ETHANOL (ETHANOL)

[Clintonb]

New Processing Technology...

EnviroStar LLC has recently completed development of a revolutionary new process control technology for biomass and ethanol processing.

To learn more about what EnviroStar can offer check out envirostarllc

[mgland]

New device can make ethanol at home
Company will deliver raw material as needed
By Michael Gardner, U-T Sacramento Bureau

http://www3.signonsandiego.com/stories/2009/jun/05/1b5homegas205410-new-device-can-make-ethanol-home/?business&zIndex=111243

2:00 a.m. June 5, 2009
HOME FUEL STATION
How it works: Purchase a mobile “microfueler” pump and hook it up to water and power. A distributor provides raw liquid materials that the pump converts into ethanol.
Cost: The pump will cost $10,000, but rebates could cut that price by $2,000. Businesses could receive a federal tax credit of 50 percent. Owners would be charged the going rate for ethanol for the fuel they use.
Local ties: GreenHouse Energy will be the distributor for most of Southern California. Karl Strauss Brewery will provide a large share of waste material for the ethanol.
SACRAMENTO – California motorists may soon be able to fill up their gas tanks without leaving the driveway.
In a ceremony on the Capitol steps yesterday, E-Fuel Corp. of Los Gatos unveiled its answer to high gasoline prices: the “microfueler,” which turns liquid waste into ethanol right at home.
Two San Diego companies are playing a crucial role in bringing the new technology to the market.
GreenHouse Energy has been named the exclusive distributor for most of Southern California. Think of it as AmeriGas or the Culligan man.
Karl Strauss Brewery has been tapped to provide a large share of the beer yeast that contains the alcohol content needed to turn its waste into fuel.
“We will make home delivery of clean and affordable ethanol something every Californian can count on,” said Chris Ursitti, chief executive of GreenHouse.
But there is a steep price upfront: $10,000. Government-sponsored rebates could cut that price by $2,000 for individuals, however. And businesses could be eligible for up to a 50 percent federal tax credit.
Marc Martin, a Karl Strauss vice president, is excited about the new avenues microfuelers can open for motorists and businesses.
“It furthers our internal core values, which are caring for each other, our community and our environment,” he said.
Gov. Arnold Schwarzenegger attended the event to promote the microfueler, which looks like a gas station pump on wheels.
“It takes what is essentially a byproduct of beer, something that would be normally thrown away, and turns it into fuel,” he said.
Schwarzenegger also announced that the state is exploring a pilot program to operate some of the fuel-at-home stations.
“We, as a state, want to be a good example,” he said.
This is how it will work: Interested motorists will buy the microfueler and keep it at home, probably in the garage. A normal wall socket and water supply are all that's needed to churn the waste into ethanol. GreenHouse Energy will supply the liquid waste at no charge.
Motorists can then pull the car up and pump the ethanol at the going market price, currently about $2 a gallon. They will be billed a fixed rate for the fuel pumped, most likely monthly. The pump machine can make 40 gallons a day and will automatically notify the distributor when supplies are running low, company officials say.
Currently, homeowners do not need to obtain any special permits from the city or county to produce ethanol. However, they will have to go online and obtain a free permit from the federal Bureau of Alcohol, Tobacco, Firearms and Explosives, according to E-Fuel executives.
In a nod to naysayers, E-Fuel founder Tom Quinn compared the microfueler to the dawn of the computer age, when skeptics couldn't imagine personal computers, laptops or iPhone technology.
“So we really feel that this is going to start the greatest organic fuel revolution of our time,” Quinn said.
Ethanol makers have come under increasing criticism, primarily because a large share of the fuel is made from food-based corn. The rush to produce more ethanol when gas neared $5 a gallon was blamed in some quarters for a spike in food prices.
GreenHouse Energy will steer clear of that controversy by using only organic, non-food waste sources for ethanol production, Ursitti said.
“We will never enter the food chain,” Ursitti said. Organic waste from beer makers, wineries and even lumber mills will provide ample sources, he said.
Karl Strauss currently generates about 8,000 gallons of spent beer yeast per month, brewmaster Paul Segura said. Some of it goes to local dairy farmers for cattle feed.
In the future, the brewery expects to provide GreenHouse with 5,000 gallons of yeast for microfuelers to convert into ethanol, while keeping 3,000 gallons for livestock feed, Segura said.
As part of its agreement with GreenHouse, Karl Strauss will install a microfueler and eventually plans to use ethanol in its distribution fleet, Martin said.
Sierra Nevada Brewery has also participated in pilot projects and plans to use the microfuelers, the Chico-based company has announced. Other major beer makers are also active in the broader ethanol market.
Motorists will not have to make any major modifications to their vehicles, Ursitti said. Models from 1987 and newer are already equipped to run on ethanol as well as gasoline.
However, the “check engine” light would probably come on when running on ethanol. Motorists would need to invest a couple of hundred dollars for a computer chip that will basically tell the engine that there isn't a problem with the fuel, Ursitti said.
Michael Gardner: [phone];

[timhyma]

I still have AVRN.pk (almost a total loss), PEIX (close to a total loss) and GPRE (down about 70%). I speculated, and don't expect much out of them now

[OldPro]

not so fast - good news...

for ethanol (maybe): EPA Weighing Partial E15 Approval

EPA is reportedly considering lifting limits on ethanol content in fuel but
restricting higher ethanol fuel blends to newer vehicles that meet strict
agency emissions standards, which could fulfill President Obama's vow to
lift "artificial barriers" to broader use of renewable fuels.

still own some GPRE

[timhyma]

Looks like ethanol is about done- the big oil guys are killing the small start ups with misinformation, imo.

[timhyma]

Great article: http://www.moneyandmarkets.com/topic/experts/martin-d-weiss-phd/the-ethanol-revolution/

[timhyma]

today's headlines:

Tennessee to Establish Biofuel Pumps Every Hundred Miles Statewide - 1 hour agoDomestic Fuel reports that the Tennessee Department of Transportation (TDOT) has given $1.5 million to develop a Biofuel Green Island Corridor along its major highways. TDOT has also opened a solici...

New Biodiesel Facility On the Way for Denver Suburb - 9 hours agoColorado ABC affiliate KRDO reports that Rocky Mountain Sustainable Enterprises plans to build a plant in Fort Morgan that could generate about 4.5 million gallons of biodiesel a year for vehicles. T...

New Roadways Lead to Efficiency for Ethanol Facility in New York - 11 hours agoNew York media The Daily News Online reports on new infrastructure leading to and around the area’s ethanol facility. This new highway grid will allow better transportation and accommodation to the m...

New Safer and More Environmentally-Sound Fuel Tank Models Now in U.K. for Oils and Biodiesel Storage - 13 hours agoOilFiredUp.com reports that TankDepot.co.uk has received three new Titan Ecosafe fuel tank storage models. Designed for use to store heating oil at domestic and small commercial installations, the mo...

Newt Gingrich Criticizes Congressional Spending, Recommends Alternatives Including Energy Approaches - 15 hours agoFamilySecurityMatters.org reports on to-date staggering spending figures recently passed by Congress. Begun by the Bush administration and continued by Obama’s, the report criticizes wasteful spendin...

[timhyma]

Reuters UK reports that U. S. based-Poet may be bidding on bankrupt ethanol producer VeraSun’s facilities on the March auction block. Confirmed by Poet’s CEO, Jeff Broin, Poet is looking at a number of options, including acquiring 7 of VeraSun’s 8 facilities in the forced sale. Both companies are based in Sioux Falls, South Dakota. Despite ethanol’s grim market right now, Poet is managing to “squeeze profits” because of its high operational efficiency.

http://www.biodieselinvesting.com/biodiesel-archives/2009/02/19/could-poet-be-eyeing-verasuns-up-for-auction-facilities/

[timhyma]

Biofuels: The past, present and futureBy Justin Smith
2/2/2009 10:50:28 PM GMT





The world of biofuels is as diverse as it is controversial. From being hailed as a great savior from the perils of using fossil fuels, to being a pariah that is leading to less food to go around, biofuels have, at best, a mixed reputation.



That said, not all biofuels are created equally and many different types exist, each with their own sets of pros and cons. As such, many of the negative stereotypes should not be applied to all types of biofuels.



A long history

A biofuel is defined as any fuel that is derived from raw or recently living biological material, as compared to fossil fuels, which also come from biological material, but from organisms that have been dead for a very long time. Technically biofuels have been used for millennia in the form of wood fueled fires, and in terms of liquid biofuels for transportation, those have actually been around since the inception of the automobile.



According to biofuels information Web site Biofuel.org.uk, Rudolf Diesel, the German inventor of the diesel engine, designed his engine to run on peanut oil. "Later Henry Ford designed the Model T car, which was produced from 1903 to 1926. This car was completely designed to use hemp derived biofuel as fuel," the Web site says. However, when large supplies of crude oil were discovered in Texas and Pennsylvania, the more efficient and plentiful petroleum became the cheaper fuel of choice for auto makers.



Fuel shortages in World War II led both German and British scientists to develop biofuel/gasoline blends. Biofuel.org.uk explains, "In this period, Germany was one of the countries that underwent a serious shortage of fuel. It was during this period that various other inventions took place like the use of gasoline along with alcohol that was derived from potatoes. Britain was the second country [that] came up with the concept of grain alcohol mixed with petrol."



The United States' Environmental Protection Agency (EPA) created the Energy Policy Act (EPAct) in 1992 and revised it in 2005. The U.S. Department of Energy (DOE) says the act was "passed to reduce our nation's reliance on foreign petroleum, and improve air quality."



The DOE states, "Several parts of [the] EPAct were designed to encourage [the] use of alternative fuels, which are not derived from petroleum, that could help reduce dependence on imported oil in transportation. Titles III and V employ regulatory approaches for encouraging the fundamental changes necessary to building a self-sustaining alternative fuel market."



The EPAct gave biofuels a greater platform on which to build demand. That fact, coupled with the sky-high oil prices last summer, has led to increased interest in biofuels as both a cleaner and potentially cheaper and safer supply of energy. However, the cleanliness and price of biofuels varies by what type of plant is being cultivated and converted to fuel.



Ethanol and biodiesel

The first generation of biofuels is, by far, the most common type, and they are also what incite the most passionate debates on the subject. That said, they are, in all likelihood, not the future of the biofuel industry. Ethanol and biodiesel are the most popular of this type of biofuels.



First generation biofuels are primarily derived from two types of sources: crops that have a high sugar or starch content, or using the oils of various plants. Energy giant Shell, which has a division dedicated to finding viable fuel source, states, "When choosing raw material for biofuels, people have looked first to plants that can be grown regularly in large quantities.



"Today's most widespread biofuel, ethanol, is commonly made from crops of sugar cane, corn or wheat. The second most widespread type of biofuel is often made from rapeseed, palm oil or soy beans and is known as FAME (fatty acid methyl esters)."



One downside to such fuels is that they do not provide as much power as gasoline, so more must be used to generate an equivalent amount of power. For this reason, Shell says, "today's standard vehicle engines can only use fuel with small amounts of ethanol or FAME blended in (5-10 percent)."



Engines do exist that can use much higher concentrations of ethanol. Known as flex-fuel engines, vehicles with this type of power plant can use up to 100 percent ethanol, although in the United States automobiles are currently only allowed to use up to 85 percent blends. However, some countries, such as Brazil, permit people to run vehicles on pure ethanol.



Another type of first generation biofuel, biodiesel, is quite different from ethanol. Biodiesel, as described by the National Biodiesel Board, is "made through a chemical process called transesterification whereby the glycerin is separated from the fat or vegetable oil. The process leaves behind two products -- methyl esters (the chemical name for biodiesel) and glycerin (a valuable byproduct usually sold to be used in soaps and other products)."



Biodiesel can be blended with petroleum, but diesel-powered vehicles can also run on 100 percent biodiesel, often with no modifications to their engines, especially newer versions. It is possible to use straight vegetable oil in an engine, but as it is so viscous, it must be thinned by heat so it can be atomized by the fuel injectors, according to Ghent Bio-Energy Valley, a Ghent, Belgium-based partnership focused on developing sustainable bio-energy.



The other first generation biofuels

While biodiesel may be the most common form of biofuel, there are less familiar varieties that still play a role in the industry. Biogas, syngas and solid biofuels are each other types of first generation biofuels. One upside to these fuels is that they do not always require food crops to be made.



Biogas is produced through the process anaerobic digestion, which is the break down of organic materials, including waste, by microorganisms in the absence of oxygen. According to Biofuel.org.uk, "The biogas produced is very rich in methane, which can be easily recovered through the use of mechanical biological treatment systems."



Biogas is often naturally produced in landfills and can be captured, but this method has the potential do harm as it is a greenhouse gas. "A less clean form of biogas is the landfill gas which is produced by the use of naturally occurring anaerobic digesters, but the main threat is that these gases can be a severe threat if escapes into the atmosphere," Biofuel.org.uk explains.



Syngas, which is short for synthesis gas, has a mixture of carbon monoxide and hydrogen in varying amounts. The gas is created through a combination of gasification, combustion and pyrolysis, which is a way to decompose something through the application of heat, of organic material. Having about half the energy of natural gas, syngas is useful when split into its constituent parts to perform a range of tasks, from being a fertilizer to powering up a fuel cell.



Finally, since the category includes fuels like firewood, solid biofuels are the oldest form of biofuels. A wide variety of biomass types are useful as a solid biofuel, including sawdust, dried waste and grass. To improve efficiency, solid fuel is formed into pellets and burned, however burning raw biomass releases a number of unhealthy pollutants, and it still is not very efficient. Ghent Bio-Energy Valley says, "This is not a very efficient way of using biomass and what is more it has a number of documented ill effects for the health of the people using it, such as respiratory diseases because of soot emission and negative effects of CO-emission for pregnant women."



Cellulosic ethanol, the second generation biofuel

The second generation of biofuels comes in the form of cellulosic ethanol. This form of fuel is derived from a substance called lignocellulose, which makes up the bulk of the material in plants. As such, the vast majority of plants on Earth are capable of being a source for cellulosic ethanol.



Solid biofuels and cellulosic ethanol both have similarly huge ranges of sources, but while solid biofuels are basically just burned in a raw or near-raw state, plants are refined considerably to make cellulosic ethanol. Also, first generation ethanol is produced from the parts of plants like wheat, sugar cane and corn that people use for food; however, cellulosic ethanol is made from the remaining, more fibrous plant parts that have no value as food, such as stems, leaves and wood.



It requires a lot of work to remove the sugars from lignocellulose to make cellulosic ethanol, but the resulting fuel still has more energy than is required to make it. Currently two methods are used to make the fuel, one of which strives to separate the sugars, which are then fermented into alcohol, while the other method uses heat to break down plants then uses a different fermentation process to create the fuel.







The first method, known as cellulolysis, involves pretreating the plant material with chemicals or enzymes that begin to break down the plant through hydrolysis. Once the sugars are removed, they are fermented to create alcohol using varieties of yeast, but due to the complexity of the sugars, it can take a lot of yeast to get the job done. However, new yeasts are being created that more efficiently ferment the sugars, even ones that can perform hydrolysis and fermentation at the same time.



The other method to create cellulosic ethanol is called gasification. Instead of using a pretreatment to cause hydrolysis to separate the sugars that are then fermented, gasification uses heat to break down the plant into hydrogen, carbon monoxide and carbon dioxide. After, the gas is fermented using microbes that convert it to ethanol and water. Finally, the water is removed using distillation, leaving the ethanol.



While corn and wheat and other food crops can be used to create cellulosic ethanol, just about any other non-food plant can be used. Even though the use of non-food plants does not directly take food off people's plates, it does have to contend with food crops for arable land. One possible way to help solve this problem is using hardier plants that can grow in areas where food crops cannot, thus not competing with them. One such plant that is gaining in popularity is switchgrass, but to be truly useful as a fuel, a lot of it must be grown, which still requires a lot of land.



Competing with food crops for land is arguably cellulosic ethanol's biggest challenge, but not the only one. It also is still very expensive to process the plants. The microbes and enzymes it takes to break down the plants are not yet cheap to produce, and it takes a fair number of them to get the job done.



The DOE says, "To bring down costs, continued progress is needed in the development of energy crops dedicated to biofuel production, biomass-collection technologies, pretreatment methods that minimize the release of inhibitory by-products, and more efficient enzymes and microbes robust enough to withstand the stresses of industrial processing."



Also, the process of making the biofuel can have a negative impact on the environment. The chemicals that are used to pretreat plants can be harmful, and the heat used to break down plants through gasification is often generated through the use of hydrocarbons, primarily natural gas.



Biofuels: The Next Generation - Algae

The third generation of biofuels comes in the form of the water-based plants known as algae. The ability to transform algae into a biofuel is a burgeoning science, and could hold the future of the biofuel industry, although not without some hurdles to leap over first.



