The Illinois Farm Bureau held its annual commodities conference in Springfield this summer. The event draws between 300 and 400 farmers from throughout Illinois to hear sessions on timely topics. Seven members from Peoria County attended. This year's program had two general sessions and 20 breakout sessions for farmers to select from.
I would like to relay a few interesting notes from two sessions I attended. William Tierney, general manager for a farm advisory service, spoke about the ethanol market. Current ethanol production is 11.6 million gallons annually. This requires around four billion bushels of corn, since each bushel produces 2.8 gallons of ethanol. Last fall's harvest brought in approximately 12 billion bushels of corn-so we are currently using one-third of production to make ethanol.
The renewable fuels standard that was signed into law in 2007 requires that 10.5 gallons of ethanol be produced in 2009; 12 billion gallons in 2010; and 15 billion gallons in 2015. Ethanol producers have seen their margins squeezed in recent months, and Tierney noted that bankruptcies and poor margins idled 20 percent of capacity this spring. Little or no new construction of ethanol plants is expected. In fact, he stated that 1.45 billion gallons of plant construction were stopped or "temporarily suspended." Some of these were just a month or two from completion, while others have been abandoned and all equipment has been salvaged.
Tierney stated that with ethanol priced at $1.57 per gallon (and dried distillers grain (DDGs) priced at 70 percent of corn), at the margin, ethanol plants can afford to pay $3.70 a bushel for corn, as one bushel of corn yields 2.8 gallons of ethanol and 18 pounds of DDGs. (Dried distillers grain is a byproduct of corn during the ethanol-making process. It is primarily used as feed for cattle.)
Now dominating prices for ethanol is excess industry capacity-that is why there has been discussion of expanding the ethanol blend wall from 10 to 15 percent or somewhere in between. Large corn yields and rapid ethanol plant construction has occurred in the Midwest the last couple of years, and ethanol has played an incredible role in creating strong earnings for farmers and the Midwest economy.
The final general session speaker was Dr. Jay Lehr, science director for the Heartland Institute in Chicago. He touched on a variety of topics, including biotechnology, organic food, animal rights groups, global warming, world food supply, precision agriculture and the green movement.
He stated that there are 2.1 million farms today, of which 90 percent are individually owned, six percent are partnerships, three percent are family corporations and one percent are absentee corporations. These are surprising numbers to a public falsely convinced that farming is now controlled on Wall Street by multinational companies and that the family farm is a thing of the past.
Lehr also pointed out that reduced tillage by farmers is sweeping the country now, with 40 percent of the nation's acreage under no-till or reduced tillage programs. Savings result from reductions in fuel and labor expended, wear and tear on equipment, carbon sequestration, improved soil tilth, virtual elimination of soil erosion, and improved soil moisture through increased infiltration through crop residue. Concurrently, air quality is improved through reduction in fuel exhaust and dust, and nearby surface water quality is improved as a result of reduction or elimination of agricultural chemical runoff. iBi
