THE REST OF THE STORY …

As a young boy growing up in mid-century Kansas I remember Paul Harvey on the radio with “The Rest of the Story…”.  When it comes to renewable ethanol and the “food vs. fuel” debate it is time for “the rest of the story”.

USA Today, no fan of ethanol, noted in its March 18 article, “Hunger, despair for millions” that “The farm value of food – what goes to the farmer – is about 19% of the cost in the U.S., according to the U.S Department of Agriculture.  The rest goes to labor, packaging, transportation, energy and corporate profits.”  USA Today goes on to take a swipe at corn demand for ethanol causing higher farm prices but clearly by their own admission 81% of the cost of food comes from beyond the farm.  Given the great recession, labor costs have barely nudged but packaging and transportation costs are functions of energy costs.  The average cost of crude oil in 2009 was $53.48 per barrel and as of April 5, 2011 the price for the U.S. benchmark crude oil is $108.14 per barrel, over two times as high.  Clearly energy costs have doubled and their impact on packaging and transportation have been significant – just check the fuel surcharge rates instituted by freight haulers.

And what about corporate profits?  One vocal opponent of ethanol is Kraft Foods.  Why, because it has removed the financial advantage from taxpayer-subsidized grain prices they enjoyed for decades.  You see farmer innovation and genetic improvements allowed the supply of grain to rise much faster than demand for decades after World War II.  To keep farmers planting and from going broke the USDA implemented its “loan” program which essentially guaranteed the farmer a minimum price sufficient to keep him barely in business.  Because of the oversupply condition, this minimum price paid to the farmer was generally above the market price.  Essentially this difference was paid by the American taxpayer with the benefit of low, subsidized, market prices going to the grain buyer, in this case a company like Kraft Foods.  But don’t worry too much for them, their gross profit margin last year, the difference between what they sold their products for and what it cost to produce them, was 34.8%.  That is nearly double what the farmer received for his grain, not his profit margin as he has production costs too.

So the next time you go to the store and experience sticker shock, think about the 81% that goes to companies beyond the farmer and the 34.8% gross profit margin.  Big Oil and Big Food have a vested interest in deflecting consumer angst elsewhere and small ethanol is an easy target.  Eliminating ethanol will have little impact on consumer food prices but replacing that ethanol with one million barrels per day of imported gasoline will make $108 per barrel look cheap.  To say nothing of the havoc it will create for Rural America.  The next time you hear about “food vs. fuel” remember “The Rest of the Story….”

Ronald H. Miller is Managing Director and co-founder of Prisma Advisors, LLC, a management advisory firm specializing in biofuels and biotechnology.  Miller has four decades experience in the energy sector including being President and CEO of a Fortune 1000 producer of biofuels and food products from agricultural feedstocks.

Corn Use, Food Prices, and Ethanol

Today’s post courtesy of The Farmer’s Life.

High commodity prices have reignited the food versus fuel debate.  Not that it ever really went away, but with farmers reaping high prices for several months now you can see how it’s easy for those who don’t have the right information to make the connection that high commodity prices directly lead to high food prices.  Makes sense right?  If the price of ingredients go up, then the price of food must go up too?  Well, it’s not that simple.

Let’s talk about corn because it’s the one crop that is at the heart of this debate.  If you follow any discussion about the price of corn it won’t take long before you find talk of the price of oil.  Corn prices follow the same trends as oil, and at the same time corn will do the opposite of what the value of the American dollar is doing.  Those are two of the biggest reasons corn prices are so high right now.  Another problem is we’ve have a couple years of tough weather robbing some yield which puts in a situation today where we have tight carry over stocks of corn.  The Middle East, source of much of the world’s oil supply, is going through some significant political shifts in many countries and it’s affecting the flow of oil out of those countries.  At the same time the value of the dollar is dropping.

Now that we have a very basic understanding of why commodity prices are soaring let’s get back to the food versus fuel deal.  Proponents and opponents of ethanol often agree that 40% of US grown corn goes to ethanol production.  I was at a marketing meeting a while back and the speaker put it another way.  Four out of every ten rows of the corn we grow is taken to an ethanol plant.  That statement allowed me to visualize that statistic in a very real way.  Four out of every ten?  That sounds like a lot!