The DOE division of Energy Efficiency and Renewable Energy (EERE) explains, "Microalgae are single-cell, photosynthetic organisms known for their rapid growth and high energy content. Some algal strains are capable of doubling their mass several times per day. In some cases, more than half of that mass consists of lipids or triacylglycerides--the same material found in vegetable oils. These bio-oils can be used to produce such advanced biofuels as biodiesel, green diesel, green gasoline and green jet fuel."



Once algae are grown and cultivated, there are three primary methods of extracting their oil. The first and simplest method is in the form of the oil press or expeller. Algae biofuel experts at Oilgae explain, "When algae is dried it retains its oil content, which then can be 'pressed' out with an oil press. (…) While more efficient processes are emerging, a simple process is to use a press to extract a large percentage (70-75 percent) of the oils out of algae."



The second extraction technique is the hexane solvent method, which can produce up to 95 percent of the oil in algae. Oilge says, "After the oil has been extracted using an expeller, the remaining pulp can be mixed with cyclohexane to extract the remaining oil content. The oil dissolves in the cyclohexane, and the pulp is filtered out from the solution. The oil and cyclohexane are separated by means of distillation."



The algae oil specialists say that the hexane solvent method requires the use of chemicals, such as hexane, benzene and ether. The downsides to using these solvents include the hazard of an explosion, as well as the risk that benzene is classified as a carcinogen.



Finally, the supercritical fluid extraction method can draw out up to nearly 100 percent of the oils. In this process, CO2 is pressurized and heated until it is both a gas and a liquid, at which point it is mixed with algae, removing the oil. The fact that this method requires additional complex machinery to create the pressure has detracted from its popularity.








Algae have a number of upsides over other biofuels. According to EERE, microalgae can potentially produce 100 times more oil per acre of land than soybeans or any other oil-producing crop. In addition, algae do not have to compete for land with food crops as it can be cultivated in large open ponds or closed photobioreactors, which can be sited in deserts and other non-arable areas.



Another plus is that algae are not picky and EERE says, "Many species of algae thrive in seawater, water from saline aquifers, or even wastewater from treatment plants." Also, the production of algae can actually mitigate carbon dioxide. EERE clarifies, "During photosynthesis, algae use solar energy to fix carbon dioxide (CO2) into biomass, so the water used to cultivate algae must be enriched with CO2. This requirement offers an opportunity to make productive use of the CO2 from power plants, biofuel facilities, and other sources."



The primary downside to using algal biofuels is that they are not economical to produce, at least not with current technology. EERE says, "Based on conservative estimates, algal biofuels produced in large volumes with current technology would cost more than US$8 per gallon (in contrast to US$4 per gallon for soybean oil today)."



According to EERE, to lower the cost of production, research must focus on a number of sectors, including controlled mass cultivation, algae for wastewater treatment, and harvesting and oil extraction technologies. The group says, "Particular attention must be paid to the engineering of sustainable microalgal systems and to the regulatory and environmental landscape."

http://www.energycurrent.com/index.php?id=3&storyid=15704

[timhyma]

Utah’s Oil-Shale Resources Less Than Estimated, But Increased Ethanol and Biodiesel Use Help Reduce Foreign Oil Dependence
Deseret News reports that Eastern Utah may have less than a quarter of the oil-shale resources that had previously been estimated. Meanwhile, the federal government is opening up more public lands for oil development, and the Bureau of Land Management recently conducted a sale to auction off thousands of acres in Utah that are considered prime parcels for oil and gas development. Amid the push for more development of domestic oil resources, an analysis released Wednesday by the Energy Department’s Energy Information Administration projects virtually no growth in U.S. petroleum use through the year 2030, due to increased use of ethanol and biodiesel and a push toward greater automobile fuel efficiency, including the growing popularity of gasoline-electric hybrid vehicles. Regardless of the source of fuel, Utah supports efforts to decrease foreign oil dependence.
» Read full article on[Biodiesel and Ethanol Investing]

[timhyma]

Michigan Lawmakers Pass Renewable Fuels Incentives
Huron Daily Tribune reports that Lawmakers have passed a plan that will encourage the use and production of renewable fuels in Michigan by providing a tax credit to gas station owners who upgrade or purchase new pumps and tanks that sell ethanol or biodiesel fuel. The aim is to increase farmers’ profits and to create and protect local jobs, as well as to break dependence on foreign oil. The credit will begin in 2009 and would be available over the next three years with a limit of $1 million overall and $20,000 per taxpayer. The House also passed a plan that will create an Alternative Fuels Fund. The fund will award grants to improve the production of renewable fuels in Michigan. The plan also creates an income tax checkoff option that will help finance the fund.
» Read full article on[Biodiesel and Ethanol Investing]

[timhyma]

Ethanol innovator driven to replace oil
'Quiet guy' family man the force behind Poet
Thom Gabrukiewicz • [e-mail] • January 4, 2009

Numbers? Don't get him started. Jeff Broin loves the crunchiness of numerals, the facts, the figures - the absolute language of science behind turning a kernel of corn into biofuel.

Specifically ethanol, or ethyl alcohol, a straight-chain molecule with the structure of C2H5OH - six atoms of hydrogen, two atoms of carbon and one atom of oxygen. It's one of the oldest known recreational drugs known to man - Martini anyone? - which has become the single largest additive to the world's gasoline supply.

Sioux Falls-based Poet produces 1.5 billion gallons of ethanol a year at the 26 plants it manages across seven states, making it the leading ethanol producer in the world, according to the Renewable Fuels Association. Poet produces another 3.5 million tons of distillers grains, a protein-rich animal feed marketed under the Dakota Gold label.


Broin, Poet's 43-year-old chief executive, has been dubbed "Mr. Ethanol" by Forbes magazine. Soft-spoken and polite, he declines to disclose his net worth. Instead, he's eager to talk about ethanol and the promise the simple corn plant can have to slake the world's fuel thirst. Well-respected in the industry, Broin is a major player. He made $89,900 in campaign contributions, to Democrats and Republicans alike, in 2008. He is as complicated as he is quiet.

"Clearly, he has been extremely successful," said RFA president Bob Dinneen. "He has been a leader in this industry."

Broin seems to find comfort in numbers. At a home-office tour, Broin stops in a cavernous room filled with desk pods and copious computers; he raises a hand, smiles, points.

"We get 4,000 data entry points a second from each of our plants right here," he says of Poet Plant Management, one of five subsidiaries under the Poet banner. "We can even run the plants from here, for a short time. Last summer, we actually did that at one of our Iowa plants - there was a tornado warning. In fact, I think the plant manager ran it from his house."

Firing back at the critics of ethanol and subsidies
But as Broin continues to build his ethanol empire - the privately held company will post $4 billion in revenue this year, along with "a slight profit" - the industry faces numerous challenges. Once the darling of the alternative energy movement, in 2008, ethanol was blamed for rising food prices, global starvation and an increase in greenhouse gas emissions from intensive farming practices.

Contraction has hit the industry. Publicly traded VeraSun of Sioux Falls sought Chapter 11 protection in October. Smaller, independent plants have shuttered from Ohio to Colorado.

Groups such as the Clean Air Task Force, Environmental Working Group, Friends of the Earth and the Grocery Manufacturers Association have called on Congress to end subsidies and mandates for corn-based ethanol production.

"Despite the subsidies, ethanol is not competitive in the marketplace, and the industry only survives because politicians shovel our money into their pockets," said Duane Parde, president of the National Taxpayers Union. "We must end the bailouts and subsidies for industries that are unable or unwilling to stand on their own."

Broin, who in November helped launch the trade group Growth Energy to counter the claims, bristles at the slings, all while pushing ethanol as the replacement for gasoline in the U.S. during the next 20 years and the world sometime later.

"There is not a shortage on the means to produce food and fuel on the surface of Planet Earth," he says, tapping his fingers for effect on the conference table in his spacious, yet spartan, office. "There are those out there who would have you believe there's a problem out there. There is not a problem out there."

The government gave domestic ethanol producers about $1.3 billion in subsidies in 2007, according to an Iowa State University study. It also put a 54-cent-a-gallon tariff on foreign ethanol, which largely affects Brazilian producers that make ethanol from sugar cane. That tax is on top of the 51-cent federal excise tax exemption given to fuels that are mixed with ethanol. The 2008 Farm Bill lowers that credit to 45 cents a gallon.

"In 2007, the tax incentive, that tax break, was $3.3 billion, but the ethanol industry returned $4.6 billion in tax revenue to the Treasury," Broin says. "We saved $8 billion in farm payments because we eliminated farm payments for the first time in almost 40 years. We saved the consumer $40 to $60 billion in gas prices with extra supplies that kept prices down. We added $47 billion to the (Gross Domestic Product)."

Americans burn about 140 billion gallons of gasoline a year, according to the Energy Information Administration. The Renewable Fuel Standard now calls for blending 10.5 billion gallons of renewables this year. That mandate will increase to 36 billion gallons by 2022.

Of those 36 billion gallons, 22 billion must be made from sources other than corn kernels.

And President-elect Obama has floated a plan to expand the fuel standards to reach 60 billion gallons by 2022.

Just to wean the country off foreign oil. Ethanol's time is now - and it is the future, Broin says.

"That $3.3 billion investment?" Broin asks, rhetorically. "I think that's the best investment the government's ever made. I'm just giving you the facts here - best investment ever made."

An empire starting on family farm in Minnesota
Poet was born out of the collapse of the first Gold Rush ethanol promised in the 1970s and '80s when the technology was no better than that of a bootlegger's whiskey still. Broin's father, Lowell, began experimenting with ethanol production on the family's farm near Wanamingo, Minn., in 1983.

"Actually, my dad was always interested in new, unique things," Broin says. "At this point, I'm not even involved - I'm away at college."

By 1986, the farm was producing 100,000 gallons and the family went looking for a bigger investment.

They bought a bankrupt ethanol plant in Scotland, S.D.

"They were willing not only to sell the parts, but the land," Broin says. "The whole plant. The family said, 'Let's look at this thing.' They asked me to run the company, since I had the business degree."

The Scotland facility, which is the only plant Poet owns outright, holds a special place for Broin. It's where much of the research and development practices - $50 million over the past six years and $20 million alone in 2008 - are polished.

It's where in November, the company started producing ethanol from corn cobs - the next-generation biofuel called cellulosic ethanol - on a pilot-project basis, with the aid of an $80 million grant from the Department of Energy. Broin predicts Poet will be producing cellulosic ethanol in commercial amounts - about 25 million gallons a year - by 2011 at Poet Biorefining-Emmetsburg, in north-central Iowa.

Scotland also is where, to save on rent, Broin lived in three rooms upstairs from the plant's entrance during start-up.

"When he was here, ethanol was his career - well, it still is," says John Finck, plant manager at Poet Biofuels-Scotland, who Broin first hired as a maintenance man 17 years ago. "He takes great interest in it, the whole thing. Innovation, determination drives him."

By 1991, Broin and his brothers Rob and Todd increased Scotland's production to 3 million gallons. It also was the year they created Broin & Associates (now called Poet Design & Construction) and began to build plants across the Midwest.

"We have been profitable every year since our inception," he says. "I've often said it's all about the people - and I'll bet on our people every time."

In 2006, Broin bought out his brothers' shares in Broin Cos. In 2007 - his 20th year as head of the family business - Broin changed the company's name to Poet, saying, "Just as a poet takes everyday words and turns them into something valuable and beautiful, our team takes information that comes from common sense to leave things better than before."

Understanding his suppliers and having a vision
Poet succeeds because of its business model, say many of the farmers and ranchers who are investors. Poet is always the largest investor in its plants, and by designing, building and managing each, it can keep much of the control.

But remember the 4,000 data points per second? Each plant also runs independent of the others, and each has access to the numbers. Competition drives each plant to run with cool, efficient profitability.

"The Broins come from the Earth," says rancher Jerry Rubendall, an investor in Poet Biofuels-Mitchell. "That agriculture background is just so important. It's just a well-run company, best one going. Jeff understands us, but he knows the business. I'd invest all over again in a minute."

At Poet's Project Liberty field day in Emmetsburg, Broin moves through the crowd of farmers - guys in the caps and Carhartt overalls he needs to persuade to harvest the corn as well as the cobs - in jeans, button-down shirt, V-neck Poet sweater and a black jacket. He shakes hands, chats up the farmers and equipment manufacturers but eats his pork sandwich and baked beans away from the crowd. He sits alone, but for the company of his public relations director Nathan Schock.

Youthful, reserved, trim, Broin nearly stares through you with his gray-blue eyes as he talks. He chooses his words carefully, measures his sentences prudently.

Broin doesn't seek the public eye; it was thrust upon him. Success will do that.

"He's a quiet guy by nature," said Sen. John Thune, R-S.D., a strong supporter of the ethanol industry who has known and worked with Broin for years. "He loves what he does, he loves the technical nature of the business. But he also realizes that this industry needs a face, a leader in telling ethanol's story to the public, not only in America, but to the world. Jeff has assumed that role, and I give him great credit for it."

Broin admits he doesn't read much past trade journals. He does a little hunting, fishing, golfing and skiing - snow and water. But he spends most of his free time with his wife, Tammie, and children Alyssa, 16, Miranda, 13, and Austin, 11, at the family's home in Dell Rapids.

"I think Jeff is a very genuine person," said Hurley farmer Darrin Ihnen, a shareholder in Poet Biofuels-Chancellor who delivered the first corn cobs to Project Liberty. "I've had the opportunity to go on a few business trips with him and he's the kind of the guy who wants to get back at night to get to his daughter's basketball game. He's got family on the mind."

Ihnen says through family and ethanol, he's gained an important insight into Broin. "I can give him an agriculture-farmer perspective he doesn't get from an employee. He gives me his vision of the future, and that vision is cellulosic."

But whatever new technology develops in the advance of biofuels, Poet always will be an ethanol company, Broin says.

"Long-term, corn will become the oil of the future," he says. "I don't think people understand yet, that you can get everything from a corn plant that you can get from a barrel of oil - with the exception that it is renewable."

And he plans to steer the ethanol industry into its uneasy course for the foreseeable future.

"I am very driven by the opportunity to change our nation's and the world's energy supply and reduce our independence on foreign energy supplies," Broin says. "Agriculture and ethanol have the potential to fuel and feed the world, and we're very excited about that mission. And, quite frankly, that passion grew on me, that this was going to be so important for our country, our world."

Reach Thom Gabrukiewicz at 331-2320.

Can ethanol replace gasoline in this country?

"If you look at the projected increase in corn yields over the next 20 years, we can produce 50 billion gallons of corn-based ethanol, or 430 percent more than we do now, and increase the amount of food and feed by 40 percent. It you add cellulosic ethanol, we can produce 85 billion gallons on top of that, basically replacing gasoline."


How does a bailout of the auto industry sit with you?

"We think it's important to have a domestic auto industry. They have been great supporters of ethanol. We believe that they understand that the only available option to this country to significantly reduce oil imports in the next 20 years is ethanol."


What is your hope for the industry under President-elect Obama's administration?

"We see ourselves very aligned with President-elect Obama's three major platforms - energy independence, the environment and jobs. And we see our industry goals are exactly the same."


What makes Poet different from other companies?

"The culture we've created at Poet allows people to thrive, no question. Our culture revolves around three statements: 'We're all on the same team, we leave our egos at the door and we always over-communicate.' We work very hard at maintaining a small business environment even while becoming a large company."


Do you have any political aspirations?

"I've got a full-time job here. We have a lot to accomplish right here, so I don't need to speculate on the future. It's very hard to see past five years, so I don't."

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BrianJDonovan wrote:

Louisiana Enacts the Most Comprehensive Advanced Biofuel Legislation in the Nation

Governor Bobby Jindal has signed into law the Advanced Biofuel Industry Development Initiative, the most comprehensive and far-reaching state legislation in the nation enacted to develop a statewide advanced biofuel industry. Louisiana is the first state to enact alternative transportation fuel legislation that includes a variable blending pump pilot program and a hydrous ethanol pilot program.

Field-to-Pump Strategy
The legislature found that the proper development of an advanced biofuel industry in Louisiana requires implementation of the following comprehensive “field-to-pump” strategy developed by Renergie, Inc.:

(1) Feedstock other than corn
(2) Decentralized network of small advanced biofuel manufacturing facilities
(3) Use of blending pumps rather than splash blending
(4) Hydrous ethanol

Please feel free to visit Renergie’s weblog (www.renergie.wordpress.com) for more information.
http://www.argusleader.com/article/20090104/NEWS/901040311/1001/rss01

[timhyma]

Crush spreads are getting smaller again, down to 33 cents

CBOT Agriculture and Ethanol Closing Prices : Mar corn closed higher by 14.25 cents to $4.1225 per bushel, Mar soybeans closed higher by 37.50 cents to $9.5650 per bushel, Mar wheat closed higher by 17 cents to $5.9925 per bushel, Jan Ethanol closed higher by $0.049 to $1.662 per gallon.

