National Farmers Union

19 Things the AP Got Wrong

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Courtesy of Courtesy of National Farmers Union

The Associated Press recently published an article on “the secret environmental cost of U.S. ethanol policy.” There is much in this article that is too misleading, poor or deficient analysis, over-simplistic, or poorly drawn conclusions to comment on, but here are 19 big things the AP got wrong.

  1. The article seems to put the blame on Obama the candidate and the Obama administration.
  2. Ethanol plants, particularly in Iowa, have been around in major numbers since the 1970s. Not one has been erected in Wisconsin in the past four years.
  3. The Conservation Reserve Program (CRP) has been around since the Clinton administration, at least. It requires farmers to sign a 15-year contract to put land in the Reserve Program. There have been about 6 to 7 million acres whose contract term ended in the past two years. With the CRP paying, for example, in Manitowoc County where I live and farm, about $55/acre and rents now at $200/acre, what manager would want to continue with this program? These past couple of months, rates have been raised to $150/acre for CRP land. Thus, it was the market mechanism that drove part of the land in CRP to terminate.
  4. Ethanol did not drive the diversion of land out of CRP, but the market price for coarse cereal grains. With the Great Recession, the demise of the U.S. stock market, and the resulting near contraction, if not deflation, institutional investors (inclusive of many hedge funds and index funds) shifted their investing and cash out of their traditional domestic and international stock and bond markets and into commodities, inclusive of oil and grains. This drove the commodities and in turn the farmland market (which also was seen as a hedge against deflation) to record highs. This was not ethanol.
  5. The USDA and the 5-year farm legislation (2008 – 2012) have no conservation requirements as a condition for receiving federal agriculture subsidies.
  6. Under the 2008 farm program about 7 million acres were reduced from CRP authorization, partially for appropriation reasons, and more will be reduced in the next farm program.
  7. 2013 corn did not exceed the previous year by 15 million acres. The drought last year had almost equal amount of farmland planted, but failed to produce. The heavy rains this year into mid-June also pulled down acres that were dedicated to corn. These figures the author uses are misleading.
  8. All of the ethanol plants that I know use natural gas as the fuel for cooking the wet mash, not coal.
  9. Corn prices for most of 2013 were not at $7/bushel. I sold all my 2012 corn by June and the highest price that I got was $7.07 and an average of $6.85. Thereafter, it has all been downhill and reached a low three weeks ago of about $4.20.
  10. With corn prices in the low $4/bushel range, I assure you that farmers will not continue to plant corn or beans on this marginal land and even to the degree as this year on good land. Again, the market price will drive the use of arable land.
  11. Most farmers are not in the government program — only 38 percent overall in the United States, but 81 percent in Iowa and 60 percent in Wisconsin.
  12. The USDA does not collect data on all farms, but only on those farms in the government program, as noted immediately above.
  13. The government has no way of regulating farmers who are not in the government program and, thus, has limited ability to deter land from conservation purposes.
  14. The issue of nitrate leaching and surface runoff did not start with the ethanol mandate. It existed before 2000 even. Strange that the authors fail to note the issue of phosphorus runoff. Again, most farmers will not apply more fertilizer than they need to and are advised by their agronomist as per soil-testing labs. To do so simply wastes money. Further, nitrogen, whether organic or inorganic, is not all expended in the year of its distribution/incorporation, but continues to regenerate and dissolve into the following two years on a rapidly declining trend.
  15. The dead zone at the mouth of the Mississippi did not occur after the ethanol mandate either. It has been noted and cautioned since the late 1990s.
  16. Whether the ethanol mandates exists or not, farmers are going to continue to plant crops which generate the highest return. That is corn, soybeans, wheat, in that order. If you lack dairy, you are not going to plant alfalfa.
  17. Strange that the authors totally overlook the monopolistic and oligopolistic control of markets as the central cause of farmers being forced to concentrate on higher return crops. It is not the ethanol mandate that drives this practice.
  18. People like the authors who criticize the ethanol mandate fail to understand that farm waste, i.e., stover, is presently commercially and industrially not efficient and that farmers cannot transport this volume more than 5 to 10 miles at the most to be economically positive. Switchgrass, mescanthus, pulp and other biofuel inputs just have not yet been able to permit commercially viable production for technical and logistic reasons.
  19. Feed use of corn has dropped not because of the ethanol mandate, but because U.S. consumers are eating less meat, particularly red meat. Beef production and consumption has dropped roughly 12 percent in the past 10 years. Beef production is the least efficient meat production. My steers average 6.5- to 7-lbs. corn for each pound of gain, but hogs are about 4.5 to 1 and poultry are 2.5 to 1. This trend is driven also by the downturn in the economy which means that less income is available for higher priced meat consumption. This is projected to pick up this year as the economy slowly arises from its anemic expansion since 2009.

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