OK, you probably think that sounds like a lot too, and I won’t argue with you, because I think it does too, at least on the surface.  Critics of biofuels will often stop their argument right here.  40% of the crop going to ethanol, no wonder food prices are rising!  Once again it’s not that easy.  Ever heard of dried distiller’s grains or DDGs?  This is the by-product of corn ethanol production.  It’s a concentrated feed stock that is sold to the livestock industry.  When you take into account the amount of DDGs going to livestock, therefore putting that corn back into the food market you bring that 40% of corn going to fuel down to 23%.  So we’ve cut that usage number nearly in half, and we’re just talking about the United States.  If we look at grain use on a global scale, only 3% of grain is going to ethanol production.  And don’t forget, we export corn in this country, which means we’ve got product left over after we get what we want out of it to sell to countries all over the world.

The Renewable Fuels Association has written a post entitled Understanding the 2011 Planting Outlook, Ethanol and Food Pricing covering all these figures and how farmers are producing more on the same amount of total acres year after year.  You can see in the RFA chart that planted acres haven’t changed in 15 years.  As farmers continue to adopt new technologies in seed and equipment, and increase the use of more and more environmentally friendly practices like cover crops, they are going to keep getting more productive in the future.

So you don’t need to worry that you’re starving children in underdeveloped countries if you top off your tank with E15, E85, or biodiesel.  It’s more likely those kids are starving due to regional economics and politics, not because American farmers are greedy.

Brian Scott
The Farmer’s Life

GARDENING: A FARM FAMILY ACTIVITY

I am Marla Hasheider.  My husband Larry and I are grain and livestock farmers.  We have three children and three grandchildren, with one on the way in a month.  We also have a love of gardening.

Larry and I love tilling the soil, planting seeds, watching them grow, and harvesting from our labor.  It doesn’t matter how well or bad my garden did last year, I am optimistic this year will be a good year and have a good harvest.  Larry (and I believe all farmers) are excited and optimistic in the spring when they plant their seeds and watch them grow.

Two weeks ago we tilled the garden to prepare for planting.  I have lettuce and spinach up and growing already and I have peas, potatoes, and strawberries in the ground.  I will also plant broccoli, cauliflower, cabbage, bell peppers, green beans, tomatoes, and jack-o-lantern and pie pumpkins when the time is right.

Larry looks forward to our garden maturing because he likes to go in the garden and pick some pea pods and just shell them and eat.  Talk about a healthy afternoon snack!

I love planting the large varieties of watermelon.  Last year I grew a watermelon that weighed 120 pounds.  I picked it to enter it in the Okawville Wheat Festival and won first place.  After the fair, we cut it open and it was not even red inside.  It had a lot of maturing to still do.

Giant PumpkinTwo years ago I planted pumpkin seeds for large pumpkins.  Once the pumpkins developed on the vine, you could see it getting bigger every day.  When the grand kids came over, I would take them out to the pumpkin patch to see the pumpkin.  Larry, our son and a nephew loaded it on a trailer and we took it to enter it in the Wheat Festival.  The scale at the Wheat Festival was not big enough to weigh the pumpkins so we took them to the grain elevator in town to weigh them.  I grew a pumpkin that weighed 500 pounds (and two others that weighed 340 and 380 pounds!) I won first place with that pumpkin.

I am the cook at our Lutheran School in town.  Last year I grew enough jack-o-lantern and pie pumpkins that I gave every student (60) in our school a pumpkin.  We also have blackberries, cherries, rhubarb and grapes that we enjoy every year.

Larry plants lots of sweet corn.   Our son wanted to plant a lot so we could give some away.  Our children and grandchildren come over and in assembly line fashion, we cut the corn off the cob and freeze it.  Everybody takes plenty home to eat all year long.  The extra corn we give to family and friends.  For us, it is more fun to give it to friends to enjoy than to take it to farmers market and sell it.

The garden is a fun place for me.  I love to try growing new things and I appreciate the bounty that it provides my family and my community every year.  Especially at this time of year, when my plot of soil is so full of the promises of good food, my family working together and award winning crops, I can always look out at my garden and smile.

Marla Hascheider
Illinois farmer

PROGRAM HELPS DISABLED FARMERS RETURN TO THE FIELD

Originally posted in the April 7 issue of the Pantagraph.

For a guy used to working with his hands, the job was frustrating.

Farmer Randy Miller of Chenoa was shown a small board with bolts, washers and nuts and told to remove them and put them back on. It was an important step in his occupational therapy at the Rehabilitation Institute of Chicago, just months after he was almost paralyzed in a crash on the way home from the grain elevator.

He struggled. “If I can’t do this,” he thought, then how will I ever farm again?

