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Articles from 2006 In October


Moving beyond corn-based ethanol

Corn prices are surging, ethanol is booming. We haven't felt this kind of euphoria since the giddy early 70s when the Soviet Union needed grain and American farmers were told to •feed the world.'

Of course, that party ended quickly. And now some are wondering if the ethanol euphoria will meet a similar demise.

Most of the folks I talked to at the Advancing Renewable Fuels conference in St. Louis two weeks ago were involved in corn ethanol. And because that is what's driving the biofuel boom right now, they're worried about what's down the road - specifically, •cellulosic ethanol,' made from plant fiber, waste products or wood chips.

This meeting featured big names: Energy Secretary Sam Bodman, USDA Secretary Mike Johanns, and the President himself. It also included notables like John Deere CEO Bob Lane, ADM CEO Patricia Woertz, former CIA director James Woolsey and a flock of public and private institution leaders from the auto, petroleum and biofuel industries.

Nearly every one of them talked about the promise of cellulosic ethanol, a potentially cheaper and more plentiful energy source that may some day be the fuel of choice in this country.

A big maybe

Right now, cellulosic is more hope than promise. But that hasn't stopped the government from sinking big bucks into the idea. Bodman's Department of Energy is putting up $250 million to

Energy Secretary Bodman

build two new research centers devoted to cellulosic ethanol. They are looking into raw materials such as switchgrass, or reclaimed waste products like wood chips or corn stalks.

"The key is finding the right enzymes that will efficiently break down the feedstocks into sugars that can then be converted to ethanol,•bCrLf he says. "Solving this problem will allow us to expand the supply of plant materials we can use for ethanol—and lower its cost.•bCrLf

Just like those giddy days when the American farmer was sent out to feed the world, there's a host of challenges that come along with that idea. We also need to build up and adapt the infrastructure for delivering renewable fuels to consumers and meet the distribution challenge. Maybe crops or trees will be grown, processed and the energy consumed in regions.  No one knows for sure.

"This work will ultimately be done by the private sector, but government can—and should, in my opinion—serve as a catalyst for these developments,•bCrLf says Bodman.

The Energy Department has set two important goals for biofuels: the first is to make cellulosic ethanol a practical and cost-effective alternative to gasoline by the year 2012. The second is to displace 30% of our current consumption of gasoline with biofuels by the year 2030.

DOE's futuristic map of where bioenergy crops may be grown.

To reach this 30 by 30 goal, America must raise its production of biofuels from the current level of five billion gallons a year to 60 billion gallons a year—quite a substantial jump. Ray Orbach, Under Secretary for Science at DOE, thinks it's possible.•bCrLfThe U.S. is capable of producing 1 billion dry tons of biomass annually and 55 million acres of perennial bioenergy crops, enough for 60 billion gallons of cellulosic ethanol,•bCrLf he told the audience in St. Louis. "And it's possible to have cellulosic ethanol available in five years.•bCrLf

Not so fast

Cellulosic ethanol now appears to be the best biofuel alternative for reducing crude oil imports, but making it commercially feasible on a wide scale is a formidable challenge, notes USDA Chief Economist Keith Collins. "The capital requirement per gallon is much higher than corn ethanol,•bCrLf he says. "Ethanol yield is lower per ton of feedstock and conversion is complex, requiring enzymes that cost substantially more than for corn ethanol.                                   

"Harvesting, bailing, storing, and transportation of biomass are expensive,•bCrLf he continues. "All these barriers are recognized, and greater government and private sector research and investment capital are now being directed at overcoming them.•bCrLf

So is cellulosic a threat or opportunity for today's farmers involved in corn-based ethano? Guess it depends on how good you are at adapting to changing markets. It's not too early to start making some strategic decisions about the future.

Produce Association to Initiate Safety Measures for Greens

The Board of Directors for Western Growers, a produce growers' trade association, announced Tuesday that it would initiate a California Marketing Agreement and a Marketing Order in order to bring about better safety procedures for spinach and leafy green products. The board will also move to initiate a federal marketing order aimed at developing comprehensive and mandatory national spinach and leafy green food safety standards.

Western Growers hopes to enhance the safety of all parts of the food supply chain for leafy greens and spinach through mandatory measures. State and federal regulatory agencies would oversee the enforcement of the rules.