[timhyma]

Oil and gas producers wary about Obama energy picks
By Ana Radelat
WASHINGTON — President-elect Obama is pushing for a massive promotion of alternative energy sources, but his energy team nominees aren't likely to echo his tough campaign talk criticizing the oil industry.


Obama selected Steven Chu for Energy secretary. A 60-year-old professor of physics and molecular and cell biology at the University of California, Chu is also director of Lawrence Berkeley National Laboratory and a Nobel Prize winner. As a scientist with little political background, Chu sought scientific solutions to reverse global warming.

Chu's scientific background — and support of the national laboratories, the federal government's premier energy research centers — heartens Independent Petroleum Association of America lobbyist Lee Fuller.

"He doesn't come to the table with preconceptions either way," he said.

Rep. Steve Scalise, R-Jefferson, hopes Chu will take an "all of the above" approach to energy policy that includes fossil fuels as well as conservation measures and research to further develop renewable alternative sources of energy.

"To be successful, Dr. Chu will have to recognize the importance of energy producing states like Louisiana and the role we can play in reducing our dependence on Middle Eastern oil," Scalise said.

Obama's choice of Colorado Sen. Ken Salazar to head the Interior Department, which has authority over oil and gas leases and other industry issues, has drawn more concern.

Salazar, a moderate Democrat, has a mixed record on oil production. He opposes opening the Arctic National Wildlife Refuge to drilling and the development of shale oil production in the West.

But in 2006 Salazar voted to open new areas of the Gulf of Mexico to production and to share the federal revenues from that new production with Louisiana and other Gulf Coast states.

This year, he joined Sen. Mary Landrieu, D-New Orleans, and other Senate moderates who tried to fashion a compromise between pro-drilling senators and those who wanted to keep a drilling ban on most of the U.S. coastline.

Landrieu, who backed Salazar's efforts to block shale oil production, called the Colorado Democrat "thoughtful, pragmatic and balanced in his approach to energy and natural resource issues."

"He understands that we can responsibly produce domestic energy while still protecting the environment," she said.

The IPAA's Fuller said Chu and Salazar "are people we can work with." Others in the industry are more skeptical.

Donald Briggs, president of the Louisiana Independent Oil and Gas Association, calls Obama's energy policy choices "the dream green team" because he believes they will ignore the promotion of biofuels — including natural gas — and focus instead on biofuels and other alternative energy sources over the production of fossil fuels.

Obama's choice of former Iowa Gov. Tom Vilsack to head the Department of Agriculture indicates the new administration will continue to promote ethanol production. Both Obama and Vilsack are regarded as staunch advocates of ethanol and other biofuels as a way to reduce the nation's reliance on foreign oil.

Briggs said he appreciates Salazar's willingness to consider the expansion of offshore drilling, but will reserve final judgment on Obama's cabinet choices.

"They could have been worse, but they also could have been better," he said.

The usually outspoken Sen. David Vitter, R-Metairie, is deferring his opinion.

"I'm not sure exactly what these picks will mean, we'll have to see," Vitter said. "What I fear most is that they will reinstate the moratoria on domestic production that we just lifted."

One of the first energy issues Obama must grapple with is whether to impose an executive moratorium on drilling along the Atlantic and Pacific coasts that was lifted by President George Bush. The new Congress must also decide whether to impose its own ban on offshore drilling in those areas, which the outgoing Congress allowed to expire.

Rep. Charles Boustany, R-Lafayette, said he would encourage Chu and Salazar to "expand energy exploration off our coast to create high-paying jobs here in Southwest Louisiana."

Chu and Salazar are expected to easily win confirmation in the Senate Energy and Natural Resources Committee, which has scheduled confirmation hearings for Jan. 13 and 15. But some of the panel's Republican lawmakers are likely to grill them about offshore drilling, ANWR and the future role of the strategic petroleum reserves, an underground storage system of federal oil in salt caverns in Louisiana and Texas that would be tapped if there is a national emergency.

Lawmakers, however, won't be able to vote on one member of Obama's energy team, former Environmental Protection Agency Director Carol Browner, because her job does not require Senate confirmation.

Browner will serve in the newly created position of presidential assistant on energy and climate change, a moved hailed by environmentalist. But energy producers worry Browner will impose new regulations on greenhouse gases produced by fossil fuels and lead a campaign to re-establish the offshore drilling ban.

http://www.shreveporttimes.com/article/20081222/NEWS01/812220309

[timhyma]

long read, but good, imo

ETHANOL COULD BE WEAK LINK IN CALIFORNIA ENERGY NETWORK
18 December 2008
http://www.sanfranciscosentinel.com/?p=18085

[timhyma]

Connecticut awards $3.1 million in biodiesel grants
http://www.biodieselmagazine.com/article.jsp?article_id=3090

Re-New-able York City
http://www.biodieselmagazine.com/article.jsp?article_id=3068

[timhyma]

Sale of bankrupt Gateway Ethanol approved
Comments (0) Recommend (0)
BY RICK PLUMLEE
The Wichita Eagle
The sale of Pratt's Gateway Ethanol plant was approved today by a federal judge in Kansas City.

Larry Frazen, an attorney for Bryan Cave and who handled the sale, said Minneapolis-based investment bank Dougherty Funding bought the plant's assets for "just north of $60 million."

Dougherty had submitted a bid of $59.93 million. No other bids were made.

Frazen said U.S. Bankruptcy Judge Dale Somers approved the sale and is expected to sign the order in the next day or so.

Dougherty holds more than $63 million loans on Gateway's property in Pratt. As of Aug. 31, the company reported assets of $95.7 million and liabilities of $95.4 million.

Orion Ethanol owns 62 percent of the company, which filed for Chapter 11 bankruptcy reorganization Oct. 5.

Gateway began some ethanol production in October 2007, but it shut down shortly after that without ever reaching full production.

[timhyma]

Ethanol's troubles have sapped the dreams of an Indiana town


Battered by financial woes, the corn-based biofuel industry faces a shaky future, as does the town of San Pierre, which had counted on a distillery plant for its revival.

By P.J. Huffstutter
November 18, 2008
Reporting from San Pierre, Ind. -- The air smells clean and sweet off the sprawling corn and spearmint fields, but for this unincorporated town of 156, it is the smell of failure: the failure to reap the rewards of the ethanol boom.

Construction crews were scheduled to start digging up the sandy soil next spring to make way for an ethanol distillery plant in San Pierre. The plant promised to revive the town's economy, bring high-paying jobs to one of Indiana's poorest counties and double its tax rolls, a scenario that has played out repeatedly in struggling towns across the Midwest over the last three years.



Map Photos: Indiana town misses out...But last month, the developers of the San Pierre plant announced that the $62-million deal was dead. Banks involved in the project had cut off their lines of credit. Desperate calls to dozens of other financial institutions led to the same answer: No.

Already battered by other market forces, the ethanol industry has been hit hard by the banking world's credit crunch, and the seemingly bright future of corn-based biofuel has been cast in doubt.

In Pratt, Kan., the grinding mill machinery stands silent inside the Gateway Ethanol plant. It was open for less than six months before running out of money, and there were no bank loans available to keep it going. The firm recently filed for bankruptcy.


In Royal, Ill., developers abandoned efforts to build a plant there and in six other locations, citing an inability to get financing. Plants have been shuttered, or plans for new ones halted, in Mead, Neb.; Belle Fourche, S.D.; Blairstown, Iowa; and Melrose, Minn.

Less than two years ago, the idea of distilling corn into a gasoline substitute won over Wall Street and rural residents alike, with visions of reviving the weakened farm economy and investing in greater U.S. energy independence and renewable energy. Other agricultural businesses -- from local cooperatives to small-town merchants -- saw a boost, as farmers suddenly had money for new clothes, spa visits and farming equipment.

Indiana was slow to join this party, in part because much of the surplus corn grown in the state is shipped to livestock producers in the U.S. Southeast or to Asia, said Chris Hurt, an agricultural economist with Purdue University in West Lafayette, Ind. And unlike states such as Iowa, South Dakota and Minnesota, Indiana legislators didn't provide state subsidies for ethanol production.

In 2005, there was only one ethanol plant operating in Indiana. But by the end of 2006, after the state General Assembly pushed through millions in incentives and Gov. Mitch Daniels signed legislation mandating that state vehicles use biofuels when possible, there were plans to build at least 25 more, Hurt said.

But the current credit squeeze, along with other market developments, shut down this Indiana town's ethanol dreams. It is just the latest development in a rocky year.

First, corn prices jumped from around $2.50 a bushel in 2005 -- when ethanol plant construction began to take off -- to nearly $8 this summer on the futures market, before falling to below $4 this week.

The cost of growing corn skyrocketed, as fertilizer and seed costs jumped as much as 40%. Meanwhile, crude oil and gasoline prices -- which determine the value of ethanol on the U.S. trading markets -- have come down, narrowing the difference between the cost of gasoline and ethanol.

And the number of lawsuits -- filed by environmentalists or local residents who don't want their rural community turned into a site for industry -- aiming to block new production facilities from being built has steadily grown.

There were 139 ethanol plants operating in the U.S. as of January and 61 additional refineries under construction, according to the Renewable Fuels Assn., a Washington-based trade group.

But financial woes have led at least 27 plants to close, halt construction or be scrapped, according to DTN, an agricultural news and information service.

"There's been no credit for months," said Todd Neeley, who covers biofuels for DTN. "Even the top ethanol producers are having a difficult time getting financing. For these smaller projects, like San Pierre, they had no chance of surviving in this kind of environment."

Ethanol proponents insist this is just a temporary bump in the biofuel's potentially rich future, and may inspire producers to expand their operations to create ethanol out of other cheap materials, such as crop waste, yard cuttings, or wood and forest products.

"There is a lot of overblown concern," said Bob Dinneen, president and chief executive of Renewable Fuels Assn., the industry's main trade group. "We are not the only industry hurt by what's happening on Wall Street. But there is plenty of room for growth once the credit markets ease."

In the meantime, the dream of a revival is on hold for communities such as San Pierre.

Fewer farm families now work and own the land around San Pierre where, like many Midwestern agricultural towns, residents have slowly left over the decades.

The young people who stay often work factory jobs in Valparaiso (30 miles north) or the suburbs of Chicago (about 80 miles northwest). Retired city dwellers, here to escape urban life, worry about stretching their dwindling retirement funds.

That's the kind of glum chatter Freda Risner hears these days in The Oasis, her bar in San Pierre.



Map Photos: Indiana town misses out..."Those people on Wall Street? They don't have the sense to know how they're hurting us," said Risner, 69. "That plant could have helped the county. It could have helped save San Pierre."

Outside, about all that's left of downtown San Pierre are three churches, two bars, a post office, a veterinarian and a used-car lot that never opens. Scott Harper bought the lot with his two brothers last fall as a side business near the family farm. When they heard about the ethanol project, the trio gleefully envisioned a financial trickle-down that would reach their pockets.

"We figured if we could just hold out long enough, the lot would do great," said Harper, 22, who lives and works on the family's farm eight miles south of town. But sales plummeted, then stalled. The brothers laid off their sole employee months ago. Now, they don't bother coming by the office. They listed the vehicles on EBay, but no one bid.


For some residents, the news of the ethanol plant's demise was cause for celebration. Dawn and Jason Danford have posted red and white signs reading "No Ethanol Plant" on the edge of their corn fields.

The farm couple, who helped spearhead a lawsuit to prevent the plant from being built, worried it would sap the town's water system and taint their wells. They warned neighbors and friends that the jobs at the plant would be filled by outsiders, and the tax benefits would be minor, at best.

"I'm not happy about the way the economy's going, but I'm grateful for anything that helped kill off that ethanol plant," said Dawn, 35, a mother of three.

The land where the ethanol plant would have been is muddy and empty. Its owners, expecting the field to be bulldozed and covered in blacktop, hadn't bothered to nurture the soil. They hope that, next year, this land will be thick with corn -- to be sold to an ethanol plant 35 miles southwest of here, in Rensselaer, Ind.

Huffstutter is a Times staff writer.

[e-mail]


http://www.latimes.com/news/nationworld/nation/la-na-ethanolplant18-2008nov18,0,4427938.story

[timhyma]

7:04AM Green Plains Renewable Energy announces formation of joint venture for algae production (GPRE) 2.92 : Co announces the formation of a joint venture to commercialize algae production as part of its commitment to "next" generation biofuels. BioProcess Algae, is a joint venture between affiliates of Green Plains, CLARCOR (CLC), BioProcessH20 and N.T.R. Green Plains has committed approximately $1.4 million initial funding for a 25.5% interest in BioProcess Algae.

[timhyma]

Biofuel costs, benefits is focus of public forum, Nov. 14

By Gerry Everding


Nov. 11, 2008 -- The profitability of corn ethanol processing, the costs and benefits of ethanol as a fuel source, the impact of the ethanol boom on rural America and the future of the biofuel industry will be among topics explored at a conference on the economics of ethanol from 8:30 a.m. to 4:30 p.m. Nov. 14 in the main auditorium of the Eric P. Newman Education Center on the medical school campus of Washington University in St. Louis.

Free and open to the public, the conference kicks off with a keynote address by Mark Stowers, vice president of research and development with POET Energy. Stowers explores the evolution of the ethanol industry in the United States and challenges facing the industry.


Geared for non-technical audiences, the conference also includes sessions on the environmental effects of ethanol production, energy balance with fossil fuels, effects on food prices, subsidy rate relative to oil and gas, and effects on farm production decisions.

Speakers include nationally recognized scholars and business leaders, such as Paul Gallagher, Department of Economics, Iowa State; Douglas Tiffany, Department of Applied Economics, University of Minnesota; Jason Henderson, Federal Reserve Bank of Kansas City - Omaha Branch; Jerry Taylor, CATO Institute; Rick Tolman, CEO of the National Corn Growers Association; and Nicholas Kalaitzandonakes, Department of Agricultural Economics, University of Missouri - Columbia.

The program is sponsored by the Research Division of the Federal Reserve Bank of St. Louis and two WUSTL research and policy centers: the Weidenbaum Center on the Economy, Government and Public Policy and the International Center for Advanced Renewable Energy and Sustainability.

For registration and other information, including a detailed agenda of panels and speakers, visit wc.wustl.edu or contact conference co-organizer Melinda Warren at 935-5652; [e-mail].



--------------------------------------------------------------------------------


Participant bios:

Mike Edgerton is Monsanto's Technology Lead for Corn Ethanol and Quality Traits. Mike is responsible for supporting the on-going business initiatives in corn quality traits and developing new opportunities in the ethanol and feed markets. Mike holds a Ph.D. in protein engineering and molecular genetics from the University of North Carolina, Chapel Hill and a B.A. in molecular biology from UC-San Diego.

Steven M. Fazzari is associate director of the Weidenbaum Center and professor of economics in Arts and Sciences at Washington University in St. Louis. His research explores two main areas: the financial determinants of investment and R&D spending by U.S. firms and the foundations of Keynesian macroeconomics. He has won numerous teaching awards and is especially honored to have received the 2002 Missouri Governor's award of excellence in university teaching, the 2007 Emerson Award for teaching excellence, and Washington University's distinguished faculty award, also in 2007. Fazzari received his Ph.D. in economics from Stanford University in 1982.

Paul W. Gallagher is an associate professor in the economics department at Iowa State University. He has published numerous articles and given dozens of presentations about various aspects of bioenergy markets and industry during the past 10 years. Gallagher received his Ph.D. in agricultural economics from the University of Minnesota. He teaches courses on policy analysis, agricultural trade and econometrics at Iowa State.

Thomas Garrett is assistant director of the Economic Research Division of the Federal Reserve Bank of St. Louis. His areas of interest are public finance, regional economics and public choice. Garrett received a Ph.D. in economics from West Virginia University and a bachelor's degree in economics from Shippensburg University.

Jason Henderson joined the Omaha Branch of the Federal Reserve Bank of Kansas City in August 2006 as Branch Executive. In this role, he serves as the Bank's regional economist and representative in the state of Nebraska. Prior to being promoted into this position, he served as Senior Economist with the Center for the Study of Rural America at the Federal Reserve Bank of Kansas City. Jason began his second stint at the Bank in 2001 after completing his Ph.D. degree from Purdue University. He has a M.S. degree in agricultural economics from Purdue University and a bachelor's degree in economics from Central College in Pella, Iowa.

