St. Paul (March 26, 2010) - Minnesota Farmers Union (MFU) supports federal legislation that would extend the 45-cents per gallon Volumetric Ethanol Excise Tax Credit (VEETC) and the tariff on imported ethanol until 2015.
"In Minnesota, the ethanol industry provides about $6 billion for our economy and about 26,000 jobs," said Doug Peterson, Minnesota Farmers Union President. "That is why passing this legislation is so important to continue the development and production of ethanol and support our local economy."
The tax credit is set to expire at the end of 2010. This legislation would extend the tax credit for small producers, and also extend a tax credit for producing cellulosic ethanol, the second generation of ethanol. Representative Collin Peterson and Representative Tim Walz are cosponsors of this bill.
(June 12, 2009) - In this series of columns we examine the impact of the rapid run-up and subsequent decline of crop prices on various groups, including crop farmers; livestock, dairy and poultry producers; importing countries; and consumers and whether or not a properly managed grain reserve program could have mitigated the problems faced by each of these groups. In this column we look at the ethanol industry as an important cause and casualty of the price bubble.
To some extent the increased use of corn in the production of ethanol can be attributed to changes in agricultural policy in 1996 and the growing scientific consensus on the role of human activity on global warming. The 1996 Farm Bill effectively eliminated the floor on crop prices and, when the universally anticipated structural increases in corn exports did not materialize, allowed grain prices to fall well below the cost of production.
The explanation for the low prices was "over production" even though the year-ending stock-to-use ratio for the years beginning with 1998 was well below historic levels. With significant fixed costs, crop farmers continued to plant their fields to minimize their losses, hoping that a random crop failure somewhere would lift prices to profitable levels.
From Growth Energy
Since the publication of a controversial study last year (Searchinger et al 2008), a new term has entered the policy debate around biofuels - indirect land use change (ILUC). The debate is focused on whether or not the carbon intensity of fuels like ethanol can or should include a penalty for theoretical indirect, economic effects. Land use is just one of many indirect effects that could also increase the greenhouse gas emissions of different fuels, including gasoline.
In December 2008, the European Union decided not to include an ILUC penalty against biofuels. More recently, in April 2009, the California Air Resources Board (ARB) voted for regulations that would add an "indirect land use change" penalty to biofuels as part of its Low Carbon Fuel Standard. ARB also agreed to investigate the indirect effects of other fuel types. In addition, the U.S. Environmental Protection Agency (EPA) is expected to release a proposed rule that could include an indirect land use change penalty for biofuels in determining that fuel's capacity to reduce greenhouse gas emissions compared to gasoline.
What Is ILUC Theory?
WASHINGTON (April 24, 2009) - National Farmers Union President Roger Johnson released the following statement today in response to the California Air Resources Board decision to implement a low carbon fuel standard.
"While I appreciate California's efforts to encourage renewable fuel use through a low carbon fuel standard, today's ruling is disappointing and unfortunate - especially as we look to decrease our nation's dependence on foreign energy sources and produce more renewable fuels in the United States.
"A fairly and appropriately crafted low carbon fuel standard could spur opportunities for renewable fuels, but California's scientifically dubious interpretation of international indirect land use change is an unnecessary setback to reducing our dependence on fossil fuels.
"There is currently no clear scientific understanding of international indirect land use impacts. Until there is better scientific certainty, and analysis accounts for all fuels including petroleum and natural gas, the inclusion of indirect effects should be delayed.
"Ethanol production has a proven track record of providing real 'green jobs' in our rural communities, jump-starting the local economy. Furthermore, improved technology is increasing ethanol plant efficiency and paving the way for the next generation of renewable fuels."
WASHINGTON (April 16, 2009) - National Farmers Union President Roger Johnson today made the following statement in response to a report released last week by the Congressional Budget Office (CBO) on the impact of ethanol on food prices.
"The CBO report states what we have known all along, America's farmers are not a significant reason for increasing grocery store prices. The report states that increased ethanol production caused a mere 0.5 and 0.8 percentage point increase in the price of food between April 2007 and April 2008.
"Increased ethanol production saved consumers $48 billion at the gas pump in 2007. The food cost increase attributable to ethanol is far less - between $6.1 and $9.7 billion per year. In other words, for every extra dollar consumers spent on food, they saved between about $5.00 and $8.00 in gasoline cost.
"Another comparison is the farmer's share of the retail food dollar. The retail price of Safeway brand corn flakes on March 31 was $2.99. The farmer's share was $0.06, just 1.9 percent.
"Despite the efforts by some to blame higher food costs on farmers and commodity prices, it is evident this is not the case. NFU is again calling for Congress to reconvene hearings to investigate higher retail food prices; while commodity prices have tanked since last summer's peak, grocery store prices remain high."