"Our industry is at a crossroads," said Tom Nassif, president and CEO of Western Growers. "The consuming public, lawmakers, state and federal government agencies as well as our members want greater assurances that the healthy, fresh produce we provide is safe. The actions approved by our board of directors will help ensure that improved food safety standards are universally understood and adhered to."

Western Growers' actions figure to make a significant impact on safety in the produce industry, as 90% of those involved in growing, packing and shipping produce in California are members, along with 75% in Arizona.

Additionally, Western Growers is encouraging partner associations to support the actions. These groups include the Produce Marketing Association, United Fresh Produce Association, Grower Shipper Association of Central California and the California Farm Bureau Federation.

"We were very pleased by the reactions of our association partners to our proposed plan to develop mandatory good agricultural practices and to initiate mandatory marketing orders at the state and federal levels," says Nassif.

Seventh Bovine TB Case Emerges in Minnesota

The Minnesota Board of Animal Health announced Tuesday that investigators have found bovine tuberculosis in a seventh herd in Minnesota.

The case was found in one cow in Beltrami County, which is, with Roseau County, one of only two counties in northwestern Minnesota in which the disease has been discovered.

According to the Board of Animal Health, the herd is small and has had minimal movement, boding well for the containment of this case. Minnesota will not be able to apply for TB free accreditation until two years after the elimination of its last infected herd.

Although each new herd discovery pushes that period back, Minnesota state veterinarian Dr. Bill Hartmann says the Board of Animal Health will remain diligent in its tests and efforts to eradicate the disease. "Finding another positive herd will reset our timeline for regaining status, but for the sake of Minnesota's cattle industry, we cannot leave a single infected herd undiscovered," he says.

The Minnesota Department of Natural Resources will contribute to the board's efforts by collecting a planned 5,000 samples from white-tail deer killed by hunters this fall. Two deer have tested positive for bovine TB within a mile of the infected cattle herd this past year.

Gulf of Mexico Dead Zone Begins in Midwest

Between spring and fall each year, a huge area of water along the northern shore of the Gulf of Mexico turns into a "dead zone" in which marine creatures cannot survive. Scientists say the zone forms when the Mississippi River deposits large amounts of plant nutrients, made up largely of nitrate fertilizers, into the shallow waters off the coast, causing the phytoplankton population to skyrocket and then decay.

A task force, led by the EPA but made up of a variety of national and state organizations, is studying the dead zone in order to revise the 2001 plan to control it. Because of the connection scientists have made between the dead zone and fertilizer runoff in the Midwest, some say the results of the current study may affect agriculture in the Mississippi watershed and beyond and the way the government and individuals approach water and nutrient conservation.

USDA National Resource Conservation Service Chief Arlen Lancaster says the NRCS is already addressing the issue by providing farmers with tools, information, and incentives to take the matter into their own hands.

"We support a voluntary, incentive-based approach," Lancaster says. For example, the NRCS awards grants for water quality and runoff management, sponsors informational nutrient management programs, and offers technical assistance through district conservationists and technical experts across the country.

Although the Gulf of Mexico's dead zone has grown since the 1980s - this year it was larger than Connecticut - Lancaster points out conservation changes in the Midwest won't affect the dead zone overnight. He maintains that soil conservation is moving in the right direction, with soil erosion rates down a reported 42% between 1983 and 2003.

Lancaster credits agricultural producers for doing their part. "From my vantage point, agricultural producers are acting responsibly." Farmers are "tremendous stewards," he adds.

So what changes can farmers expect to see as a result of the Gulf of Mexico dead zone task force? Lancaster won't say what actions Congress might take, and he is happy with the current direction of his organization's approach to nutrient conservation, but he does say he would like the NRCS to be better able to target specific practices.

Lancaster also suggests the emergence of a water quality trading program in the future. This program would create market-based incentives for farmers to keep up water quality on their land, following the model of carbon credit trading. The NRCS and EPA signed an agreement to promote water quality credit trading markets on Oct. 13, beginning with a pilot project in the Chesapeake Bay basin.

Wetlands help to filter out excess nutrients, so expect the Wetlands Reserve Program to add to its three quarters of a million acres under contract in the Mississippi basin. Grants to encourage responsible subsurface management will also help to encourage producers to be good stewards, Lancaster says.