Nicholas Kalaitzandonakes is the MSMC endowed professor of agribusiness strategy and the director of the Economics and Management of Agrobiotechnology Center (EMAC) at the University of Missouri-Columbia. His research, teaching and outreach focus on the economics and policy of agrifood biotechnology and other agribusiness innovations. He received a bachelor's degree in agricultural economics from the University of Athens, Greece, and his master's and doctoral degrees in agricultural economics from the University of Florida.

Seth Meyer is an analyst for the Food and Agricultural Policy Research Institute (FAPRI). He is also research assistant professor within the Department of Agricultural Economics at the University of Missouri-Columbia. A native of Eastern Iowa, he obtained a bachelor's degree in community and regional planning and a master's degree in agricultural economics from Iowa State University. He earned his Ph.D. in agricultural economics from the University of Missouri-Columbia.

Himadri Pakrasi is the Director of the International Center for Advanced Renewable Energy and Sustainability (I-CARES) and the George William and Irene Koechig Freiberg Professor in the School of Arts and Sciences at Washington University in St. Louis. Pakrasi earned a doctorate in biology from the University of Missouri-Columbia in 1984. He earned a master's in physics from the University of Calcutta in 1976 and a master's in biophysics from the University of Rochester in 1980. He earned a bachelor's degree in physics from Presidency College in Calcutta in 1973.

Martha Schlicher serves as the vice president of technology and business development at GTL Resources plc. In this role she oversees the adoption of smart plant and second-generation technologies at GTL Resources existing ethanol production facility and merger and acquisition activities. Prior to joining GTL, Martha led the successful start up and industry utilization of the National Corn to Ethanol Research Center (NCERC). Martha earned a bachelor's degree in chemistry from Indiana University; a Ph.D. in Organic Chemistry from the University of Illinois and an M.B.A. from the Kellogg Graduate School of Management at Northwestern University.

Max Schulz is a senior fellow at the Manhattan Institute's Center for Energy Policy and the Environment. His work focuses on the practical application of free-market principles in energy debates at the international, federal, and state levels, with a particular examination of the intersection of energy, the economy, and the environment. He received bachelor's degree in history from Vanderbilt University.

Mark D. Stowers joined POET in October 2006 as the vice president of research and development. In that capacity, he is responsible for overseeing scientific and technology advancement for the company, including cellulosic ethanol. Stowers came to POET from MBI International in Lansing, Mich., where he has served as president and CEO since 2001. Stowers graduated from Appalachian State University with a bachelor's degree in biology before earning master's and doctoral degrees in microbiology from North Carolina State University. He completed post-doctoral studies at Cornell University's Boyce Thompson Institute.

Jerry Taylor is a senior fellow at the Cato Institute in Washington, D.C. As a senior fellow, he challenges the "market failure" critique of free markets as they pertain to energy policy and environmental protection. Under his direction, the Cato Institute has become an influential critic of federal and state environmental policy. Taylor is active on the lecture circuit and one of the most frequently cited experts in energy and environmental policy in the nation.

Douglas Tiffany is a research fellow in applied economics at the University of Minnesota. He works on energy-related topics, including biomass fuels and energy requirements of agricultural production. Collaborating with others he has estimated the economics of using biodiesel to reduce emissions in underground mines, biodiesel production economics, ethanol plant economics, the grain flow patterns of Minnesota, and impacts of the Kyoto Accord on Midwestern agriculture. He earned bachelor's and master's degrees in agricultural economics at the University of Minnesota.

Rick Tolman serves as chief executive officer of the National Corn Growers Association (NCGA), a producer directed trade association headquartered in St. Louis, Mo. Tolman was recognized as the 2008 Agribusness Leader of the Year by the National Agri-Marketing Association. He is a graduate of Brigham Young University and received his master's degree in agricultural economics from Purdue University.

Murray Weidenbaum is honorary chairman of the Weidenbaum Center and Mallinckrodt Distinguished University Professor at Washington University in St. Louis. He is known for his research on economic policy, taxes, government spending, and regulation. In 1981 and 1982, he was President Reagan's first chairman of the Council of Economic Advisers. Earlier, he was the first Assistant Secretary of the Treasury for Economic Policy in the Nixon administration. He is the author of nine books. His latest is "The Competition of Ideas: The World of the Washington Think Tanks" (New Brunswick, NJ: Transaction Publishers, 2008). He received a bachelor's degree from City College of New York; a master's degree from Columbia University, and a Ph.D. from Princeton University.
http://news-info.wustl.edu/news/page/normal/12954.html

[timhyma]

Ethanol firms join forces against critics
By PHILIP BRASHER • [e-mail] • November 11, 2008

Washington, D.C. – Several ethanol companies are getting together to add another voice to the debate over using grain for fuel.

They’ve formed Growth Energy, which planned ads in the New York Times defending the ethanol industry from accusations that biofuel production is driving up food prices.

Jeff Broin, chief executive of Poet LLC and a leader in putting the new group together, said it would be a “fresh, aggressive” voice for the industry. Poet, which operates seven ethanol plants in Iowa, planned to renew its membership in the rival Renewable Fuels Association but at a reduced level. Both RFA and Growth Energy are based in Washington.

Bruce Rastetter, chief executive of Ames-based Hawkeye Energy, said Growth Energy would be a “new voice in the industry that provides some leadership in particular on the food-versus-fuel debate.”

Its ads strike back at a public relations campaign started earlier this year by the Grocery Manufacturers Association aimed at getting the government to roll back incentives for ethanol. GMA has argued that ethanol is one of several factors behind recent food inflation and one of the only ones that government can control.


Other companies involved in Growth Energy include Amaizing Energy of Denison; and Green Plains Renewable Energy of Omaha.

The Glover Park Group, the Washington consulting firm that has been managing the anti-ethanol campaign for GMA and other organizations, called Growth Energy a “splinter group” that “seeks to perpetuate the myth that rising food prices are a result of a food-company conspiracy.”

As for RFA, spokesman Matt Hartwig said it will work wtih Growth Energy as it does other industry groups.
http://www.desmoinesregister.com/article/20081111/BUSINESS/81111019/1029/BUSINESS

[timhyma]

Ethanol makers push U.S. to boost fuel blend rate
Tue Nov 11, 2008 3:42pm EST Email | Print | Share| Reprints | Single Page | Recommend (0) [-] Text [+]
By Charles Abbott

WASHINGTON (Reuters) - The U.S. government should set the ethanol-to-gasoline blend rate above the current 10 percent to ensure federal targets for using the renewable fuel are met, industry leaders said on Tuesday.

They said a blend rate of 15 percent or 20 percent may be more appropriate. Jeff Broin of POET, the largest U.S. ethanol maker, said a newly formed trade group, Growth Energy, would work with the Environmental Protection Agency on the issue.

Asked if the Obama administration would support higher blends, Broin said "We see tremendous alignment between our goals."

During the campaign, President-elect Barack Obama supported the ethanol mandate and development of renewable fuels.

U.S. gasoline consumption is around 140 billion gallons a year. Federal law requires the use of 9 billion gallons of renewable fuels this year and 10.5 billion gallons in 2009, rising to 15 billion gallons a year by 2015.

Two members of Growth Energy said shipping and cost constraints could discourage further blending of ethanol with gasoline as soon as 2009, a situation the ethanol industry calls hitting the "blend wall."

"We're seeing it at a 10 billion (gallon) rate and we're already there," said David Vander Griend of ICM Inc, a designer of ethanol plants and equipment.

Wayne Hoovestol, head of Green Plains Renewable Energy Inc, said ethanol would hit the blend wall in 2009.

Growth Energy members said food makers were wrong to blame ethanol as a culprit behind higher food prices.

"We can feed our country. We can fuel our country," said Tom Buis, president of the National Farmers Union. He said renewable energy offered farmers a chance to make money.

(Reporting by Charles Abbott; Editing by David Gregorio)

http://www.reuters.com/article/environme/idUSTRE4AA7IW20081111

[timhyma]

Ethanol crush spread continues to get better. Dec contract prices puts it at $1.06 per gallon, while the July contracts are around $0.73, about 20% improvement from a couple months ago. They should be making a few bucks now.

[timhyma]

Ethanol No Longer Seen as Big Driver of Food Price
USAgNet - 10/24/2008

Heavy demand for corn from ethanol makers was seen as a key driver of corn futures to record highs in June, but since then the sharp decline of corn along with other commodities shows that belief was mistaken. According to Stewart Ramsey, senior economist for Global Insight of Philadelphia, the record high prices were a speculative bubble as corn is now down about 50 percent from its record high in June, even as the amount of the grain used to produce the renewable fuel in the United States remained the same.

"We had a lot of reasons for prices to go up and to go up a lot and ethanol use was one of those," he told Reuters News Service.

Meanwhile, U.S. food prices, which normally rise by about 2.5 percent a year, surged by four percent in 2007, the biggest increase in 17 years. World food prices jumped a stunning 40 percent, causing food riots, hoarding and bread lines in some countries.

The government has forecast that U.S. food prices will rise 5.5 percent this year and 4.5 percent in 2009.

The use of corn to produce ethanol in the United States does add to the price of the grain. Analysts, including some in the ethanol sector, say ethanol demand adds about 75 cents to $1.00 per bushel to the price of corn, as a rule of thumb. Other analysts say it adds around 20 percent, or just under 80 cents per bushel at current prices. Those estimates hint that $4 per bushel corn might be priced at only $3 without demand for ethanol fuel.

Federal law calls for production of 9 billion gallons of biofuels this year and 10.5 billion next year. The requirement increases to 36 billion gallons by 2022, with ethanol supply from corn capped at 15 billion gallons. It takes roughly one bushel of corn to produce 2.8 gallons of ethanol.
http://www.usagnet.com/story-national.php?Id=2491&yr=2008

[timhyma]

ANALYSIS-Ethanol no longer seen as big driver of food price
10.23.08, 2:03 PM ET


United States - By Sam Nelson
CHICAGO (Reuters) - Heavy demand for corn from ethanol makers was seen as a key driver of corn futures to record highs in June, but since then the sharp decline of corn along with other commodities shows that belief was mistaken.

Corn is down about 50 percent from its record high in June, even as the amount of the grain used to produce the renewable fuel in the United States remained the same.

"The record high prices were a speculative bubble," said Stewart Ramsey, senior economist for Global Insight, Philadelphia (www.globalinsight.com/)

"We had a lot of reasons for prices to go up and to go up a lot and ethanol use was one of those," he added.

U.S. food prices, which normally rise by about 2.5 percent a year, surged by 4 percent in 2007, the biggest increase in 17 years. World food prices jumped a stunning 40 percent, causing food riots, hoarding and bread lines in some countries.

The government has forecast that U.S. food prices will rise 5.5 percent this year and 4.5 percent in 2009.

Chicago Board of Trade corn futures set a record high $7.65 per bushel for a spot contract at the end of June. By the spot contract's price had been halved to $3.85 per bushel.

The use of corn to produce ethanol in the United States does add to the price of the grain. Analysts, including some in the ethanol sector, say ethanol demand adds about 75 cents to $1.00 per bushel to the price of corn, as a rule of thumb. Other analysts say it adds around 20 percent, or just under 80 cents per bushel at current prices.

Those estimates hint that $4 per bushel corn might be priced at only $3 without demand for ethanol fuel.

Federal law calls for production of 9 billion gallons of biofuels this year and 10.5 billion next year. The requirement increases to 36 billion gallons by 2022, with ethanol supply from corn capped at 15 billion gallons.

It takes roughly one bushel of corn to produce 2.8 gallons of ethanol.

The Department of Agriculture has earmarked 4.0 billion bushels of corn or roughly a third of this year's U.S. corn crop for ethanol use next year, up from 3.0 billion bushels or about 23 percent of last year's record 13.1 billion crop.


MONEY SHIFT TO COMMODITIES KEY REASON FOR PRICE GAINS

Analysts said soaring corn prices were a symptom of big shifts of investment money into corn and other commodities. As big money began shifting out of stocks a few years ago, commodity markets like corn futures began climbing.

"There was a speculative bubble in the market and that's one of the bigget things that came out of the market is just that equity markets weren't good and for a while the money came into commodities," Ramsay said.

By mid-February non-commercial investors, including speculators, index and hedge funds and managed pools of money, held nearly 484,000 long positions in CBOT corn futures or 2.42 billion bushels of corn.

That would be enough to produce more than 6.7 billion gallons of ethanol and more than 20 million tonnes of livestock feed, according to the Renewable Fuels Association, Washington D.C.

By October those investors held about 240,000 long positions in the corn market, less than half the levels seen in the spring and early summer, the RFA said.

"We had adequate corn stocks, there was no shortage of corn, that wasn't the issue," said Don Roose, analyst and president of U.S. Commodities, West Des Moines, Iowa.

"What we got into is the dollar went so low, crude oil went up and that inflated a lot of things...it was that factor of the least resistance moving up...it was an all-in attitude in the commodity markets in general no matter what it was."

U.S. capacity to make ethanol has risen about 60 percent since last year to about 11.2 billion gallons per year and if all the new plants and expansions come on line total U.S. capacity would be about 13.8 billion gpy. (Reporting by Sam Nelson; Editing by David Gregorio)

Copyright 2008 Reuters, Click for Restriction

http://www.forbes.com/reuters/feeds/reuters/2008/10/23/2008-10-23T180353Z_01_N23380078_RTRIDST_0_FOOD-CORN-ETHANOL-ANALYSIS.html

[timhyma]

Home
BlueFire Ethanol
Posted on: October 21st, 2008 by Janet Hsiung
Concentrated acid hydrolysis will transform virtually any cellulosic feed into fermentable sugars. BlueFire Ethanol, located in Irvine, California, has developed an advanced, proprietary version of this process which they believe could make them the first company to deploy a commercial scale cellulose to ethanol refinery that generates a return to its investors.

The process relies on reusing more than 96% of the sulphuric acid that is used to initially break down the cellulose from the lignin, as well as using the lignin to provide up to 70% of the total plant’s energy requirements. Although from the diagram (below) it doesn’t appear BlueFire’s process is simple, in reality it is one of the most straightforward and proven cellulose to ethanol processes known. BlueFire has adapted and improved a process that was used in WWII era Germany at an industrial scale to refine vast amounts of ethanol from cellulosic feedstock, and pilot plants already operated by BlueFire have successfully refined ethanol from sorted municipal solid waste, wood chips, as well as rice and wheat straw.

In summary, the process might be described as follows: Waste biomass, ground and dried, is mixed with sulphuric acid and reduced to a paste and heated in the 1st stage hydrolyser - depending on the feedstock this process may be repeated in a 2nd hydrolyser. The hydrolyzed cellulose and hemicellulose, along with the acid, is then separated from the lignin in a plate and filter press. The lignin is used for fuel for process steam, feedstock drying, and plant power. The acid and sugar solution that has been separated from the lignin is itself separated, with 96% of the acid being extracted for reuse. The sugar solution is then fermented with yeast and distilled, with the water captured for reuse and the ethanol collected for distribution.
post resumes below image


CONVERSION OF CELLULOSE TO SUGARS USING CONCENTRATED ACID HYDROLYSIS




A proven method, reusing the acid and water inputs, and using the waste lignin
to generate most of the energy required, makes BlueFire’s technology an
attractive contender to be first to commercially refine ethanol from cellulose.
(Photo: BlueFire Ethanol)



One convincing aspect of this process regards the synergy created by using the lignin for heat energy and the cellulose for ethanol fuel. If all of the biomass were burned to create electricity, the energy efficiency would be about 25% - that is, an efficient biomass plant will require 13,000 BTUs of biomass feedstock to generate one kilowatt-hour, which is about 3,420 BTUs. At 15.0 million BTUs per ton (on the high side) of biomass and at a wholesale electricity price of $.07 per kWh a biomass electricity plant operating at a 25% efficiency will earn $77 per ton. But using BlueFire’s process, each ton of biomass can be refined into 70 gallons of ethanol, which at $2.00 per gallon earns nearly twice as much, $140 per ton - and, the manufacturing costs are lowered because the lignin from the feedstock is still used to provide most of the energy requirements of the refinery.

