CHINESE DELEGATION VISITS IL CORN

Illinois Corn hosted twelve Chinese academia today who had questions about corn production in Illinois and about our agricultural technologies for producing corn.

On the fact finding mission, the group asked questions about machinery, planting techniques, conservation tillage, and others because they use different methods of agriculture than what we do in the US. Their techniques are about 30 years behind our techniques.

A few highlights: 
  • These twelve men were from maize research institutes and academia in china
  • Sharing information with them is a valuable exercise because when we provide them data about our cropping techniques, we get to ask them questions about their techniques as well.
  • In a competitive global market, it’s important to know what other countries are doing and speculate how much corn they can grow because the US might be able to provide the shortfall.
  • In particular, Illinois is well poised to take advantage of any shortfall in Chinese corn because of our position on the river system and our transportation advantages.
For more information on Illinois Corn’s activities regarding export promotion or trade missions, please visit our website at http://www.ilcorn.org/ or email Phil Thornton at pthornton@ilcorn.org.

MR. PRESIDENT, WHERE ARE THE LOCKS AND DAMS?

Labor Day, the day we American’s celebrate our nation’s workforce, is a great day to announce plans for more jobs. I definitely understand what President Obama was thinking when he stood in Milwaukee, WI and announced plans for massive infrastructure investment, which will not only modernize American roads, rails, and runways, but will also create millions of jobs.

What I don’t understand is the conspicuous absence of funding for upgraded locks and dams.

Will investment in waterway transportation create jobs? Yes. Updating our waterway infrastructure will create 48 million hours of labor for skilled trade workers throughout the Midwest.

Does investment in waterway transportation offer a return on investment? Definitely. America’s inland waterway navigation system moves more than a billion tons of domestic commerce valued at more than $300 billion per year. Agricultural products are a significant portion of that commerce and agriculture is one industry with potential to pull our economy out of the black hole it’s in.

Does investment in waterway transportation garner industry support? Undoubtedly. The shipping industry is the only industry stepping forward to provide additional funding streams for upgrades to their system that will match federal dollars. In other words, upgrading locks and dams provides jobs and return on investment in a much bigger dose than other projects because the industry is financing a portion of the project.

So what’s the problem? I’m not sure. President Obama used to support lock and dam upgrades. As a US Senator he was an advocate for upgraded locks and dams and even played a key role in the passage of the Water Resources Development Act of 2007 that now simply sits for lack of funding. He used to be in favor of allowing the US to be competitive in a global market. He used to understand that Midwestern agriculture, the powerhouse of the American economy, relied on efficient infrastructure to get goods to markets all across the globe.

What’s changed? Again, I’m not sure. What I do know is that investment in waterway transportation offers a greener option for transporting goods, a bundle of great jobs for Midwestern workers, and a means to allow agriculture to further drive our country out of an economic mess.

All I know for sure is that that no matter what question I ask, upgraded locks and dams are the answer. More jobs, greener transportation, supportive to our nation’s largest economic powerhouse …

Mr. President, where are the locks and dams?

Jim Tarmann
Frustrated IL Corn Waterway Transportation Specialist

TRADE MISSIONS ARE VITAL TO ILLINOIS AGRICULTURE

As the Value Enhanced Projects Director for the Illinois Corn Growers Association/Illinois Corn Marketing Board, you might not think that I’ve traveled all over the world and visited with people from nearly every country as they traveled to IL. But I have. And this “exchange program” of visiting with other countries and having other countries visit us is a vital part of our programming to help corn farmers in IL.

Illinois is a massive exporter of corn. In fact, reports yesterday from the US Department of Agriculture (USDA) indicate that agriculture as a whole is in our second highest year on record for agricultural exports. Agriculture is one of the only major sectors of the American economy with a trade surplus, which is expected to be $30.5 billion this year.

One of the ways that we keep that export market vibrant and growing is to meet with buyers in other markets to tell them about our products. In much the same way that a printing company sales rep might knock on your door to market their printing services or the Schauwn man stops by every week, we simply make appointments to meet with buyers at their homes and businesses, even if those businesses are an ocean away. This is really the only way to truly understand what a buyer needs, the quality they are looking for, the price they expect, and how we can work together to deliver on that demand.