Washington, D.C. - Today, Growth Energy's CEO, Tom Buis released the following statement regarding recent findings on the impacts of higher blends of ethanol on automotive fuel pumps and sending units released by the State of Minnesota on April 2, 2009:
"The study released by Minnesota State University yesterday adds to the sound body of science that overwhelmingly supports the use of higher blends of ethanol in vehicles on the road today. The study, which included a 4,000 hour endurance test, found that gasoline with a 20 percent blend of ethanol (E20) had no negative impacts on the endurance, wear and performance of automotive fuel pumps and sending units from a representative variety of vehicle manufacturers, models and part designs. Further, the study found a clear trend that the fuel pumps showed significantly less wear when tested with E20 blends than with gasoline.
"These results demonstrate what we've known for quite some time - increasing the blend of ethanol in our fuel supply from 10 percent to 15 percent will have no adverse impact on a car's performance, maintenance, or emissions. The U.S. Environmental Protection Agency should act expeditiously to increase the arbitrary limit on ethanol blends to up to 15 percent as our waiver requests."
MN ethanol supporters call for EPA to raise "arbitrary" ethanol cap - E15 blends could create over 3,000 new jobs in Minnesota
(St. Paul) - According to a new study released today, Minnesota could see over 3,000 new jobs and nearly $600 million in economic activity if the federal government gives the green light to blending gasoline with 15 percent ethanol.
Earlier this month, national trade group Growth Energy submitted a "green jobs" waiver asking the Environmental Protection Agency (EPA) to allow gasoline blended with as much as 15 percent ethanol (E15). A rule that dates back to the 1970s arbitrarily caps at 10 percent (E10) the amount of ethanol that can be blended with gasoline.
At a press conference appropriately held on "Ag Day" in the State Capitol, Minnesota Department of Agriculture Commissioner Gene Hugoson joined the Minnesota Ethanol Producers Association, the Minnesota Corn Growers Association and the Minnesota Farmers Union in calling for the EPA to approve higher ethanol blends.
"EPA approval of higher blends of ethanol will equal more jobs for Minnesotans, a cleaner environment for our planet and less foreign oil flowing into America," said Commissioner Hugoson, who, along with nine other state agriculture officials, signed a letter to President Obama in support of higher ethanol blends.
(March 1, 2009) - If it's even partly true that you're known by the company you keep, then the farmer-loved ethanol business got a lot less lovable Feb. 8 when Valero Energy Corp., the largest crude oil refiner in North America, announced its intent to purchase five of the choicest plants owned by mega-biofuel maker, mega-bankrupt VeraSun Energy.
Should Valero succeed in acquiring VeraSun's best ethanol plants-and there's little reason to suspect it won't-Big Oil's drooling camel will have its nose in your government-sponsored, government-protected tent.
And you know what they say about camels and tents.
In all likelihood, Valero is just Big Oil's first camel. More will follow, especially if the ethanol business continues to struggle and cash-rich, market-insulated crude refiners can buy state-of-the-art ethanol plants for dimes on the dollar.
In fact, you have to wonder what took the refiners so long to start picking up-and picking off-ethanol operations. They've had big reasons to own ethanol for years.
For example, large refiners like Valero own gas stations (Valero owns more than 5,000 retail and branded stations in North America) so it has a built-in thirst for millions of gallons of ethanol. Why buy it retail when you can make it wholesale?
(February 17, 2009) - We receive a lot of information through the media. The Minneapolis Star Tribune recently sited a study that claimed corn ethanol is not better than gasoline for the environment. My frustration is that from the looks of it, the study just offers criticisms, and does not give the corn ethanol industry credit for producing a clean and non-foreign substitute that is helping the United States take a step toward being less dependent on foreign oil.
Another criticism I have of this study is that it is by the University of Minnesota, and it provides unfavorable information on the corn ethanol industry without offering any suggestions. The University of Minnesota is a land grant college, and many believe the University of Minnesota should work with farm organizations, and commodity groups, and with the great resources we have here in Minnesota to take us one step further in reaching home-grown energy independence.
I wanted to mention that WCCO's Pat Kessler did a "Reality Check" about this story and the study. One thing he pointed out was that the study neglects to mention that both the ethanol and oil industries are subsidized, and that a gallon of E-85 costs about $1.45 a gallon, but without subsidies would be $2.23 a gallon; whereas a gallon of gasoline costs $1.85, and without subsidies would cost $5.85 a gallon.
(February 3, 2009) - Recent news stories have been flush with reports about developments in cellulosic ethanol and other biofuels production. Maybe these reports help provide an understanding of why Informa Economics recently forecast corn prices below $3.00 with wheat prices below $4.00 and soybeans under $7.00
Let's look at the biofuels news first and then see what implications this news has for the long-term pricing of farm grains and oilseeds.
Poet recently announced that its research center in Scotland, SD is producing cellulosic ethanol in its pilot-scale plant. The plant has the capacity to produce 20,000 gallons a year from corn cobs
Poet CEO Jeff Broin said, "After producing 1,000 gallons, we've already been able to validate all of what we learned in the lab and believe the process will be ready for commercialization when we start construction on Project Liberty next year."