For more information about conservation management and stewardship grants, see the NRCS website at www.nrcs.usda.gov.  

Massey Ferguson in the Pink with Promo Tractor

Tractor companies are often identified by the color of their machine, but for at least one Massey Ferguson tractor the color scheme is different - for a reason. Agco Corporation, owner of the Massey Ferguson name, partnered with NBC's show "Deal or No Deal" to raise money for the Susan G. Komen Breast Cancer Foundation. And starting at 8 p.m. EST Oct. 31 - tonight - that tractor will be for sale on eBay.

Game Show Host Howie Mandel, left, signed this special-edition Massey Ferguson 1547 tractor that will now be auctioned off to raise funds for breast cancer research. The pink machine is a one of a kind tractor.

The machine, in a nice pink color, was autographed by show host Howie Mandel, and that machine is on the electronic auction block through Nov. 11. Agco provided the tractor on October 12 because contestant PJ Dykes races lawn tractors and was given the opportunity to take a "deal" that included a MF compact tractor with a front-end loader and a large sum of cash. She instead said "no deal" and went for more money.

As for the pink color, it was Dykes's favorite and she says she "instantly fell in love" with the machine, according to an Agco release. Dykes races a pink and purple tractor, and she says knowing the Massey Ferguson special model was for the Komen effort filled her with pride.

Since the show was aired the tractor has been decaled with pink ribbons and a one-of-a-kind pink MF logo. The machine is a 1547 model with a 47-hp diesel engine, hydrostatic transmission and matching front loader. Suggested list price for the machine is $30,434.

In a press statement, Phil Jones, manager, brand marketing for Agco, says "this tractor donation is being made in honor of our customers, as many of their lives have been touched by cancer, and the loss of a loved one can be devastating and not only to the family, but to the farming operation as well."

Interested in bidding? Just check out the tractor starting after 8 p.m. EST on eBay by visiting www.ebay.com/pinktractor. Auction Cause, a premier online auction management agency specializing in high profile celebrity and charity auctions, is managing the event on eBay.

NRCS Deals with Dead Zone through Incentive-Based Programs

Between spring and fall each year, a huge area of water along the northern shore of the Gulf of Mexico turns into a "dead zone" in which marine creatures cannot survive. Scientists say the zone forms when the Mississippi River deposits large amounts of plant nutrients, made up largely of nitrate fertilizers, into the shallow waters off the coast, causing the phytoplankton population to skyrocket and then decay.

A task force, led by the EPA but made up of a variety of national and state organizations, is studying the dead zone in order to revise the 2001 plan to control it. Because of the connection scientists have made between the dead zone and fertilizer runoff in the Midwest, some say the results of the current study may affect agriculture in the Mississippi watershed and beyond and the way the government and individuals approach water and nutrient conservation.

USDA National Resource Conservation Service Chief Arlen Lancaster says the NRCS is already addressing the issue by providing farmers with tools, information, and incentives to take the matter into their own hands.

"We support a voluntary, incentive-based approach," Lancaster says. For example, the NRCS awards grants for water quality and runoff management, sponsors informational nutrient management programs, and offers technical assistance through district conservationists and technical experts across the country.

Although the Gulf of Mexico's dead zone has grown since the 1980s - this year it was larger than Connecticut - Lancaster points out conservation changes in the Midwest won't affect the dead zone overnight. He maintains that soil conservation is moving in the right direction, with soil erosion rates down a reported 42% between 1983 and 2003.

Lancaster credits agricultural producers for doing their part. "From my vantage point, agricultural producers are acting responsibly." Farmers are "tremendous stewards," he adds.

So what changes can farmers expect to see as a result of the Gulf of Mexico dead zone task force? Lancaster won't say what actions Congress might take, and he is happy with the current direction of his organization's approach to nutrient conservation, but he does say he would like the NRCS to be better able to target specific practices.

Lancaster also suggests the emergence of a water quality trading program in the future. This program would create market-based incentives for farmers to keep up water quality on their land, following the model of carbon credit trading. The NRCS and EPA signed an agreement to promote water quality credit trading markets on Oct. 13, beginning with a pilot project in the Chesapeake Bay basin.