Buyers also want to come to Illinois to see how the products are grown or created. Company reps from China looking to buy dried distillers grains (DDGS) from our Illinois ethanol plants might schedule a trip to our state and I will set up visits to ethanol plants for them, both educating them about the industry and connecting them with potential Illinois suppliers. This is an important way that we can add value to Illinois corn – by creating new markets for Illinois corn by-products.

Representatives from other countries come to Illinois for other reasons too. Sometimes they simply want to learn about US agriculture and experience planting or harvest. Sometimes they want to discover our methods of livestock production and how corn and DDGS fit into our feed rations. They may want to see how Illinois farmers live. But even these discovery missions make important connections between Illinois farmers and overseas buyers that we simply can’t ignore.

In the past year, I have worked with potential buyers from Mexico, Vietnam, Korea, China, Japan, Panama, Brazil, Central America, Algeria, Libya, Egypt, and more.

Conversely, Illinois farmers need a knowledge of overseas markets to try to find ways to fulfill those market’s needs. Sometimes, experiencing a culture first hand helps Illinois farmers see markets that have never before existed. One good example is “chicken paws” that are coveted in the Chinese market. These delicacies are simply the feet of the chicken that US meat processors used to just throw away. Visiting and making connections with Chinese buyers helped us understand that there is a market for those extra parts of the chicken and now our US chickens have more value. And, of course, Illinois corn feeds those chickens so value in the poultry market is a good thing for both of us.

Illinois farmers have recently been to missions in Brazil, Mexico, Panama, and China just to name a few.

In Panama, IL Corn leadership met with the Panama Poultry Buyers Association who was considering switching their corn purchase from US Corn to Argentine Corn. After visiting with them twice in Panama City and once in Illinois, we have been able to maintain that market and address their concerns. They are still buying 95% of their corn from the US.

Also in Panama, we visited the Panama Canal. Current upgrades to the Panama Canal will double their capacity to ship grain, but the America’s failing infrastructure including our 80 year old locks and dams, leave us lagging behind in the global transportation system. It is very important for our Illinois corn farmers to understand Illinois’ precarious position in global infrastructure so that they can lobby their elected officials appropriately and hopefully resolve this issue.

Regarding upcoming trade missions, at the end of September, I will spend the week with a company from the Dominican Republic. Two years ago, SID Grupo was buying 100% hard endosperm corn from the US. Likely, because of our position on the Mississippi, Illinois, and Ohio Rivers, much of that purchase was Illinois corn, to the tune of about 3.2 million bushels per year. Last year, our hard endosperm corn quality was poor so they switched their purchases to Argentine corn. In September, I will hopefully help them re-establish relationships with sellers of hard endosperm corn here in Illinois and we have several meetings set up with specialty grains shippers to regain that market and renew those relationships. $13 million dollars in grain sales is at stake, but the economics becomes much larger when you consider the entire production chain.

Traveling may seem glamorous, but in the end, Illinois Corn’s trade missions are about education and markets. After all, the near record exports we’re experiencing this year are the economic engine helping to pull America out of the recession. Our “exchanges” are simply programs that are too important to ignore.

Phil Thornton
ICGA/ICMB Value Enhanced Project Director

CONVENTIONAL AGRICULTURE FEEDING DROUGHT STRIKEN UKRAINE

The Illinois National Ag Statistics Service (NASS) crop report today indicated that Illinois corn yields are expected to be significant this year, equal to the last record set for Illinois in 2004. Compared to expected US average corn yields, Illinois is estimated to yield 6 more bushels per acre than last year.

Couple this information with the reality of widespread drought in Ukraine and other surrounding areas and experts suppose Ukraine will import 59 million bushels of corn in 2010, a 30% increase over last year.

Certainly, Illinois corn farmers are growing food for a world population. Without biotechnology and conventional agriculture capable of achieving these yields, humans in other countries would go hungry and Midwestern US would be unable to bring economic benefits of agricultural exports to our damaged economy.

Conventional agriculture feeds the world and fuels our economy. What’s so bad about that?

Phil Thornton
ICGA/ICMB Value Enhanced Projects Director

AN EVEN TRADE?