BlueFire Ethanol has already received DOE funding and a conditional use permit from Los Angeles County to begin construction of a commercial scale refinery to produce ethanol from biowaste. Sited next to a landfill in Lancaster, California, this plant will be able to use municipal waste feedstock for which there is already a preexisting collection and delivery. One of the advantages of processes such as BlueFire’s, that can use municipal solid waste as feedstock, is the yield of waste relative to the territory surrounding the plant is quite high, and already serviced anyway. But instead of going into the landfill, the BlueFire’s Lancaster facility will divert 125 tons per day into the refinery to produce 3.2 million gallons of ethanol per year.
http://www.ecoworld.com/blog/editor/guest/2008/10/21/bluefire-ethanol/

[timhyma]

Algenol takes fresh approach to ethanol production

By Steve Gelsi, MarketWatch
Last update: 4:17 p.m. EDT Sept. 23, 2008Comments: 3NEW YORK (MarketWatch) -- Paul Woods traces the origins of Algenol Biofuels to his college days in the mid-1980s, with the idea of alternative energy sustained by memories of the oil embargo of the prior decade.
At around that time, gasohol started taking root in the U.S., but then it quickly faded, as oil prices fell.
But Woods stayed at work on the idea of using algae to produce ethanol. Along the way, Woods managed to build up and sell his natural-gas company, United Gas Management, and channel those resources into algae. He formed Algenol in 2006 along with Craig Smith and Ed Legere.
Video: A reprieve from oil prices

Barron's Clare McKeen says lower oil prices might give the economy a boost. (Sept. 23)Now, armed with patents, several test facilities around the world, and some $70 million in private backing, Woods is targeting his first large-scale ethanol production facility with output that may rival that of some of the category's largest U.S. players.
Algenol inked a partnership with BioFields, which has committed $850 million to build an industrial-scale ethanol facility in Mexico on 102,000 acres of desert located near the Pacific coast and not far from Cabo San Lucas.
"We don't use farm land, we don't consume any food and [we use] no fresh water," reported Woods, who has said hopes to bring the plant on line by the end of next year. "It's time to focus on California, Texas and Florida. We want to have a major plant on U.S. soil. Cheap energy is a matter of national security."
Woods holds a half-full plastic bottle of Gatorade sideways to illustrate the functioning of the firm's 5-feet-by-20-feet plastic holding tanks. Using a patented algae, Alegenol fills each tank with seawater and places the water-based plant inside.
As the algae grows, Alegenol will tap into carbon dioxide from a nearby power plant and funnel it into the tanks. The algae takes the gas and converts it into oxygen and evaporated alcohol, which is then removed and concentrated for use as fuel.
Unlike other algae players that make diesel oil by processing algae itself, Algenol doesn't spend time or energy removing the algae. It uses the ethanol vapors that the plant emits.
Algenol forecasts sales from the Mexico plant by the end of 2009 at price levels comparable to other U.S. ethanol makers. It says the plant will have a capacity of 1 billion gallons per year, much of which will be transported by ship to Mexican oil refineries nearby to be blended into gasoline.
So far, Algenol's test facilities have yielded 6,000 gallons of ethanol per acre per year, with yields expected to grow to 10,000 gallons of ethanol per year by the end of 2008.
'There will be enough demand for ethanol and other biofuels for all producers. It's an insatiable market.'
— Craig Smith, Algenol
The company formally met with Wall Street for the first time Monday at the UBS Global Life Sciences Conference in New York as a step toward a possible financing round down the road.
Algenol plans to seek federal, state and local assistance to bring U.S. facilities on line. Refiners are interested in buying ethanol because it's cheaper than buying crude oil in many cases, he said.
Looking ahead, Algenol sees itself helping the U.S. reduce its oil imports, it has said, while adding to the ethanol supply from fellow ethanol makers such as VeraSun Energy (VSE:verasun energy corp com
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Privately held Poet, based in Sioux Falls, S.D., bills itself as the largest ethanol producer in the world, according to the Renewable Fuels Association, with 24 production facilities in the United States and more than 1.4 billion gallons of ethanol annually.
"We see ourselves as standing on the shoulders of the corn-ethanol business," said Algenol Chief Operating Officer Craig Smith. "We want to expand the market. There will be enough demand for ethanol and other biofuels for all producers. It's an insatiable market."
Steve Gelsi is a reporter for MarketWatch in New York.
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Comments: 3

When you buy 10% ethanol, count on losing 15-20% of your gas mileage - for 85%, count on losing 35%. I drive an '08 Ford F-150 and on regular gas, I get a fairly consistent 18.8 MPG with the Triton engine. When I fill up with 10% ethanol, I get 16.2...

- ebmfck

Add Comment
http://www.marketwatch.com/news/story/algenol-takes-fresh-approach-ethanol/story.aspx?guid=%7BE36349E5%2D0713%2D4468%2DA8BA%2DFE5DBA1ADF0C%7D&siteid=yhoof

[timhyma]

Thanks for the update. I still have AVR, GPRE, MGPI, and PEIX in the sector

[OldPro]

VRNM closed the gap at 2...

and got a buy rating from Lazard over the last few days. Was all set to buy when closed the gap and chickened out but still may get in.

The deal with BP puts some muscle behind them going forward but could be a while before they see profits - which is what's holding me back.

[timhyma]

Three agribusiness giants—Archer Daniels Midland Co., Deere & Co., and Monsanto Co.—said Tuesday they have agreed to collaborate on research that will explore the potential of transforming corn-crop residues into feed and bioenergy products.


Creating such additional products from the unused byproducts of crops, the companies said, would allow farmers to increase the value they derive from each acre.

The collaboration is part of a growing trend toward developing non-food sources of the gasoline substitute known as ethanol. Its production has helped drive the price of many foodstuffs higher by diverting a portion of the nation's corn crop that formerly went to food.

The three companies said they hope to learn whether there are economically and environmentally sustainable ways to harvest, store and transport "corn stover," or the unused stalks, leaves and cobs of corn plants.



Farmers typically leave stover on the field, where it can help reduce erosion and create new organic matter for the soil. But stover also holds promise for use as feed for animals, as biomass to generate steam and electricity, or as a cellulosic feedstock for biofuel production, the companies said.

"As the world's population grows, so will demand for food and energy," said ADM research vice president Todd Werpy. "Using non-food feedstocks for feed and energy is one way that agriculture can apply innovation to create renewable sustainable solutions."

As production of corn-derived ethanol has soared, so have corn prices, and the use of stover has been drawing increasing interest, as have other non-food "cellulosic" products such as switch grass and even logging residue.

Experimental equipment has been designed to allow farmers to use their combines to harvest stover at the same time as corn crops, for example, and work is being done on how best to transport the material.

But because the stalks, leaves and cobs provide valuable soil nutrients as they rot, researchers are also trying to determine what trade-offs would be involved if stover were taken away to be fermented into ethanol.

When Congress passed its latest farm bill in June, lawmakers included substantial tax credits to encourage new cellulosic-ethanol research and production. And the Department of Energy is investing about $385 million in six commercial-scale cellulosic plants in the next four years.

The development has sparked a host of pilot projects and entrepreneurial startups, but it has also drawn the attention of big corporate players, such as chemicals giant DuPont Co.

ADM, Deere and Monsanto bring deep pockets as well as significant political savvy. A spokeswoman at ADM said the partners aren't disclosing the funding for the stover project.

ADM, based in Decatur, Ill., is a grain-processing company and is a major maker of ethanol from corn. Deere & Co., of Moline, Ill., is the world's leading maker of agricultural equipment, while Monsanto, of St. Louis, is a major provider of agricultural chemicals and seeds.

[e-mail]

http://www.chicagotribune.com/business/chi-wed-agri-agreement-aug27,0,7288581.story

[timhyma]

ALGAE-AS-RENEWABLE-FUEL PROJECT MAY BREAK GROUND BY SEPTEMBER

(Shenandoah) -- The world's first algae farm for use in renewable fuels may be in our very own Shenandoah.

Greg Connell is Shenandoah Chamber and Industry Association's Executive Vice President and founder of the project. Connell says the project is expected to begin in the end of August or beginning of September. Some of that will be simple ground work identifying CO2 quality and temperatures, water quality etcetera.

Connell expects by October there will be actual modules growing algae. One issue being addressed now is harvesting the algae without stopping the growth process. Connell says those issues are being addressed and will sorted out with time.

An important advancement has taken place in the venture: Green Plains experienced a merger recently for the furtherance of the algae project with a company from Dublin, Ireland called National Toll Road. Connell feels the merger provides more access to funds and moves the project much farther along scientifically. He believes algae is a great companion project to the ethanol industry

Connell says there seems to be no negatives to such a project. The algae farm would use waste water from the cooling towers of the ethanol plant, capture waste CO2 from the plant (which happens to emit 140,000 tons of CO2 each year) with the water/sunlight photosynthesis process that produces the algae, it will produce a tremendous amount of biomass and is usable for many products - including cosmetics.

Participants:

Senator Tom Harkin and his Energy Advisor Ellen Boes, Kevin Lynch, National Toll Road (NTR) (the merged company with GPRE), Dublin, Ireland, Wayne Hoovestol, CEO Green Plains Renewable Energy, Inc. (GPRE), Omaha, NE, Todd Becker, CEO VBV, Omaha, NE, Bob Vavra, Chairman of Board of Directors GPRE, Shenandoah, IA, Scott Poor, Corporate Council, GPRE, Omaha, NE, Gregg Connell, Executive Vice President, Shenandoah Chamber & Industry Association, Shenandoah, IA

08/21/2008 6:16:21 AM

http://www.kmaland.com/localnews.asp

[timhyma]

WASHINGTON - When VeraSun Energy this week reported a 50 percent increase in second-quarter earnings, part of that boost in profits had nothing to do with selling ethanol.

Distillers grain, a byproduct of the process of making ethanol, is becoming an ever-larger part of those companies' revenue, and some say it can play a key role in limiting the effects of ethanol on food prices.

One-third of all the corn used to make ethanol ends up as an ingredient in feed that farmers in the upper Midwest - where most of the ethanol plants are - give their cattle, poultry and pigs. This year, farmers will feed 18 million metric tons of distillers grain to their animals, up from 2.3 million tons nine years ago. About 1 million tons will be exported to places such as Canada, Mexico, Taiwan and Japan.


VeraSun expects to produce more than 4 million tons of distillers grain this year, company spokesman Bill Honnef said.

"We consider our (distillers grain) sales to be an important part of our overall business," Honnef said.

Some livestock producers, however, say the grain doesn't make up for a steady supply of corn. They also say the feed isn't as good for poultry and some other livestock.

Ethanol producers will use about a quarter of the U.S. corn crop this year. As ethanol plants have boosted their output to meet new federal requirements for ethanol use in the nation's gas supply, so too have they boosted their output of distillers grain.

Historically, distillers grain represented 10 percent of an ethanol plant's revenue stream, said Jerry Shurson, an animal science professor at the University of Minnesota. Today, it's closer to 20 percent to 25 percent, he said.

"Yes, the ethanol plants are using a lot of corn to make ethanol. But they're also delivering a significant quantity of a high-quality feed ingredient back into the industry," Shurson said. "They're essentially taking the starch out and returning what's left to the feed industry."

David Fremark, who operates a feedlot in Miller, said using distillers grain shaves about 25 percent off the cost of his feed bill. Distillers grains typically track corn prices but in recent weeks have been about 20 percent cheaper.

"The animals love it," said Fremark, who's also chairman of the South Dakota Corn Utilization Council. "I don't look at my local ethanol plant as an ethanol plant. It's a feed plant to me."

Cattle and dairy cows, with their four stomachs, seem to benefit the most from distillers grain and last year consumed 84 percent of the nation's supply. Pigs ate 11 percent and poultry 5 percent, according to the Renewable Fuels Association.

Critics say distillers grain is no substitute for a plentiful and inexpensive feed corn supply.

Distillers grain is not readily available in the South and West, and it's too costly to ship there, said Colin Woodall, executive director of legislative affairs for the National Cattlemen's Beef Association. Although many of his members are fans of distillers grain, the group sided with Texas Gov. Rick Perry this year when he sought to exempt his state from the new national ethanol requirement on the grounds it would hurt his state's economy and world food prices.

The U.S. Environmental Protection Agency found the new requirement would have only a small effect on food prices and denied Perry's request.
----------------------


WASHINGTON — Ethanol producers will use about a quarter of the U.S. corn crop this year, an amount that alarms ranchers and poultry producers who depend on corn to feed their animals.

As the demand for corn and energy costs climb, so do prices at the grocery store.


But the ethanol industry's impact on the nation's supply of corn for feed isn't as dramatic as it may seem.

One-third of all the corn used to make ethanol ends up as an ingredient in feed that farmers in the upper Midwest — where most of the ethanol plants are located — give their cattle, poultry and pigs.

This year, farmers will feed 18 million metric tons of this ethanol byproduct, called distillers grains, to their animals, up from 2.3 million tons nine years ago. Last year they used 14.6 million tons. About 1 million tons will be exported to places such as Canada, Mexico, Taiwan and Japan.

As ethanol plants have boosted their output to meet new federal requirements for ethanol use in the nation's gas supply, they have also boosted their output of distillers grains, which got their name from the whiskey industry.

"Yes, the ethanol plants are using a lot of corn to make ethanol. But they're also delivering a significant quantity of a high-quality feed ingredient back into the industry," said Jerry Shurson, an animal science professor at the University of Minnesota. "They're essentially taking the starch out and returning what's left to the feed industry."

Grains rarer in South
VeraSun, the nation's largest ethanol producer with 16 plants in eight upper Midwestern states, expects to produce more than 4 million tons of distillers grains this year, spokesman Bill Honnef said.

"We consider our (distillers grains) sales to be an important part of our overall business," Honnef said.

David Fremark, who operates a feedlot in Miller, S.D., said using distillers grains shaves about 25 percent off the cost of his feed bill. Distillers grains typically track corn prices but in recent weeks
have been about 20 percent cheaper.

"The animals love it," he said. "I don't look at my local ethanol plant as an ethanol plant. It's a feed plant to me."

Cattle and dairy cows seem to benefit the most from distillers grains and last year consumed 84 percent of the nation's supply. Pigs ate 11 percent and poultry 5 percent, according to the Renewable Fuels Association.

Critics say distillers grains are no substitute for a plentiful, inexpensive feed corn supply.

Distillers grains are not readily available in the South and West and it's too costly to ship them there, said Colin Woodall, executive director of legislative affairs for the National Cattlemen's Beef Association.

[timhyma]

BIOF got themselves in trouble w/ hedging:

BioFuel Reports Hedging Losses
Tuesday August 12, 12:46 pm ET


DENVER, Aug. 12 /PRNewswire-FirstCall/ -- BIOFUEL ENERGY CORP. (Nasdaq: BIOF - News) announced that as of the close of business yesterday, it had realized approximately $26.1 million of losses resulting from closing out various corn, ethanol and natural gas hedges. Based on current commodity prices, the Company also had approximately a further $19.9 million of unrealized mark-to-market losses under hedging agreements (for further details, see the attached table). The Company currently does not have sufficient liquidity available to satisfy all of the realized losses, and further market developments may result in further margin calls and additional losses being realized. All of the related contracts were entered into with Cargill, Incorporated, which handles all corn purchases and sales of ethanol and distillers grains for the Company and is a modest stockholder. The Company put the corn and natural gas hedges in place solely to minimize the impact of rising prices. Unfortunately, the sharp recent decline in the corn market exposed the Company to large unrealized losses under its hedge contracts, and in mid-July, the Company began to receive margin calls from Cargill. While the Company had posted significant margin deposits with Cargill to satisfy a large portion of the margin calls, on August 8th, Cargill delivered a notice of default with respect to certain contracts to the Company, and on August 11th, Cargill exercised its right to liquidate certain contracts (approximately 60% of the Company's hedge position), resulting in the associated realized losses. The plants start-ups have progressed more slowly than anticipated and reduced cash on hand due to higher corn inventories. The Company is currently engaged in discussions with Cargill to agree to a schedule of payments in the short-term to satisfy the Company's current obligations to Cargill.
ADVERTISEMENT


(Logo: http://www.newscom.com/cgi-bin/prnh/20070319/LAM081LOGO)

In the anticipation of commencing operations, BioFuel began to contract for physical deliveries of corn in the first quarter of 2008. In April, it started to enter into futures and options contracts with Cargill to protect against then rapidly rising corn prices. As of June 30th, the Company had hedged roughly 40% of its anticipated corn requirements for the third quarter of 2008, 30% for the fourth quarter of 2008 and 12% for the first and second quarters of 2009. As reflected in its second quarter financial statements, which will be released later today, the Company recorded a $10.1 million mark-to-market gain on its corn futures and options position at June 30th. However, starting in mid July, corn prices pulled back sharply, resulting in the Company's hedging gains swiftly turning to losses.

In an effort to improve the Company's liquidity position, an amendment to the Company's bank credit agreement is being pursued which would assure the Company more immediate access to the remaining $15.0 million working capital line and would accelerate $11.4 million of borrowing availability under its $210 million construction loan. If that amendment is finalized, the Company expects to promptly repay Cargill.