More than two years later, Miller, 43, is farming again. That’s thanks in part to AgrAbility Unlimited, a statewide program that helps those in agriculture who have disabilities. AgrAbility, created in 1990 as part of a national initiative, was government-funded for years but is now seeking private support to stay afloat.

“It gives you hope, shows you what other people with disabilities have done and are doing,” Miller said.

AgrAbility is a joint program of University of Illinois Extension and the Easter Seals Central Illinois. A client service manager gets calls from farmers or referrals from family and friends. Some get advice on how to, say, devise a lift to get into a combine; others are guided to the state’s rehabilitative services staff for financial help.

AgrAbility has helped more than 800 people since its inception in 1990, said director Bob Aherin, an ag safety professor at U of I. Clients’ backgrounds range from heart problems to partial paralysis, he said.

Randy Miller struggles to use his left hand while assembling the subsystem of a planter in his tractor shed near Weston on Tuesday, April 5, 2011. Miller suffered a broken neck in an accident in October 2008. (The Pantagraph, David Proeber)

“The biggest focus is to try and keep them engaged and involved in farming, despite whatever disability they have,” Aherin said.

Initially funded by the U.S. Department of Agriculture, the state’s ag agency picked up the tab until funding was cut entirely about 1½ years ago. Aherin said the program runs on about $180,000 annually, largely for a handful of part-time staffers, with only a small portion used to help farmers buy assistive equipment.

“For a statewide program, we’re pretty frugal,” he said, noting a vast network of volunteers.

AgrAbility has enough carryover state money and donations from groups like Illinois Farm Bureau and Growmark to last thru December, he said. An application to the USDA for more funds is pending.

Helping Randy

Miller’s neck was broken but his spine was not severed in the October 2008 crash. After treatment at a Peoria hospital and three months in Chicago, Miller did six months of outpatient work at a Pontiac hospital, which he said was more equipped to deal with farmers’ unique needs. It even had a Deere tractor cab replica for patient use.

Miller said he’s blessed not to be confined to a bed or wheelchair, but the accident lingers. He has poor balance, can’t type with his left hand, and has no pain sensation on his right side. He was down 45 pounds at one point.

Chip Petrea, AgrAbility’s client service manager, visited Miller’s farm in spring 2009. They discussed his options for returning to farming, from upgrading an older tractor with more accessible steps, to using more air-powered tools to make it easier on his hands but not clog up the ground with cords.

Randy Miller uses a cane to walk around his farm near Weston on Tuesday, April 5, 2011. (The Pantagraph, David Proeber)

Miller said he bought a new combine with more push-button electronics. Petrea also helped get Miller a reverse-facing camera and monitor for his combine cab, so he didn’t have to strain his neck turning around. 

“I just try to present them with options of what other farmers have done in their situations,” Petrea said.

Getting back hope was the biggest benefit for Miller, married with two children, ages 12 and 14. Miller said AgrAbility also helped him face a difficult realization about tasks he used to do, such as climbing on equipment.

“You want to try things, but you also have to accept there’s things you probably shouldn’t be doing,” he said.

Miller’s brother came to help on the farm after the crash. Miller drove the combine a bit last fall, and hopes to drive the tractor a bit more this spring. He can’t go overboard, or his damaged nerves start to burn.

Still, it’s something he never thought he’d do again.

“I’ve made an amazing recovery,” he said.


How to help

AgrAbility Unlimited has set up a 501(c)(3) account at University of Illinois to accept contributions from individuals, businesses or other groups. Checks should be made out to “University of Illinois AgrAbility Program,” and sent to:

Bob Aherin, AgrAbility Unlimited program director
University of Illinois
1304 W. Pennsylvania Ave.
Urbana, IL 61801

For more information, contact Aherin at 217-333-9417 or visit www.agrabilityunlimited.org.

SEVENTEEN YEARS LATER, NAFTA HAS HAD POSITIVE IMPACT ON AGRICULTURE

In honor of World Health Day, check out this post on world food trade and the positive benefits of free trade agreements from IL Corn!

The Economic Research Service of USDA has released its latest report on the effects of NAFTA on U.S. agriculture, NAFTA at 17: Full Implementation Leads to Increased Trade and Integratio. It concludes that most of North American agriculture has achieved a high degree of market integration for cross-border flows of trade and investments with the removal of almost all barriers.

For Illinois, this information is important.  Half of the Illinois corn crop is exported due to our unique position along the Mississippi River system (including the Illinois and Ohio Rivers); Illinois corn farmers continue to be interested in expanding opportunities to export their goods.

