of a sudden, this market is really taking off,” he said.

Not surprisingly, the resulting increased demand for corn has somewhat tightened corn stocks, driving prices up. “Usually, tight stocks are because of scaled-back production,” he noted. “Now it’s because of demand.”

While Collins was hesitant to predict future production levels, he pointed to the ramp-up in capacity in the last half of 2006, during which time capacity grew from 7.6 billion gallons to 11.4 billion gallons.

Collins said that ethanol returns will continue to be strong, encouraging production, but the next three to four years will be a critical period of adjustments in the ethanol industry, and in the livestock industry because of higher feed prices.

Collins said even during an unpredictable period of adjustment, there are some events that can be counted on. Among them are growth in corn yield per acre, more corn acreage, higher corn prices, the development of new economically feasible feedstocks and products replacing some corn or meal in feed.

“Dried distillers grains (DDGs) have to improve in quality and be more easily digested,” he said.

In an earlier session, Doug Rushing of Monsanto described a recently launched ethanol processing system that not only creates a new hog feed product, but produces improved DDGs.

The hog feed comes from lysine, which is extracted along with oil when the corn is processed for ethanol. The oil can be used as vegetable oil or for biodiesel. The process also results in 33 percent to 50 percent less DDGs. Rushing emphasized that the DDGs are higher quality than the byproduct of traditional ethanol corn processing.

The system, created by Renessen, a joint venture between Cargill and Monsanto, is being used at a recently opened pilot ethanol plant in Iowa.

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