The Renewable Fuels Association released a report yesterday regarding U.S. ethanol exports. According to the report, our ethanol exports are surging partly because the U.S. is the lowest cost producer right now and also because we have extra ethanol we can’t use within our country.

Both of these concepts might come as a shock to you so let me give a brief explanation. Ethanol produced in Iowa is currently $1 cheaper per gallon than ethanol produced in Brazil. Blending 10% ethanol from Iowa into a gallon of gasoline would be $0.11 cheaper than the same blend containing ethanol from Brazil.

I’m not shocked that U.S. farmers and ethanol producers are the most efficient in the world, but I’m sure some are.

And in regards to the second point, we do have additional gallons of ethanol that we can’t use in the U.S. right now. Since the U.S. Environmental Protection Agency will only allow a 10% of each gallon of gasoline to be ethanol, we simply don’t have any more gallons of gasoline to blend into.

But all the summaries and background information aside (you can read that here), there are a couple of take home messages from this data that I just can’t ignore.

First, I wish the world, the government, and the American consumer would notice that American corn farmers are doing EXACTLY as we said they would – they are producing more than enough corn to feed and fuel the world. Corn farmers have grown enough corn to feed all the livestock in the U.S., to export corn to other countries to feed their livestock, to fulfill the needs of all the food markets in our country, to produce all the ethanol that our entire nation can use, and now to ship our ethanol to other countries.

Why did anyone doubt us and when is someone going to notice? American corn farmers can produce corn. They can produce exponential yields using less fertilizer, fewer chemicals, and contributing to minimal soil erosion. When is someone going to stand up and give the corn farmer credit for this incredible story of production and environmental stewardship?

Secondly, and maybe more importantly, why are we shipping ethanol to other countries at the expense of our own energy security!?

To quote the RFA report, “As long as domestic ethanol usage is restricted by the regulatory limitation on 10% blends, the U.S. ethanol industry will be forced to look to the global marketplace for new demand sources. And, as a result, Americans will miss out on the opportunity for greater fuel savings and a healthier, more secure domestic energy supply.”

I admit that I obviously have a bias because I love corn farmers, I love corn, and I love ethanol. But am I the only one thinking that trading our safety, our health, and our cash for more oil overseas because of government rhetoric is crazy?

Dave Loos
ICGA/ICMB Technology & Business Development Director
(and ethanol expert!)

CHINA’S PURCHASE READS LIKE A SUSPENSE NOVEL

It’s sad but true. I enjoy my job enough that I sit on the edge of my seat waiting for answers to the question of the day. Today, that question happens to be Will the Chinese government allow US corn to be unloaded in China?

I know it’s isn’t a question that would keep most of you up at night, but for me, it’s almost like a suspense novel.

Yesterday, China (actually COFCO, the largest oils and food importer and exporter in China) bought six cargos of U.S. corn from Bunge. The shipments are to be delivered between June and September 2010.
This is great news because the U.S. has been waiting to gain entry into the Chinese market for years. We have worked long and hard to ensure that when China needed more corn, they would buy it from us. In 2001, we heard the great news that they had purchased three cargos of corn, but we were all disappointed later when they cancelled them.
Now can you imagine that when I heard the news about China buying six cargos of corn yesterday I was jumping out of my chair? Ok, maybe I wasn’t that enthusiastic, but I was cautiously optimistic that this market was finally open to Illinois corn farmers.
Illinois corn farmers have a lot to gain from new exports to China. We have three river systems … the Illinois, the Ohio, and the Mississippi. We have a comparative advantage when it comes to exporting corn because it’s cheapest for us to get it to a river and load it on a barge. Cargos of corn going to China is great news for the overabundance of corn Illinois farmers are predicted to produce in 2010.
This announcement came just in time.
Except a second announcement came right on its heels – the Chinese inspection papers, or whatever they call the government document that allows US corn to be unloaded in China, haven’t been issued yet. To me, that means another cancellation could be in our future.
I’m on the edge of my seat. I’m waiting to see what happens. I can’t wait to flip to that final page of the story and find out the answer.
What can I say? I love a good story. Instead of a book worm, I’m a corn wor … no wait.

Phil Thornton
ICGA/ICMB Value Enhanced Project Director