Building Bridges in 2001 was the theme of the Commodity Classic this year. If the National Corn Growers Association (NCGA) and the American Soybean Association (ASA) have anything to do with it, we will be traveling that bridge in vehicles fueled by ethanol or biodiesel.

By Doug Rich

Building Bridges in 2001 was the theme of the Commodity Classic this year. If the National Corn Growers Association (NCGA) and the American Soybean Association (ASA) have anything to do with it, we will be traveling that bridge in vehicles fueled by ethanol or biodiesel.

Both groups made it very clear during their annual meetings in San Antonio, TX that now is the time for renewable fuels to come of age. In their meetings and on the floor of the trade show ethanol and biodiesel were front and center.

"We support a national sustainable energy policy that employs this renewable, affordable, abundant, and environmentally friendly fuel," said Lee Klein, a farmer from Battle Creek, NE and president of NCGA. "NCGA and the nations farmers are ready to assist in solving the energy crisis." During his press conference Klein said NCGA will be spending money to develop new and more efficient ways to produce ethanol.

Tony Anderson, ASA president and a farmer from Mt. Sterling, OH, echoed these comments during his press conference. "We believe biodiesel should play a role in the national diesel fuel market," he said. "The current energy crisis and plans for action this year by the administration and Congress make it crucial that biodiesel be included as a vital component in a renewable fuels bio-strategy and as part of a long-term national energy plan. Biodiesel can be used to satisfy a ruling to reduce sulfur content of diesel fuel and replace it with renewable lubricity agents."

Additional benefits to using ethanol and biodiesel include reducing our dependence on foreign oil, enhancing air quality, increasing farm income, and reducing the cost of farm programs.

The National Ethanol Vehicle Coalition (NEVC) was formed to promote the use of 85 percent ethanol as a renewable form of alternative transportation fuel. The potential impact of 1.9 mill E85 vehicles on the road by the end of this year would include the potential to consume 1,425,000,000 gallons of ethanol; the potential to consume an additional 528 million bushels of corn; and the potential to add over $3 billion to total farm income.

"We don't give ourselves credit for the progress that has been made already," said Rick Tolman, executive V.P. and CEO of NCGA. "Actually, right now ethanol is priced higher than gasoline and we are still using up all supplies at record levels every month. There are quite a number of new facilities being put in place."

"ADM had 70 to 80% of the production just 7 years ago now they are down to 40%," said Tolman. This is not because ADM has reduced production but because so much new production has come on line recently. "If we can get the right political climate to get bankers and the financial people comfortable with longer term investments we can get to the next plateau. What we are talking about is a tripling of the use of corn by 2010. We have done well in the Midwest but we have not made inroads on either coast. That is the next step, to get in to those big populations areas."

"We feel this year is a make or break year," Tolman said. "Everything is in place and if we don't get it done as an industry we have missed an opportunity."

Eric Nieman, a soybean farmer from Kansas, said ethanol and biodiesel fuels are really taking off. "I think the time is perfect with increased energy prices and the directives to reduce the sulfur content in diesel fuels by 500 PPM down to 50 PPM in the next five years," he said. "This is a perfect opportunity to put a low blend soyoil in the diesel fuel. A good deal for consumers and the American soybean farmer."

Another good thing about the ethanol and biodiesel markets is that they don't care, as a rule, if the grain has been genetically enhanced. However, that is not the case with most of the markets for our corn and soybean products. Lee Klein said NCGA wants to protect the flexibility of producers to use technology if it produces a profit. "We want biotechnology handled in a manner that will meet our customers demands and protect the integrity of the U.S. corn supply," he said.

"If it is not approved by U.S., Japan, and other export buyers then we should not release it," said Alan Peter, a farmer from Tribune, KS and president of the Kansas Corn Growers Association.

"It is important that we all realize that despite the controversy surrounding the acceptance of biotech derived soybeans last year, the U.S. had a record setting year with soybean exports," said Tony Anderson. The European Union purchased 15% more soybeans last year than they did the year before even though 55% of the soybean acreage in the U.S. is planted to Roundup Ready varieties.

"ASA is not in the business of telling farmers when to plant, where to plant, or what to plant," said Anderson. "However, ASA believes that we do have the responsibility to protect the farmers access to profitable technology and to educate the public about the safety of the food we grow." ASA and NCGA are cooperating on a project called Tomorrow's Bounty to provide customers with accurate information about technology.

According to its chairman, the United Soybean Board (USB) wants to be a credible science based source of information about soybean production. "Despite the concern in some countries about the role biotechnology plays in modern soybean production, the soybean checkoff has been able to help grow U.S. exports especially in key regions such as the European Union," said Doug Magnus, USB chairman and a farmer from Slayton, MN. "Our exports are running about 15% ahead of last year at this time. Soybean meal exports have doubled so far this year."