Through NAFTA, the U.S. and Mexico have eliminated all tariffs on agricultural products, unique among U.S. free trade agreements (FTA). The Canada-U.S. FTA began in 1989, but U.S. restrictions remain on imports of dairy products, peanuts, butter and cotton, and Canadian restrictions remain on dairy products, poultry, eggs, and margarine.

U.S. exports of wheat and rice to Mexico have quadrupled in the NAFTA era, while exports of feed grains, oilseeds, and related products to Mexico have increased by 134 percent from an annual average of 8.3 million metric tons to an average of 19.5 million metric tons. These have allowed livestock and poultry producers to lower their costs of production, expand output and compete more effectively with meat imports.

U.S. livestock and meat trade is highly integrated with Mexico, but Mexican integration with the U.S. market is rated medium to low due to animal health import restrictions on pork and poultry. U.S. and Canada are highly integrated with cattle, beef, hogs and pork, but have low integration in poultry and dairy because they continue to have barriers to trade.

Illinois corn farmers look forward to this sort of growth in opportunity if the recently negotiated Colombia Free Trade Agreement passes in the House and Senate later this year.  Other Free Trade Agreements that will impact agriculture are the Korea Free Trade Agreement which would increase exports of various agricultural commodities by up to 46 percent while the Panama Free Trade Agreement could mean increased U.S. agricultural exports to Panama of more than $195 million per year by full implementation.

Read more analysis of the ERS report on NAFTA here.

COLOMBIAN MARKET VALUABLE FOR IL CORN FARMERS

Fresh from the IL Corn newsroom … check out our statement on the news that a Colombia Free Trade Agreement is finally negotiated and now waits for Congressional approval!

“The Colombian market is certainly valuable to Illinois corn farmers since roughly half of the corn grown in our state is exported. The pending ratification of a free trade agreement with Colombia means that our access to that market will be equal to that of other nations around the world. By removing trade barriers, we can secure the Illinois corn farmer’s position in the effort to provide high quality feed grains while enabling the Colombian people access to corn at a price relative to the world market, rather than prices distorted by politics.”  ~ James A. Reed, Illinois Corn Growers Association President

You can also read what the U.S. Grains Council has to say about the potential for trade with Colombia here.

And you might be interested in our fact sheet on the Colombia Free Trade Agreement here.

2011 IFB YOUTH CONFERENCE

Yesterday, Illinois Corn spent the day chatting with youth from all over our state at the IFB Youth Conference in Springfield.  They were excited to hear about our partnership with the Normal Cornbelter’s baseball team and the FFA day we’re planning during ag week in July.  (Would you like to be in the know when we make this date announcement?  “Like” us on Facebook!)  Some were interested in our internship opportunities because, even though they were only high school juniors, they were already thinking about their futures.   And many didn’t have a clue what the Illinois Corn Marketing Board was.

Despite our name, the Illinois Corn Marketing Board doesn’t market anything.  The Board manages the 3/8 of a cent checkoff that Illinois farmers pay per bushel and invests in opening and maintaining markets for Illinois corn among other things like funding public education and research projects.  I was surprised, but that was the number one question during our afternoon with 400 Illinois FFA students.

The day was a fun time to reconnect with the future of agriculture.  I look forward to seeing many of these students again on our FFA Day at the Corn Crib and probably in a few years as Illinois Corn interns! 

Becky Finfrock
ICGA/ICMB Communications Assistant

BLOG REVIEW: FOOD FOR THOUGHT

When asked to discuss an informational blog that will intrigue readers “Food For Thought” came to consideration. This blog educates consumers about the misconceptions agriculturists face and answers any questions viewers may have.

Food For Thought will provide consumers with answers about where their food comes from by empowering agriculturalists, informing consumers, and confronting myths about modern agriculture through innovative and effective methods.

The blog has been very effective for myself and has educated me in many areas that I am not knowledgeable on. Being from a city atmosphere, and not having the peers to enhance my knowledge on agriculture, Food For Thought has answered many of my questions.

Food For Thought is striving to connect producers and consumers together, therefore, giving them the right information and decreasing the misconceptions consumers have about our farmers. Social media is the number one way to reach out to anyone in society today, the agriculture youth is teaching farmers about finding their voice and spreading information to peers. By updating the blog daily and increasing their fans this will help consumers discover more of the right information. Once one person hears a piece of information, it is viral, and eventually everyone will know.

Food For Thought is growing and deserves to be recognized for its incredible information the blog shares to the public. A main priority for our farmers is to explain to the misconceived people the right facts and statistics in order to better promote their reputation.

Megan Moore
ISU Student