Monday, May 24, 2010

The U.S. Exports More Corn Ethanol

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In the past twelve months, ethanol exports from the United States have increased from 4 million gallons in March of '09 to 46 million gallons in March of this year to places like United Arab Emirates, Brazil, Canada, and the Netherlands. This year's March figure is about 4 percent of the 12 billion gallons mandated for domestic biofuel use this year. Ethanol producers are thrilled.

From the Grand Island Independent in Nebraska:

Exports fuel Nebraska's ethanol industry
The United States has gone from being a net importer of ethanol to a net exporter, which will continue to help fuel Nebraska's growing ethanol market, said Todd Sneller, executive administrator of the Nebraska Ethanol Board.

According to the Renewable Fuels Association (RFA), data from the U.S. Department of Agriculture, Department of Commerce and the Census Bureau indicate U.S. ethanol exports increased significantly in 2010.

In March, the U.S. exported more than 45 million gallons of ethanol. For the first quarter of 2010, U.S. exports exceeded 83 million gallons. By country, Canada and the Netherlands were the top importers of U.S. ethanol. U.S. ethanol is also finding its way into Brazil and OPEC nations in the Middle East.

According to the RFA analysis, one reason for America's surge as a global ethanol trader is its current advantage as the world's low-cost producer.

"Despite the Brazilian ethanol industry's recent attempts to portray its product as always being the cheapest in the world, current prices show Iowa ethanol plant-gate ethanol prices are 50 cents per gallon lower than Brazilian ethanol prices," RFA reported. "As recently as February, that spread exceeded $1 per gallon. By way of example, a gallon of ethanol containing 10 percent ethanol from the U.S. would cost 11 cents less than a similar gallon blended with 10 percent Brazilian product."

Another reason for the growth of U.S. ethanol exports, according to RFA, is the saturated domestic market for ethanol.

"Ethanol use in the U.S. is arbitrarily capped at 10 percent per gallon of gasoline (E10). Based on historic gasoline demand trends, this arbitrary 10 percent cap, called the 'Blend Wall,' would be around 12.5-13.5 billion gallons of ethanol. The U.S. industry has the capacity to produce 13.5 billion gallons annually, with more capacity waiting in the wings," RFA reported. to continue reading. . .

There is nothing low cost about exploiting our land to produce politically driven, taxpayer subsidized ethanol through industrialized corn growing. One third of our corn crop now goes towards ethanol production and the corn growers and ethanol interests would like to see mandates for yet higher blends. How can they refer to this product as low-cost when its survival isn't even feasible without the taxpayer subsidies? Corn ethanol's already low EROEI becomes even lower after shipment overseas.

And, another important point:
In Nebraska, completion of two ethanol production facilities in Aurora and Columbus will increase the state's ethanol production capacity to 2.2 billion gallons, providing a market for more than 700 million bushels of corn. Last year, Nebraska's corn crop totaled 1.58 billion bushels. This year, Nebraska farmers planted 9.2 million acres of corn, up 1 percent from 2009.

According to Sneller, Nebraska uses about 50 million gallons of ethanol within the state, with the rest exported for use outside Nebraska.

Nebraska's extremely productive corn output is dependent upon irrigation, which is depleting the Ogallala aquifer and requires even more electrical energy to produce, thus an even lower EROEI than corn from other states. A better ethanol policy would, at minimum, exclude irrigated corn from eligibility of taxpayer subsidies. Instead, current policy is increasing irrigation demand. Nebraska's two new plants are in the midst of irrigation country.

While the rest of the world laments the BP Oil spill disaster (don't get me wrong, I do, too) most American's today are oblivious to the fact that 98% of the Great Plains ecosystems have been decimated by industrial agriculture. Exporting corn ethanol is nothing short of agribusiness insanity.

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  1. Sacrifice the taxpayer, the environment, the future, you name it to special interests? This iteration it's called Hope & Change.

    Don't get me started....