"Unlike some commodities, all commercially available soybean seed varieties improved through the use of biotech have been approved for food and feed use across the globe," added Magnus. "The soybean checkoff, along with our partners at the American Soybean Association, have insisted for four years now that companies secure domestic as well as international food and feed approvals of all soybean varieties improved through the use of biotechnology before they are commercialized in the U.S."

The U.S. is still the dominant player in the corn market world wide, said Ken Hobbie, president and CEO of the U.S. Grains Council. "Exports are doing well and world demand is on an upward trend," Hobbie said. Japan, Taiwan, Mexico, Egypt, and Korea are the top five markets for U.S. corn. In the next ten year Hobbie said Saudi Arabia, and Malaysia could be added to that list. Although China will be very important to U.S. corn exports in the short-term, Hobbie said to watch India in the long-term. "India will surpass China in population, it has a thriving middle class, and it is a WTO member."

"Global soy consumption has exploded," according to Jerry Slocum, chairman of the international marketing committee at USB. "Demand is not our problem. People around the world want a more western diet." Slocum said the demand is being driven by pork and poultry production as people strive to put more meat and protein in their diets.

Argentina and Brazil are still the major competitors for U.S. soybean farmers. Argentina has a small domestic market and must export over 90% of their soybean production. Brazil has very low land costs which keeps their cost of production very low. "Brazil has an enormous capacity for production," said Slocum. "That is why we need to focus on exporting higher value soybeans. We need to take advantage of U.S. infrastructure to supply identity preserved and higher value products. The U.S. should focus on high value markets. Our product is better and they will a pay us more for it."

Ethanol, biodiesel, biotechnology, and exports are all overshadowed by the debate over the next farm bill.

Lee Klein said in the short-term we must find a way to improve low Commodity prices and the long-term find ways to expand demand for our agricultural products. "We will support a farm policy that will insure American Farmers will be globally competitive, market responsive, and environmentally responsible," Klein said. "We will also insure that American farmers have unfettered access to world markets, capital, technological advances, and risk management programs.

"Soybeans must be treated equitably in any new farm bill," according to Tony Anderson. He pointed out that soybeans are grown 28% of the cropland in this country and they are the highest value ag export. Therefore soybeans should included in an expanded AMTA or similar payments. "We want soybeans to receive a fair share of a larger pie so that other commodities continues to receive comparable benefits." Anderson said soybeans growers want to maintain the $5.26 loan rate.

Most farmers want to retain the flexibility of Freedom to Farm and only make minor changes to the 1996 legislation. "It appears to me we will just do some fine tuning," said Bart Ruth, a farmer from Rising City, NE and ASA first vice president. "I don't see a loud cry to totally revamp the program. It seems to me that the ag groups are more on the same page this time around. It is a tough economic situation and everybody is looking for solutions."

"I think the loan rate is where it should be based on historical stocks to use ratio," Ruth said. "It is dangerous to say that the expansion of soybean production in the western corn belt has been caused by the loan rate being too high for soybeans. The previous farm bill (prior to 1996) did not allow for flexibility and now we are seeing farmers shift to a crop rotation that makes more sense. Before we were limited by the farm program. To say an out of whack loan rate is the cause for that expansion is dangerous."

"People want to keep the flexibility," said Warren Stemme, a corn and soybean farmer from Chesterfield, MO and a voting delegate at the ASA convention. "They like the freedom. The LDP works, but there are some problems with it. For instance folks who have low yields can not utilize the LDP the same as folks with high yields. The solution may be through crop insurance. If we come out of this with the same number of dollars we have been getting we should feel pretty happy."

Sen. Pat Roberts told the corn and soybean growers that assistance to the nation's farmers would continue under the Bush administration. This fiscal year farmers will receive $4.13 billion in regular AMTA payments. That amount will drop to $4.008 billion in fiscal 2002. "If there ever was a time when we needed advice and council from commodity organization this is that time," he said. "But, we want those suggestions to be specific and budget responsible to the extent that it is possible. Be specific, don't just give another farm speech we have had enough of those. Suggestions must be policy driven as opposed to just asking for more funds."

Sen. Roberts, one of the authors of Freedom to Farm, defended the 1996 farm bill. "The design of the 1996 farm bill was to restore decision making to the individual producer," he said. "To give them more tools through which to manage their operations and withstand the roller coaster ride we have in agriculture." In response to a reporter's question, Sen. Roberts said the intent of the 1996 farm bill had nothing to do with ending subsidies to farmers. Sen. Roberts said the failure to pass adequate tax reform and export policies hurt the 1996 farm bill.

Corn and soybean growers have a lot of bridges to cross before a new farm bill is passed, before every export market is open to U.S. agricultural products, before biotechnology is accepted worldwide, and before renewable fuels are part of national energy plan.

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