Wetlands help to filter out excess nutrients, so expect the Wetlands Reserve Program to add to its three quarters of a million acres under contract in the Mississippi basin. Grants to encourage responsible subsurface management will also help to encourage producers to be good stewards, Lancaster says.

For more information about conservation management and stewardship grants, see the NRCS website at www.nrcs.usda.gov.

State Initiatives Promote Clean Fuels

State legislature across the county discussed more than 275 pieces of biodiesel-specific legislation, including 53 passing bills, according to the National Biodiesel Board. Incentives, grants and tax credits designed to promote biodiesel production and use are at an all-time high, the NBB says.

"When it comes to alternative energy proposals, there is increasing momentum in statehouses across the country, and we've seen it building year to year," says Joe Jobe, Chief Executive Officer of NBB. "Many governors and lawmakers want to go beyond what is happening on the federal level and are tapping into their own state resources to offer proposals that will not only reduce our reliance on foreign oil, but create jobs and strengthen state economies."

NBB recognizes the governors of Arizona, California, Florida, Illinois, Indiana, Iowa, Michigan, New York, and Pennsylvania for proposing or enacting ways to promote biofuels. For more about state legislation, see www.biodiesel.org/2006leg.htm.

"Biodiesel production could reach 200 to 250 million gallons this year — tripling the amount produced last year," Jobe says. "With this flurry of activity at the state level, production increases could be even more dramatic in 2007. NBB applauds the leadership of these and other states working to achieve greater energy independence for our country."

EPIC Develops Online Ethanol Course

The Ethanol Promotion and Information Council has developed a new online course to teach the technical side of ethanol. The course will help to provide an understanding of ethanol fuel and how it affects engine performance and the environment.

"Today's consumers ask their mechanics for advice related to the use of fuels in their cars," says Reece Nanfito, senior director of EPIC's senior director of marketing. "So, the ethanol industry wants to make sure those mechanics have the right information to answer those questions adequately."

The site is designed to benefit both technicians and customers.

"It's intended for auto service technicians and other people interested in ethanol as it performs in engines," says Nanfito.  "It is an interactive course that goes through the benefits of ethanol and then goes through in great detail how ethanol performs in engines."

Dan Schwartzkopf, general manager of Renova Energy and a race car driver, says anyone interested in learning about ethanol can gain from the course. "If your interest is just knowing what ethanol is, then it's going to tell you a story.  If your interest takes you into wanting to know the details of the working of a motor and the fuel together, it's going to take you to that level.  So, it's an A to Z program."

The course can be found at www.drivingethanol.org.

Corn+Soybean Digest

Market News

Corn, Soy Harvest Advance Slowly

The U.S. corn and soybean harvest pace remained slightly behind normal last week as cool, wet conditions continued to slow progress in the eastern Midwest.

Corn harvest advanced 15 percentage points to 68% done during the week ended Sunday, but remained 3 percentage points behind the five-year average pace, USDA said Oct. 30 in its weekly crop update.

Soybean harvest advanced 7 percentage points to 83% done, vs. a five-year average pace of 86%.

Corn and soybean harvest progress continued to lag further behind normal across the eastern states of Indiana, Ohio and Michigan, as producers continued to struggle with unfavorable weather conditions.

Strong winds and heavy rains showers caused more lodging in Indiana cornfields last week, according to the Indiana Agricultural Statistics Service.

At 49% done as of Sunday, vs. a five-year average of 67%, Indiana’s corn harvest was nine days behind schedule, while Indiana soybean harvest progress of 71% was said to be 10 days behind the average of 87%.

Meanwhile the Ohio corn harvest was pegged at 34% done, vs. an average of 50% and Michigan’s corn harvest progress was put at 32% vs. an average of 51%.

Ohio soybean harvest progress was put at 68% vs. a five-year average of 84%, while Michigan soybean harvest progress was pegged at 57% vs. an average of 80%.

There are some slow areas for corn harvest in the western Corn Belt as well.

At 54% done as of Sunday, Nebraska’s corn harvest trailed the normal pace by 12 percentage points with high crop moisture levels reportedly continuing to slow harvest activity.

Editors note: Richard Brock, The Corn and Soybean Digest's > Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at

http://www.brockreport.com/brockreport.