The Company is continuing to explore various alternatives to resolve this matter. As noted above, the principal focus is on reaching a mutually beneficial agreement with Cargill and securing funds to satisfy its obligations upon which our ability to continue as a going concern will be dependent. However, there can be no assurance of our success in these efforts. If the Company is not successful in resolving its liquidity issues, the Company may be forced to engage in other restructuring efforts.

This release contains certain forward-looking statements within the meaning of the Federal securities laws. Such statements are based on management's current expectations, estimates and projections, which are subject to a wide range of uncertainties and business risks. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Factors that could cause actual results to differ from those anticipated are discussed in our Exchange Act filings and our Annual Report on Form 10-K.

BioFuel Energy currently has two 115 million gallons per year ethanol plants in the Midwestern corn belt. The Company's goal is to become a leading ethanol producer in the United States by acquiring, developing, owning and operating ethanol production facilities.


Contact: Kelly G. Maguire For more information:
Vice President - Finance and http://www.bfenergy.com
Chief Financial Officer
[phone]
[e-mail]



BIOFUEL ENERGY CORP.

The following table summarizes by commodity type the liquidated hedging
contracts as of August 11, 2008.

Hedging Contracts Liquidated

Realized
Gain/(Loss) Realized
Quantity Per Unit Gain/(Loss)

Corn (in bushels) 13,060,000 ($2.21) ($28,900,000)
Ethanol (in Gallons) 4,050,000 $0.77 3,100,000
Natural Gas (in MMBTU's) 80,000 ($3.53) (282,000)

Total ($26,082,000)


The following table summarizes by commodity type the hedging contracts
still open as of August 11, 2008 and the related unrealized gain or loss
based on market prices as of August 11, 2008.

Corn Hedging Contracts Still Open

Average Average Unrealized
Expiration Period Bushels Hedged Price Market Price Gain/(Loss)
Third Quarter 2008 5,750,000 $7.01 $4.75 ($12,995,000)
Fourth Quarter 2008 3,970,000 $6.90 $5.17 (6,868,100)
2009 700,000 $7.58 $5.59 (1,393,000)

Total 10,420,000 ($21,256,100)


Ethanol Hedging Contracts Still Open

Average Average Unrealized
Expiration Period Gallons Hedged Price Market Price Gain/(Loss)
Third Quarter 2008 1,687,000 $2.87 $2.04 $1,400,210

Total 1,687,000 $1,400,210




--------------------------------------------------------------------------------
Source: BioFuel Energy Corp.

[timhyma]

Global energy giant, biofuels startup to partner on project
By Bruce V. Bigelow
UNION-TRIBUNE STAFF WRITER

August 7, 2008



Lake Charles (La.) American Press
Verenium's "cellulosic" ethanol pilot plant in Jennings, La., has been designed by the alternative energy company to run on agricultural waste and wood products instead of corn.
British petroleum giant BP and Verenium Corp., a biofuels company formed in last year's merger with San Diego-based Diversa, said yesterday they will collaborate to develop new methods for making ethanol fuels.
The alliance marks one of the largest partnerships to be formed between a multinational oil company and a biofuels startup.

Verenium has been developing so-called cellulosic ethanol technology that uses plant waste instead of corn to produce the biofuel. Using a different approach has enabled the company to sidestep concerns about the use of corn to make ethanol. Prices for corn have increased 58 percent over the past year.

As part of the deal, BP agreed to provide $90 million for rights to Verenium's technology and to fund research and development until 2010 – which helped allay investor concerns over the startup's widening losses.

Verenium's stock price leaped more than 64 percent, or $1.30, to $3.32 a share in Nasdaq trading of almost 3.7 million shares. That was almost nine times the company's recent average trading volume.

“This is really a major event for us, because we have long had this vision of rapidly building out a portfolio of commercial facilities,” said Verenium Chief Executive Carlos Riva.

Beyond the 18-month alliance announced yesterday, the two companies said they intend to establish a joint venture that will build and operate a full-scale ethanol-production facility.



AdvertisementVerenium has been evaluating potential sites for the commercial-scale plant in Florida, Louisiana and Texas. The biofuels company based in Cambridge, Mass., has been operating a pilot plant in Jennings, La., since June that uses Verenium's technology to make ethanol.
“We believe energy crops like sugarcane, miscanthus and energy cane are the best feedstocks to deliver economic, sustainable and scaleable biofuels to the world,” said Sue Ellerbusch, president of BP Biofuels North America. “This deal puts us at the front of the cellulosic biofuels game.”

Ellerbusch said BP sold more than 764 million gallons of biofuels in the United States last year. The London-based energy conglomerate has been working to develop various biofuels with DuPont and others, and currently supplies about 10 percent of global demand for biofuels.

The U.S. Energy Independence and Security Act of 2007, also known as the Renewable Fuels Standard plan, mandates that the country use 15 billion gallons a year of ethanol and 1 billion gallons of biodiesel by 2015. It also calls for consumption of 16 billion gallons of cellulosic ethanol by 2022.

BP's partnership with Verenium was announced less than 14 months after the startup was formed with the merger of San Diego's Diversa, a publicly held biotech specializing in enzymes, and privately held Celunol of Cambridge, Mass.

Riva, who previously headed Celunol, kept the company's headquarters near Boston, but Verenium continues to operate a research and development center with about 180 employees in San Diego.

Diversa, which was the larger of the two companies, has never posted a profit. For the first quarter that ended March 31, Verenium said its total operating expenses had increased more than 48 percent over the same quarter last year.

“We had some concerns as their financial situation became much more dire in recent months with a higher cash burn rate,” said analyst Ron Oster of Broadpoint Capital. He added: “This news today is a home run for the company on a number of levels.”

For one thing, Oster said, BP's $90 million alleviates Verenium's financial straits for the foreseeable future.

The deal also represents BP's endorsement of Verenium's technology for developing cellulosic ethanol, Oster said, “and there are numerous cellulosic ethanol companies out there.”

Analyst Laurence Alexander of Jeffries & Co. predicted the BP-Verenium deal will serve as a model as major oil companies seek to expand into emerging markets for alternative fuels.

Alexander said he expects to see a number of similar investments by big oil companies in startups like Verenium. He compared such investments to the type of partnership deals struck by major drug companies with early-stage biotech companies.

Forging a partnership with a major energy company to accelerate the commercialization of Verenium's biofuels technology was always part of the new company's plan, Riva said.

He said Verenium's strategy was twofold. The company wanted to build, own and operate its own cellulosic ethanol production facilities in the United States with a major partner such as BP. Secondly, it sought to spread the use of its technology as broadly as possible by forming a business entity with BP to license the underlying technologies to other companies.

“This is a massive market opportunity,” said Riva, who estimated the U.S. market for ethanol fuel will be $60 billion to $80 billion a year by 2022.

Riva said Verenium hopes to finalize plans to build its first commercial-scale ethanol plant later this year. He expects construction to begin next year, with production tentatively set to begin in 2011.
http://www.signonsandiego.com/news/business/20080807-9999-1b7verenium.html

[timhyma]

EPA Keeps Biofuels Levels in Place after Considering Texas’ Request



Contact Information: Jonathan Shradar, [phone] / [e-mail]



(Washington, DC – August 7, 2008) Following extensive analysis, U.S. Environmental Protection Agency (EPA) Administrator Stephen L. Johnson today announced his decision to deny a request submitted by the State of Texas to reduce the nationwide Renewable Fuels Standard (RFS). As a result, the required total volume of renewable fuels, such as ethanol and biodiesel, mandated by law to be blended into the fuel supply will remain at 9 billion gallons in 2008 and 11.1 billion gallons in 2009.



“After reviewing the facts, it was clear this request did not meet the criteria in the law,” said EPA Administrator Stephen L. Johnson. “The RFS remains an important tool in our ongoing efforts to reduce America’s greenhouse gas emissions and lessen our dependence on foreign oil, in aggressive yet practical ways.”



Current law authorizes EPA to waive the national RFS if the agency determines that the mandated biofuel volumes would cause “severe harm” to the economy or the environment. The agency recognizes that high commodity prices are having economic impacts, but EPA’s extensive analysis of Texas’ request found no compelling evidence that the RFS mandate is causing severe economic harm during the time period specified by Texas.



The Energy Policy Act of 2005 established the RFS program – and included amendments to the Clean Air Act to set strict criteria for RFS-related waivers. RFS nationwide volume mandates were increased in the Energy Independence and Security Act, which was signed into law in December 2007.



EPA conducted detailed analysis, consulted closely with the Departments of Energy and Agriculture, and carefully considered more than 15,000 public comments in response to the Texas request.



This is the first RFS-related waiver request. In a Federal Register notice, EPA is publishing a detailed rationale that will also serve as a framework for any future waiver considerations.



More information: http://www.epa.gov/otaq/renewablefuels

[timhyma]

HELP US REACH THE 200-LETTER MARK TO COMPLETE THE "JOIN THE REVOLUTION" LETTER TO THE EDITOR CAMPAIGN
POSTED: AUG 05, 2008

In mid-May, ACE launched the "Join the Revolution" letter to the editor campaign, asking grassroots supporters to speak out with the truth about ethanol to a series of urban media targets. So far, 164 pro-ethanol letters have flooded the editor's desk at the Washington Post, Wall Street Journal, New York Times, USA Today, and the Los Angeles Times.

Before our Friday, August 8 deadline, please help us hit the 200-letter mark by penning your ethanol support to the editor of our final target, the Kansas City Star. More details - including where to send your letter and sample letters - can be found here on Ethanol.org's "Take Action" page: http://www.ethanol.org/index.php?id=6&parentid=6

Thank you! Your voice in support of ethanol does make a difference.
http://www.ethanol.org/news/?newsid=56

[timhyma]

EPA to announce ethanol mandate decision
Wed Aug 6, 2008 4:15pm EDT
WASHINGTON (Reuters) - The U.S. Environmental Protection Agency said Wednesday it will announce a ruling on Thursday on Texas' request to cut the federal mandate requiring 9 billion gallons of ethanol and other renewable fuels to be blended into gasoline this year.

Texas Governor Rick Perry asked EPA in April to cut the mandate by 50 percent in 2008.

(Reporting by Ayesha Rascoe; Editing by Marguerita Choy)

[timhyma]

Saline County Missouri Approves $141 Million Revenue Bonds for Alternative Energy
By: iStockAnalyst Thursday, July 31, 2008 9:53 AM
Email Comments (0) Post Comment Bookmark It

Green Star Products, Inc. (OTC:GSPI) today announced that EcoAlgae USA, LLC, has received a signed resolution from Saline County Missouri commissioners to construct a commercial Algae Production Facility in conjunction with an Integrated Biorefinery Complex.

EcoAlgae USA will contract with Green Star's Associated Consortium of Companies to construct the Algae-to-Biodiesel and Next Generation Waste-to-Energy Complex.


EcoAlgae USA received from the Saline County commissioners the approval of issuance of $141 million of the county's industrial development revenue bonds to finance this project. The project will be organized and constructed in conjunction with United Biorefineries Corp. (UBC), a technology management company, as the main Consortium Company with other integrated licenses.


The EcoAlgae USA, LLC, project will involve algae production as the heart of this Biorefinery Complex because its high production biomass feedstock only requires sunlight, CO2 and brackish or saltwater. Note these important facts about algae:


1. Algae produce 100 times more oil per acre than traditional food oilseed crops such as soy, etc. (Note: Algae produces 4,000 gallons of oil per acre per year versus 50 gallons per acre for soy.) 2. Algae eat CO2, the major Global Warming Gas, and produce oxygen. 3. Algae require only sunshine and non-drinkable (salt or brackish) water. 4. Algae do not compete with food crops for either agricultural land or fresh water. 5. Algae can reproduce themselves and their oil every 6 hours, while it takes Mother Nature millions of years to produce crude oil in the ground. 6. Algae oil byproduct is a highly nutritious protein-rich food (30- 50%), which will someday help feed the world.
Green Star Products has been a major facilitator in all aspects of this UBC Integrated Biorefinery Manufacturing Complex model for several years.


The Biorefinery will be the first of its kind and will incorporate all the technologies to produce oil, cattle feed, electricity, biodiesel, cellulosic ethanol and steam.


Besides algae feedstock, other feedstocks to produce these valuable products come from non-food sources and are comprised of waste wood products, organic municipal waste, switchgrass, and other waste agricultural products such as corncobs.


The four main technologies required for this facility are:


1. Algae Production, Processing and Refining by Green Star Products 2. Cellulosic Ethanol Production by Pure Energy Corporation 3. Biogas Production by MKW Biogas 4. Algae Research & Engineering by Biotech Research (BTR) and Green Star Products
UBC and the above companies have strategic alliances with other major corporations and international engineering firms.


United Biorefineries Corp. represents the above Consortium of Companies through licensing arrangements and is the technology provider and will be responsible for the construction of the entire Biorefinery Complex for EcoAlgae USA, LLC. UBC will distribute profits from this project to its participating Consortium Companies.


EcoAlgae USA and all the participants, who have been working on this Missouri project for over one year, would like to congratulate Saline County and its commissioners for having the insight to provide the opportunity to build the most advanced Eco-friendly Biorefinery of the future.


Green Star Products, Inc. (OTC:GSPI) is an environmentally friendly company dedicated to creating innovative, cost-effective products to improve the quality of life and clean up the environment. Green Star Products and its Consortium are involved in the production of green sustainable goods including renewable resources like algae biodiesel and clean-burning biofuels, cellulosic ethanol and other products, as well as lubricants, additives and devices that reduce emissions and improve fuel economy in vehicles, machinery and power plants. For more information, see Green Star Products' Web site at http://www.GreenStarUSA.com, or call Public Relations at 800-741-7648 and 800-340-9784, or fax [phone], or email [e-mail]. Information about trading prices and volume can be obtained at several Internet sites, including http://www.pinksheets.com, http://www.bloomberg.com and http://www.bigcharts.com under the ticker symbol "GSPI."


Forward-looking statements in the release are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including without limitation, continued acceptance of the company's products, increased levels of competition for the company, new products and technological changes, the company's dependence on third-party suppliers, and other risks detailed from time to time in the company's periodic filings with the Securities and Exchange Commission.

Story Source: Business Wire

http://www.istockanalyst.com/article/viewiStockNews+articleid_2457985~title_Saline-County-Missouri.html

[timhyma]