  2. "One third of our corn crop now goes towards ethanol production"

    What comes out of an ethanol plant? Ethanol, carbon dioxide (which can and has been used to enhance greenhouse production and is also used for other food and industrial products), and a product called dried distillers grains with solubles (DDGS) - all of the leftover mash containing nutrients, fat and protein (including the dead yeast). The DDGS is higher quality ruminant feed (more meat production, faster, healthier animals) than the corn, which is what the corn is predominantly grown for. This is the main product, the ethanol is actually a byproduct (which happens to be used as a gasoline additive to reduce pollution). Your characterisation of ethanol as consuming food is incorrect.

    More myths busted here:

  3. Tim,
    There is a major difference between "One third of our corn crop now goes towards ethanol production" and "Your characterisation of ethanol as consuming food is incorrect." I think you missed the point of my article, which was that we have a vast amount of policy driven over-produced corn in the U.S. which should not be produced in the first place, at the expense of some of our most precious resources: topsoil, water, aquifers, and the original wildlife habitats and ecosystems which were destroyed as little as one hundred years ago. Corn overproduction is seldom talked or written about, study the numbers. Corn is less about real food. I'm looking at this as a corn-destroying program not unlike that the government did in the 30's.

  4. I don't think I missed the point, I was just clarifying what many people will misinterpret, whether it was intentional or not.

    Another issue you might reconsider - you say "Corn ethanol's already low EROEI becomes even lower after shipment overseas." Let's look at it on balance. You're aware that some 20% of corn is shipped overseas to feed European cattle and 70% internally to the US? So if that cattle feed is converted to DDGS, the 2/3 volume reduction will result in a 2/3 energy saving in shipping, plus an energy gain from the ethanol which would have otherwise resulted in manure pollution and sick animals. The weight of ethanol produced being smaller (half the carbon in the starch is lost during fermentation) I'd expect there would be a net gain versus an non-ethanol based system.

    Now my point is not that industrial corn is great, it's that if you're going to be attacking it, be careful in what you say about ethanol. As far as I can see it's a significant improvement on a wasteful system (still, not the best way to make ethanol by a long shot). Furthermore, ethanol is a fantastic fuel and by painting it with same brush as industrial agriculture, however unintentional, you are doing it injustice.

    Finally, you're unlikely to change much with this kind of commentary. You would better spend your time promoting and developing alternative business models that satisfy the needs the current system does (food, fuel, profit, work, etc.) as well as restoring and preserving the natural environment. By using high productivity organic farm designs there is more space left for wilderness:

  5. In the U.S. the cultivation of corn for ethhanol has been positioned as a green initiative. In practice it is merely a new twist on an old political game: farm subsidies. The push for ethanol is merely another redistribution scheme. If what Tim says regarding utility, efficiency and so forth is true, great, but I assure you it was an unintended consequence. Kalpa's point, if I understand, is that Govt meddling for political benefit distorts the market and will have other unintended consequence - these more deleterious than Tim's.

  6. Tim
    I don't think you understand that as long as government policy supplements ethanol production more and more land is devoted to corn acres. I've seen it first hand. Large swaths of land have become megafarms fencerow to fencerow. There is nothing else left. That is why the young people leave these areas. At the same time the rivers are drying up, the trees are growing up in the river beds, the Sandhill crane habitat is disappearing for their annual six week migration stop. These things are happening in the name of ethanol demand. The corn ethanol lobby is powerful due to the nature of the political structure in the U.S. I disagree with you that it is a worthwhile program, all things considered. Instead we need to conserve and increase our efficiencies. We are burning ethanol in large trucks and SUV's without even bringing conservation into the picture. That, I call raping the land to keep up BAU.

  7. Kapla,

    "These things are happening in the name of ethanol demand." This could only be possible if there was insufficient corn to satisfy government ethanol mandates. You've said yourself that only a third of the corn crop is used for ethanol production. The reasons for corn's popularity are complex and historic. Michael Pollan's 'The Omnivore's Dilemma' sets it out well.

