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