Statement of Joseph Glauber, Chief Economist
Before the
Committee on Energy and Natural Resources
United States Senate
June 12, 2008
Mr. Chairman, members of the Committee, thank you for the opportunity to discuss the effects of the expansion in biofuels production in the U.S. on commodity markets and food prices here and abroad. In the United States, two commodities, corn and soybean oil account for over 90 percent of biofuels production. From April 2007 through April 2008, corn and soybean prices rose by over 50 percent in response to a variety of factors, including domestic and global economic growth; global weather; rising input costs for energy; international export restrictions; and new product markets, particularly biofuels. Over the same period, global food commodity prices as measured by the International Monetary Fund (IMF) rose by over 45 percent and retail food prices in the U.S. increased by more than 5 percent. I will describe the factors affecting farm commodity prices and the effects of biofuels production on commodity prices, global food prices, and retail food prices in the United States.
Key Factors Behind the Increase in Commodity Prices
Many factors have converged to increase commodity prices. Global economic growth, weather problems in some major grain producing countries, and depreciation in the value of the dollar have increased the demand for U.S. agricultural commodities, leading to higher commodity prices. In FY 2008, the value of U.S. agricultural exports is projected to reach a record $108.5 billion, up from last year’s record of $81.9 billion.
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Global economic growth is boosting the demand and prices for agricultural commodities. Real foreign economic growth was a healthy 4.0 percent in 2007, only slightly below 2006’s robust rate of 4.2 percent. Foreign economic growth is expected to be 3.9 percent in 2008, down slightly from 2007, but well above trend, as has been the case beginning in 2004 (Economic Research Service). Asia, excluding Japan, will likely grow at over 7 percent in 2008, above trend for the fifth consecutive year. Higher incomes are increasing the demand for processed foods and meat in rapidly growing developing countries, such as India and China. These shifts in diets are leading to major changes in international trade. For example, China’s corn exports are projected to fall from 5.3 million metric tons in 2006/07 to 0.5 million metric tons in 2007/08, as more corn is used for domestic livestock feeding.
Adverse weather events in a number of countries have reduced production leading to higher commodity prices. The multi-year drought in Australia reduced wheat and milk production and that country’s exportable supplies of those commodities. Drought and dry weather have also adversely affected grain production in Canada, Ukraine, the European Union, and the United States. These weather events have helped to deplete world grain stocks. With world stocks for wheat at a 30-year low, grain importers are increasingly turning to the U.S. for supplies. Furthermore, the tight stocks situation is leading to increasing concerns that prices could move sharply higher if this year’s harvest falls below expectations. These concerns are causing some importers to purchase for future needs, pushing prices higher.
Many exporting countries have put in place export restrictions in an effort to reduce domestic food price inflation. The United Nations Food and Agriculture Organization recently noted the cereal import bill of the world’s poorest countries is forecast to rise by 56 percent in 2007/2008, which comes after a significant increase of 37 percent in 2006/2007. Exporting
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countries as diverse as Argentina, China, India, Russia, Ukraine, Kazakhstan, and Vietnam have placed additional taxes or restrictions on exports of grains, rice, oilseeds, and other products. By reducing supplies available for world commerce, these actions exacerbate the surge in global commodity prices. Export restrictions are ultimately self-defeating, reducing the incentives for producers to increase production.
Higher food marketing, transportation, and processing costs are also contributing to the increase in retail food prices. Record prices for diesel fuel, gasoline, natural gas, and other forms of energy affect costs throughout the food production and marketing chain. Higher energy prices increase producers’ expenditures for fertilizer and fuel, driving up farm production costs. Higher energy prices also increase food processing, marketing, and retailing costs. These higher costs, especially if maintained over a long period, tend to be passed on to consumers in the form of higher retail prices. ERS estimates direct energy and transportation costs account for 7.5 percent of the overall average retail food dollar. This suggests that for every 10 percent increase in energy costs, the retail food prices could increase by as much as 0.75 percent if fully passed on to consumers.
Recent Developments in Commodity Markets
Higher commodity prices are contributing to the increase in food price inflation, even though in the United States the farm value accounts for only about 20 cents of each dollar spent on food. For highly processed foods, such as cereal and bakery products, the farm component of the retail value is less as processing costs account for a higher portion of the retail value. In contrast, for food products that undergo little processing prior to being consumed, such as eggs and fresh fruits and vegetables, the farm value accounts for a much larger share of the retail value.
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The index of prices received by farmers for all products increased by 18 percent in 2007, as farm prices for several major crops, beef, milk, broilers, and eggs either reached new record highs or posted large annual gains. Compared to one year ago, the index of prices received by farmers for all products was up 13 percent during the first 4 months of 2008. Over the same period, the prices received for all crops were up 19 percent, reflecting continued strong prices for major crops. Meanwhile, the prices received for livestock and livestock products, while up 7 percent during the first 4 months of 2008 compared to one year ago, have moderated in recent months as record large supplies of red meat and poultry have lowered farm prices for cattle and hogs.
Wheat & Coarse Grains: The 2007/08 wheat marketing year reflects a third straight year in which global production has fallen short of consumption, driving expected world stocks to their lowest level in 30 years. Back-to-back years of lower production in the major exporting countries, including Australia, Canada, and the European Union, have combined with below-trend yields in the United States to reduce the availability of exportable supplies. Tight supplies in competitor countries and restrictions on exports in major producing countries such as Argentina, Ukraine, and Russia have boosted export demand for U.S. wheat. U.S. ending stocks are projected at their lowest level in 60 years. As a consequence, wheat prices have increased to record levels. Farm prices for 2007/08 are estimated at a record $6.50 per bushel, sharply higher than last year’s $4.26 and the previous record of $4.55 per bushel.
Wheat producers indicated in March they intend to plant 63.8 million acres in 2008, up 6 percent from 2007. Yield prospects for the 2008 crop remain mostly favorable, but persistent dryness remains a concern in the southwestern portions of the hard red winter wheat belt in western Kansas and the panhandle areas of Texas and Oklahoma. In addition to higher
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production in the U.S., wheat production in other major wheat producing countries is expected to rise sharply as planted area is up around the world, spurred by record prices and encouraged by favorable fall sowing weather. If trend yields are achieved, world production could set a new record, rising as much as 50 million tons from 2007/08. Global production is expected to exceed global consumption for the first time in four years leading to some recovery in global wheat stocks. Nonetheless, the average farm price is projected to increase in 2008/09 to $6.75-$8.25 per bushel, supported by forward sales made at prices well above last year’s level. Cash wheat prices during the first quarter of the marketing year are also expected to be supported by strong competition between domestic mills and foreign buyers.
The U.S. corn market in 2007/08 is characterized by record production and farm prices driven by strong domestic and export demand, which is boosting use to record levels. U.S. producers planted 93.6 million acres to corn in 2007, the largest plantings since 1944. Domestic use for 2007/08 is estimated at a record 10.5 billion bushels, up 1.4 billion or 16 percent from last year. Ethanol use, projected at 3.0 billion bushels, is expected to surpass exports for the first time ever, accounting for 23 percent of total corn use. Despite high prices, export demand remains strong with growing world demand for animal protein and tight supplies of feed quality wheat, particularly in the European Union. Exports are projected at a record 2.45 billion bushels, up 15 percent from last year. The farm-level price of corn for 2007/08 is expected to average a record $4.25-$4.45 per bushel, up substantially from $3.04 per bushel in 2006/07.
Corn prices are expected to rise again in 2008/09. Demand is expected to remain strong, supported by expanding use for ethanol, which is forecast to reach 4 billion bushels in 2008/09. Corn area and production are expected to be lower in 2008/09 as record soybean prices and high input costs for corn encourage a rebound in soybean plantings. Producers indicated in March
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they intend to plant 86.0 million acres of corn in 2008, down 8 percent from last year. In addition, cool, wet weather slowed planting progress, which could also lead to lower corn plantings and lower yields in 2008. With higher use and lower production, ending stocks are expected to decline, keeping upward pressure on prices. The farm price of corn is forecast to average $5.30-$6.30 per bushel in 2008/09.
Rice: Tighter domestic rice supplies, higher global rice prices, and export bans imposed by some major rice exporters have helped to boost U.S. rice prices in 2007/08. Producers cut back on rice area in 2007 by 3 percent, because they could earn higher returns by planting alternative crops such as wheat, corn, sorghum and soybeans. U.S. exports in 2007/08 are projected to increase 23 percent to 112 million hundredweight (cwt). Tight global supplies and self-imposed export bans in Egypt, Vietnam, and India are helping to support U.S. exports. Rice ending stocks are forecast at 21.6 million cwt, down from carry-in stocks of 39 million cwt. The season-average farm price is forecast at $12.85-$13.15 per cwt, up from $9.96 in 2006/07 and the highest since 1973/74. Domestic rice prices in 2008/09 are expected to be higher than in 2007/08 due to tighter domestic and global supplies and higher world prices.
Soybeans: U.S. soybean prices are record high this year, reflecting lower production and strong demand. The farm price received for soybeans is estimated to average $10.00 per bushel during 2007/08, compared with $6.43 last marketing year and the previous record of $8.73 per bushel set in 1983/84. Lower production was brought about by sharply lower planted area as producers shifted some soybean acres to corn in 2007. Lower stocks are projected in part due to strong export demand for U.S. soybeans resulting from record imports by China and limited growth in South American supplies despite high prices.
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U.S. soybean crush is also a contributing factor to declining stocks as foreign demand for U.S. soybean meal remains exceptionally strong. Wheat shortages in many parts of the world are leading to strong export demand for soybean meal protein which can be used to replace wheat in feed rations. Soybean crush is also supported by growing demand for biodiesel, production of which is expected to account for 14 percent of total soybean oil use for 2007/08. Strong domestic and export demand have pushed prices for both soybean meal and soybean oil higher. The prices of both soybean meal and soybean oil are up by over 50 percent in 2007/08, compared with one year ago.
U.S. producers indicated in March they intend to plant 74.8 million acres to soybeans in 2008, up 18 percent from last year. If these intentions are realized, soybean supplies for 2008/09 could increase as larger production more than offsets sharply lower beginning stocks. Reflecting the increase in projected soybean production, soybean ending stocks are expected to rebound in 2008/09 from this year’s very low level. Forward sales at prices above last year’s average and high corn prices are likely to push soybean prices higher in 2008/09. The farm price of soybeans is currently forecast to average $11.00-$12.50 per bushel in 2008/09.
Fruits and Vegetables: Retail prices for fruits and vegetables increased 3.8 percent in 2007, as fresh fruit and vegetable prices rose by 3.9 percent and processed fruit and vegetable prices rose by 3.6 percent. Price spikes in these commodities are often linked to drought or freeze damage. In 2008, the CPI for fruits and vegetables is projected to increase by 3.5-4.5 percent.
Livestock and Poultry: Beef production is currently forecast to increase by 1.5 percent in 2008 due to continued strong cow slaughter. Drought conditions in the Southeast led to strong increases in cow slaughter last year and, even with a return to normal weather in 2008, cow
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slaughter is expected to remain relatively high in 2008. The January Cattle report indicated the cow herd continued to contract during 2007. Beef cow numbers were estimated about 0.6 percent lower than a year ago, and the number of beef cows expected to calve was down 1 percent. In addition, the number of beef heifers to be retained for the breeding herd was down 3.5 percent. Higher feed costs are lowering returns to cattle feeders. Nebraska Direct steer prices averaged a record $91.82 per cwt in 2007 and are expected to average $89-$93 per cwt. in 2008.
Pork production in 2008 is expected to increase 6.6 percent due to expansion triggered by positive returns to producers in 2006 and 2007 and strong productivity gains. However, the growth in production is expected to slow later in the year as producers respond to much higher feed costs. The most recent Quarterly Hogs and Pigs report indicated that producers farrowed 5 percent more sows during December 2007-February 2008, but intend to farrow 2 percent fewer sows during June 2008-August 2008. In 2008, hog prices are expected to decline from 2007’s $47.09 per cwt to $46-$48 per cwt.
Broiler producers reacted to low returns in 2006 and pulled back broiler production during the last two quarters of 2006 and the first two quarters of 2007. As broiler prices hit record levels in mid-2007, broiler producers responded by expanding production. Since last fall, weekly estimates of chicks placed for growout were consistently 3 to 5 percent above a year earlier, but the increase in placements has dropped below 3 percent recently. However, little to no expansion in broiler production is expected during the second half of 2008, as producers respond to higher corn and soybean meal prices. Broiler prices for 2008 are forecast to average 80 to 83 cents per pound in 2008, compared with a record 76.4 cents in 2007.
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Eggs: In 2007, the wholesale price for a dozen grade A large eggs in the New York market averaged $1.14 per dozen, 43 cents higher than the previous year. The strong increase in egg prices reflected lower production and strong domestic demand. In 2007, table-egg production was down 1 percent, as producers lowered production in order to increase the hatching-egg flock.
Given the current size of the table-egg flock and the number of birds available to add to the flock, no significant expansion in production is expected in 2008. Wholesale table-egg prices (New York area) averaged $1.59 per dozen in the first-quarter, up 51 percent from the previous year. Prices are expected to decline seasonally in the second quarter and average $1.21-$1.25 per dozen in 2008.
Milk: Very strong international dairy product prices, robust domestic demand and modest expansion in domestic production in response to very low milk prices in 2006 were the primary factors pushing up dairy product prices in 2007. The recent increase in feed costs probably had only a minimal effect on milk production in 2007.
Although higher feed costs are expected to temper later-year expansion plans, milk producers are expanding herds in response to generally favorable returns during much of 2007. Production in 2007 increased about 2 percent as the herd increased fractionally. Milk per cow increased but lagged its historical growth. Driven by strong domestic demand and sharply higher international prices in response to declining milk production in Australia due to drought and limited surpluses of dairy products in the European Union, the all-milk price averaged a record $19.13 per cwt, over $6.00 above 2006. Cow numbers are expected to increase further in 2008 but high feed costs may slow the growth in milk per cow. Milk production in 2008 is expected to increase about 2 percent and about equal the growth in demand for dairy products
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domestically and for export. The all-milk price is forecast to average $18.90-$19.30 per cwt in 2008.
Effects of Biofuels Production on Commodity Prices
In recent years, the conversion of corn and soybean oil into biofuels in the United States has been an important factor shaping major crop markets. The amount of corn converted into ethanol and soybean oil converted into biodiesel nearly doubled from 2005/06 to 2007/08. The growth in biofuels production has coincided with rising prices for corn, soybeans, soybean meal, and soybean oil.
While increased biofuels production in the United States is partially responsible for the increase in domestic corn and soybean farm prices, other factors have also contributed to the sharp increase in prices for these commodities. The strength in exports resulting from global economic growth and drought and dry weather in some major grain producing countries has boosted prices for corn and soybeans. For example, corn exports are projected to reach 2.45 billion bushels in 2007/08, up from 2.1 billion bushels in 2005/06, and soybean exports are projected to increase by 18 percent over the same period.
Estimating the effects of increased ethanol and biodiesel production on domestic agriculture and domestic food prices necessitates segmenting the portion of the increase in corn and soybean prices due to the expansion in ethanol and biodiesel production and the increase in corn and soybean prices due to other factors. Various analytical approaches were used to estimate the effects of increased ethanol and biodiesel production on corn and soybean prices. Table 1 compares actual and estimated corn and soybean prices over the period 2005/06-2007/08, assuming corn used for ethanol and soybean oil used for biodiesel production in the United States remained unchanged from the amount used in the 2005/06 marketing year.
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Table 1. Estimated Effects of Increased Ethanol and Biodiesel Production on Corn and
Soybean Prices
2005/06
2006/07
2007/08
Corn Price ($/Bu.)
Actual
2.00
3.04
4.25
Alternative 1/
2.80
3.60
Soybean Price ($/Bu.)
Actual
5.66
6.43
10.00
Alternative 1/
6.25
8.25
Soybean Oil Price (cents/lb.)
Actual
23.41
31.02
52.00
Alternative 1/
30.35
45.25
Soybean Meal Price ($/ton)
Actual
174
205
315
Alternative 1/
201
274
1/Assumes the amount of corn used for ethanol and soybean oil used for biodiesel production in the United States remained unchanged from the amount used in the 2005/06 marketing year. This scenario was selected to depict the effects of increased ethanol and biodiesel production on corn and soybean prices and does not represent a specific policy scenario.
Under the alternative scenario, lower corn and soybean oil use resulting from reduced production of biofuels leads to lower prices for corn, soybeans, soybean oil, and soybean meal. In addition, changes in relative returns for corn and soybeans cause producers to switch from planting corn to planting soybeans. Lower corn and soybean prices could also result in increased plantings and lower prices for other crops and lower feed costs to livestock producers.
The recent increase in corn and soybean prices appears to have little to do with the run-up in prices of wheat and rice. Corn and soybean prices began increasing during the fourth quarter of 2006. By this time, producers had already planted the 2007 winter wheat crop. Rice and spring wheat plantings could have been affected by increasing corn and soybean prices but weather problems, low stocks, and strong global demand likely had a much greater impact on wheat and rice prices than increasing corn and soybean prices in 2007/08. In 2008, U.S. wheat
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producers indicate they intend to plant more acreage to wheat while rice acreage is projected to remain flat, suggesting that higher corn and soybean prices have not greatly altered wheat and rice producers’ planting decisions.
Effects of BioFuels Production on Global Food Commodity Prices
The International Monetary Fund’s (IMF) global food commodity price index is often quoted as an indicator of the change in global food prices. The IMF global food commodity price index includes a bundle of agricultural commodities including wheat, corn (maize), rice, barley, vegetable oils and protein meal, meat, seafood, sugar, bananas, and oranges. A complete list of the commodities included in the index, the percentage change in each commodity price, and the estimated contribution of each commodity to the overall percentage change in the food price index from April 2007 to April 2008 are presented in Table 2. It is unclear how the list of commodities and the prices used in the IMF index relate to the foods purchased and the prices paid for food items by consumers in other countries.
The IMF global food commodity price index increased by 45.0 percent from April 2007 to April 2008. Sunflower oil and rice exhibited the largest price changes, with prices for both commodities increasing by over 200 percent. Prices for corn, wheat, soybeans, soybean oil, soybean meal, palm oil, sunflower oil, and rapeseed oil also exhibited relatively large price increases, while the prices for beef and swine meat actually fell.
Combining the change in corn prices with the corn weight of 8.1 percent, the change in corn prices contributed 5.0 percentage points to the estimated 45.6 percent increase in the global food commodity price index. Soybeans, soybean oil, and soybean meal exhibited larger price increases and play a much larger role in the global food commodity price index, a combined weight of over 15 percent. The combined effects of the increase in soybean, soybean meal, and
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Table 2. Contribution to the IMF Food Commodity Price Index, April 2007 to April
2008. 1/
Food Commodity
Weight
April 2007 to April 2008
Contribution to Overall Change
Percentage Change
Percentage Points
Food
100
45.0
45.0
Cereals
Wheat
10.9
82.7
9.0
Corn (Maize)
8.1
61.7
5.0
Rice
3.6
215.0
7.7
Barley
2.2
51.0
1.1
Vegetable oils and Protein Meals
Soybeans
7.5
78.6
5.9
Soybean Meal
4.6
69.3
3.2
Soybean Oil
3.2
80.9
2.6
Palm Oil
6.2
67.9
4.2
Sunflower Oil
0.5
223.5
1.2
Olive Oil
1.3
-4.8
-0.1
Fish Meal
1.6
-8.1
-0.1
Groundnuts
1.5
66.6
1.0
Rapeseed Oil
2.0
87.1
1.7
Meat
Beef
7.2
-11.8
-0.9
Lamb
1.3
16.9
0.2
Swine Meat
5.6
-6.5
-0.4
Poultry
4.7
5.0
0.2
Seafood
Fish
15.2
7.2
1.1
Shrimp
3.7
-23.0
-0.8
Sugar
Free Market
2.8
30.5
0.9
United States
0.2
-1.8
0.0
EU
1.2
-0.4
0.0
Bananas
2.3
49.9
1.2
Oranges
2.5
42.7
1.1
1/Estimated from the International Monetary Fund (IMF) 8 price indices and 49 actual price series. The prices are available from the IMF web site at http://www.imf.org/
soybean oil prices contributed 11.7 percentage points to the estimated 45.0 percent increase in the IMF global food commodity price index from April 2007 to April 2008.
14
In order to estimate the impact of the increased production of U.S. biofuels on global food prices, one needs to estimate the direct and indirect effects of the increased use of corn and soybeans on individual commodity prices. Last month, CEA testified before the Senate Foreign Relations Committee about corn-based ethanol’s impact on global food prices using this strategy. The analysis below continues in this spirit, but it considers a broader category of factors and costs and a slightly different time period. Here the analysis is updated to the 12 months ending in April and the analysis considers a broader mix of biofuels--focusing on corn-based and soybean oil-based biofuels.
Table 3 presents the estimated effects of increased ethanol and biodiesel production in the United States on global prices for corn, soybeans, soybean oil, and soybean meal as well as the impact on the IMF global food commodity price index. We estimate that the percentage increase
Table 3. Effects of biofuel production in the United States on
global food commodity prices.
With Biofuels
Without Biofuels
Percentage Change
Percentage Change
Food
45.0
40.6
Corn (Maize)
61.7
47.5
Soybeans
78.6
54.2
Soybean Meal
69.3
51.2
Soybean Oil
80.9
61.5
in the price of corn from April 2007 to April 2008 would have been 23 percent lower in the absence of any growth in biofuel production in the United States. Based on this analysis, we estimate that the price of corn would have increased by 47.5 percent assuming no growth in biofuel production in the United States, down from the actual increase of 61.7 percent, from April 2007 to April 2008. Assuming no growth in biofuel production, the price of soybeans,
15
soybean meal, and soybean oil in the global food commodity price index would have increased by 54.2, 51.2, and 61.5 percent, respectively, down from actual increases of 78.6, 69.3, and 80.9 percent, respectively, from April 2007 to April 2008.
Assuming no growth in biofuel production in the United States, the IMF global food commodity price index would have increased by 40.6 percent, down from the actual increase of 45.0 percent, from April 2007 to April 2008. Lower corn prices contributed 1.2 percentage points, lower soybean, soybean meal, and soybean oil prices contributed 3.2 percentage points to the total reduction in the global food commodity price index.
However, combining soybeans, soybean meal, and soybean oil in the same index overstates the impact of biofuels on global food prices. Soybeans are processed into soybean meal and oil and by including the effects of biofuels on the prices of all three commodities we magnify the impacts of biofuels on the global food prices. If we exclude the impacts of biofuels on soybean meal and oil prices, the IMF global food price index would have increased by 42.0 percent assuming no growth in biofuels production in the United States, compared to the actual increase of 45.0 percent from April 2007 to April 2008.
Effects of BioFuels Production on U.S. Retail Food Prices
In 2007, the Consumer Price Index (CPI) for all food increased by 4.0 percent, up from 2.4 percent in both 2004 and 2005. In 2007, the retail price of eggs increased by 29.2 percent, retail dairy product prices rose by 7.4 percent, retail poultry prices posted a 5.2 percent gain, and retail beef prices increased by 4.4 percent. In 2008, the CPI for all food is projected to increase by 4.5 to 5.5 percent, with the retail prices of eggs, dairy products, fats and oils, and cereals and bakery products all increasing by more than 5 percent.
16
It is very unlikely that the retail prices for dairy products, beef, poultry, and eggs were greatly affected by higher corn and soybean prices in 2007. Higher corn and soybean prices increase livestock and dairy producers’ feed costs. The increase in feed costs, with no offsetting increase in livestock prices, reduces livestock producers’ margins. Livestock producers react to these lower margins over time by reducing the breeding herd. In the short term, higher feed costs lead to an increase in livestock slaughter and lower livestock prices. For milk and eggs, higher feed costs may have lowered production somewhat 2007, partially contributing to the increase in retail prices for these food products. However, other factors, such as low returns in 2006, strong demand, abnormally high international prices, especially for dairy products, and increasing use of eggs for hatching to expand broiler production likely contributed to the bulk of the increase in retail food prices for these commodities in 2007.
The ratio of livestock prices relative to feed costs is a measure of the pressure on livestock producers to adjust future production in response to higher feed costs. In April, the steer and heifer corn price ratio (bushels of corn equal in value to 100 pounds of steers and heifers, live weight) was the lowest since August 1996, the hog-corn price ratio (bushels of corn equal in value to 100 pounds of hog, live weight) was the lowest since December 1998, and the milk-feed price ratio (pounds of 16 percent mixed dairy feed equal in value to 1 pound of milk) and the broiler-feed price ratio (pounds of broiler grower feed equal in value to 1 pound of broiler, live weight) was the lowest since at least 1995.
In 2008, higher feed costs are likely to lead to lower prices for beef and pork as producers react to higher feed costs by reducing the number of breeding animals. In contrast, dairy producers react to higher feed costs by cutting back on the number of dairy cows and adjusting rations. In 2008, higher feed costs are expected to dampen the growth in milk production per
17
cow but the dairy herd is expected to continue to expand in response to strong milk returns in 2007.
To estimate the effects of growth in ethanol and biodiesel production on U.S. retail food prices, we assume that all of the increase in prices for corn, other feed grains, soybeans, soybean oil and soybean meal presented in Table 1 are passed on to consumers through higher retail food prices. In 2007, the expansion in ethanol and biodiesel production is estimated to have increased the CPI for all food by 0.10-0.15 percentage point. During the first four months of 2008, the all food CPI increased by 4.8 percent, with increased ethanol and biodiesel production in the U.S. accounting for about 0.20-0.25 percentage point of the increase in retail food prices. Over time, livestock and dairy producers will adjust to higher feed costs by reducing production leading to higher retail prices for animal products. In future years, production adjustments by livestock and dairy producers in response to higher feed costs resulting from the expansion in ethanol and biodiesel production could add a total of 0.6-0.7 percentage point to the CPI for all food.
Conclusion
Many factors have converged to increase corn and soybean prices. Some of these factors include domestic and global economic growth; global weather; rising input costs for energy; international export restrictions; and new product markets, particularly biofuels. At this time, the expansion in biofuel production in the United States would appear to be a relatively modest contributor to food price inflation globally and in the United States. Assuming no expansion in biofuel production in the U.S., we estimate the IMF global food commodity price index would have increased by over 40 percent from April 2007 to April 2008, compared with the actual increase of 45 percent. In the U.S., the CPI for all food would have increased by 4.55- 4.60 percent during the first four months of 2008, compared with the actual increase of 4.8 percent,
18
assuming no expansion in U.S. biofuel production. In future years, production adjustments by livestock and dairy producers in response to higher feed costs resulting from the expansion in ethanol and biodiesel production could add a total of 0.6-0.7 percentage point to the CPI for all food.
Mr. Chairman, that completes my statement.
19
Farm Prices for Crops, Livestock, and Livestock Products, 2006-08.
2006
2007
2008P
Livestock
Steers ($/cwt)
85.41
91.82
89-93
Hogs ($/cwt)
47.26
47.09
46-48
Broilers ($/cwt)
64.4
76.4
80-83
Milk ($/cwt)
12.97
19.13
18.90-19.30
Eggs (cents/doz)
71.8
114.4
121-125
Crops
2005/06
2006/07
2007/08E
Wheat ($/bu)
3.42
4.26
6.50
Rice ($/cwt)
7.65
9.96
12.35-12.65
Corn ($/bu)
2.00
3.04
4.25-4.45
Soybeans ($/bu)
5.66
6.43
10.00
Prices Paid by Farmers for Selected Inputs, 2006-08. 010203040506070FeedFertilierFuelsannual percent change20062007Apr. 2008
20
A
Corn-Based Ethanol Production, 2000-16. 0246810121416200020022004200620082010201220142016billion gallonsActualEIA Forecast
21
C
Relative
mportance100.0
2.4
4.0
4.5 to 5.5
F
F
Meats, poul
12.2
0.8
3.8
2.0 to 3.0
Eggs
0.9
4.9
29.2
Dairy
6.4
-0.6
7.4
5.0 to 6.0
Fats and oils
1.5
0.2
2.9
Fruits and veg
8.4
4.8
3.8
3.5 to 4.5
Sugar and sweets
2.0
3.8
3.1
3.5 to 4.5
Cereals and bakery
7.4
1.8
4.4
7.5 to 8.5
Nonalcoholic beverages
6.7
2.0
4.1
4.5 to 5.5
Other foods
9.9
1.4
1.8
3.0 to 4.0
A02468101214161970197319761979198219851988199119941997200020032006percentFoodOverall
22
B
B
Hog-Corn: Bushels of corn equal in value to 100 pounds of hog, live weight. and heifers, live
Steer and Heifer-Corn: Bushels of corn equal in value to 100 pounds of steers
Milk-Feed: Pounds of 16% mixed dairy feed equal in value to 1 pound of whole milk.