    Suddenly removing those subsidies and others would be an economic catastrophe for farmers and the country. The government has farmers on life support and understanding this is not the same as evangelizing it.

    The subsidies applied to ethanol are made back in taxes on the increased economic activity, as it preserves and builds capital that would have left the country.

    You will get more traction by displacing industrial agriculture in the market with more profitable and ecological models that can be taken up rapidly. A corn farmer may make around $50-75 an acre for a mind numbing and toxic job. The US government has taken some of the risk out of it with their loan programs, but still smaller farmers are squeezed out and farm size grows. We need farms such as those of David Blume and Joel Salatin which can earn farmers good money with interesting work, and alternative financial models such as community supported agriculture.

    My approach is to understand the motivation of the various actors, not to berate them. Once you understand what motivates people you can find ways to satisfy those needs in sustainable ways. Just telling them to stop doing what they know rarely works.

  8. Tim

    "This could only be possible if there was insufficient corn to satisfy government ethanol mandates."

    No, this is possible because the price of corn goes up which motivates farmers to plant more corn.

    Surprisingly, the biodiesel subsidy has not been reinstated to date. Our generous farm policies will need to be pared back due to our debt load, and are currently very generous to corporate (largest) farms. These subjects are under discussion currently.

    You raise good points but ignore others. If one doesn't point out what is wrong with policy, idealogical thinking and blogging can take care of it? The only power we have is contacting our politicians, freedom of speech, and in our own actions which might mean starting and promoting our own organic farms or voting with our dollars. But, in reality much is driven by economically motivated factors which, in farming, are too often dictated by Ag policy. Farm programs were established to keep farms operating during difficult economic times and like all else, have been abused and written to help corporations over the years. If you have been reading my blog you will know that I am not anti-corporate farming. I feel industrialized Ag is very efficient and holds an important place in combination with small local farms around cities to provide local produce.

  9. I'm not saying it's impossible to reform this particular government policy, just that it's probably not the best way to spend your limited time. Others such as Michael Pollan, who has written some US national best sellers, are doing a good job of exposing the situation. There are also good films such as Food, Inc. coming out.

    Ideological thinking and blogging? I'm advocating starting businesses that change the situation and displace destructive practices. I'm personally running a business that establishes and maintains food gardens for people in my city, relieving the need for farming of any kind. I also support my local organic CSA and I'm discussing with them setting up a driver owned ethanol station. I support community gardens in my area and do some occasional guerrilla gardening.

    Industrial agriculture is only efficient in terms of food produced per unit of human labor (a major factor in why the proportion of farmers is falling and their average age rising), but even this can be rivaled with good design. Bill Mollison believes that a single ecological farmer can feed hundreds of people. Blume's experience bears that out. In all other respects industrial ag is inefficient: land area to feed a person is around 10-100 times higher than it needs to be, water use (rainfall and condensation is not capitalised on), nutritional content has been dropping, resource use is extravagent - around 10 units of fossil energy produce 1 unit of food energy, top soil is lost instead of created, 25% of carbon emissions are associated with agriculture, and so on. These problems are mostly necessary outcomes of large scale mechanisation.

  10. To follow up on your comment "No, this is possible because the price of corn goes up which motivates farmers to plant more corn."

    The ethanol price has not been going up, precisely because there is sufficient capacity to meet the mandate:

    "Why is ethanol trading so low? The ethanol price weakness stems from current production capacity exceeding the RFS mandate of 12 billion barrels for 2010."

    If the area planted to corn is expanding then there is something else driving it. You might be surprised what that reason is. The farmers need to cover fixed costs, expanding their planting is the only way they can, which exacerbates the problem (reduces the corn price) and forms a vicious cycle. Anything that makes farming more profitable relieves that pressure. I recommend reading The Omnivore's Dilemma.

  11. Why the assumption that I have not read Omnivore's Dilemma? Or that I know nothing of supply and demand? or corn pricing? You are welcome to make more posts here, but this is my last response.