http://www.usda.gov/oce/newsroom/congressional_testimony/2008/GlauberSenate061208.pdf

[timhyma]

Ethanol plant keeping strategy close to home
By DAN PILLER • [e-mail] • July 22, 2008

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Superior, Ia. —The towering edifices of the new Green Plains Renewable Energy ethanol plant and the adjacent Great Lakes Cooperative elevator demonstrate how larger ethanol companies are beginning to look something like major oil companies.

The "vertically integrated" oil companies are involved in the production and refining end of the business. So is Omaha-based Green Plains, which began grinding corn at its 55 million gallon Superior ethanol plant last week.


The company's financial results show that, all the concern about the financial state of the ethanol industry notwithstanding, there's money to be made in grinding corn into fuel.

In April, Green Plains completed its purchase of Great Lakes and its 14.5 million bushel grain storage capacity at elevators in northwest Iowa at Superior, Everly, Greenville, Gruver, Langdon, Milford and Spencer. Last year, Green Plains bought a grain elevator at Essex to support its new ethanol plant nearby in Shenandoah.

The combination of ethanol plants with grain elevators isn't new, of course. That's how Iowa's ethanol industry began. But Green Plains is using the combination on a larger scale to try beat the city slickers and their futures markets.

"What we're trying to do is cut Chicago out of the deal," said Wayne B. Hoovestol, the crew-cut former trucker who is Green Plains' chief executive. Green Plains wants to avoid the futures market on the Chicago Board of Trade and instead rely as much as possible on its own physical storage capacity and spot market buying strength.

So far, that strategy looks promising. According to Securities and Exchange Commission filings, Green Plains' average corn cost in the second quarter recently completed was $4.84 per bushel, well below the $6-$7 range corn traded on the Chicago futures markets. Subtract some profits Green Plains made on derivatives deals and the average price dropped below $4 per bushel.

In the second quarter, Green Plans took in $35.8 million in ethanol revenues and earned an operating profit on ethanol of $6.7 million, an operating margin of 18 percent.

Hoovestol said a key factor is the $5.5 million in revenues Green Plains took in from the sale of dried and wet distillers grains, the residue from ethanol production that is sold to farmers. Distillers grains tend to track the price of corn, and the byproduct enables ethanol plant operators like Hoovestol to remain more comfortable whenever corn prices rise.

That kind of financial performance gave Green Plains the courage to open the Superior plant at a time when plant delays, or outright abandonment of projects, have dominated industry news. Verasun Energy of Brookings, S.D., which has plants in Albert City, Charles City and Fort Dodge and is building a plant at Dyersville, said this month it would delay the opening of a completed ethanol plant at Hartley just west of Spencer - along with two other plants in Minnesota and North Dakota. The company cited the profitability squeeze caused by record high corn prices this spring and summer.

Similarly, Amaizing Energy Holding Co., which operates a 48 million-gallon ethanol plant at Denison, has put its planned plant at Atlantic "on hold" for the time being, according to a spokesman.

Because Verasun is a publicly traded company, its delay announcements caused Wall Street to go negative on ethanol. Analyst Troy Gavitt of FBR Research warned in a report that U.S. ethanol production is in oversupply status.

He said the major metropolitan markets that are under mandates to use ethanol for environmental reasons have fully completed the conversion, and home Midwest market for 10 percent ethanol blend is near saturation. That leaves smaller states and cities along the coasts as the last expansion territory, a more difficult proposition considering that ethanol still must be moved by rail.

Green Plains stock, traded on Nasdaq, has tanked along with the rest of the biofuels industry. Last week, it traded at $7, below the $20 it opened at last year.

But Green Plains is grinding forward, along with other ethanol producers. The state's ethanol capacity will rise from 1.5 billion gallons in 2006 and 2 billion gallons last year to 2.4 billion gallons this year, according to the Iowa Renewable Fuels Association. That's not quite the doubling of capacity every other year that Iowa experienced between 2002 and 2006, but it defies the doomsayers that have assailed the industry this year.

A lot depends on corn market conditions. Ethanol producers got some good news Monday when December corn futures dropped to $6.08 per bushel, making the $8 corn that was supposed to slay the ethanol industry seem further away.

Analyst Rick Kment of the DTN market data firm in Omaha wrote last week that the crush spread that defines ethanol plant profitability has swung 75 cents in favor of producers in the last two weeks.

So, Havestool said he's on the winning side of the market.

"Right now, ethanol is the best and most profitable use of corn," Havestool said from his new office of the Green Plains Superior plant. "We're not in the business of grinding corn to lose money."
http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=/20080722/BUSINESS/807220367/1029/BUSINESS

[timhyma]

Yea- Corn around here is above my head now. Tassled out, and looking really good.

[OldPro]

thanks - good info...

"The trade has expected the EPA would rule against Texas, said Vic Lespinasse, an analyst with grainanalyst.com. Approval of the waiver request would be seen as an indication the government was ready to curb ethanol usage, analysts said. "

Corn prices falling and crop looking fairly good. Lots of the flooded areas were able to be replanted and now need the weather to cooperate. The longer EPA waits to make a decision the lower corn prices should be - and therefore the greater the chance that EPA will deny the waiver. Who knows though.

[timhyma]

decision was delayed

The EPA administrator said Tuesday he needed more time to announce whether he will roll back the law mandating a five-fold increase in annual ethanol production to 36 billion gallons. Texas Gov. Rick Perry, who has sought the waiver, said the mandate is contributing to high corn prices that are hurting the state's beef, chicken and dairy industries through higher feed costs.

http://news.ino.com/headlines/?newsid=20080722014019

[OldPro]

Thursday decision day for TX RPS waiver...

if goes ethanol way - will likely gather more GPRE - my favorite ethanol stock. Ethanol stocks don't appeared scared of the decision - although they've been beaten up pretty bad so likely aren't scared of much anymore.

[timhyma]

Big business concocts link of biofuels, food costs
By Brooke Coleman - Special to The Bee
Published 12:00 am PDT Saturday, July 19, 2008
Story appeared in METRO section, Page B7

Print | E-Mail | Comments (6)|

You know the story. Food prices are up. There are many possible culprits, but one of them is allegedly our new appetite for biofuels made from so-called "food crops" such as corn.

Like all good public relations campaigns, the message is simple: Corn is used for biofuels, and that means less corn for food products, thereby making them more expensive. It's an effective message. So good, in fact, that biofuels are now part of any conversation about food prices.

Problem is, it's a message driven by corporate profit, not consumer concern.

It recently was discovered that the Grocery Manufacturers of America, the Washington, D.C., trade association representing many of the largest food companies in the world, is spending millions of dollars on this public relations campaign to blame biofuels for rising food prices, even going as far as staging an event recently at the Capitol in Sacramento.

But Sacramento isn't the only capitol in play. The Grocery Manufacturers are working closely in Austin with Republican Texas Gov. Rick Perry to overturn federal biofuels policy. But it turns out that Perry's anti-biofuel campaign started with a $100,000 check from the infamous poultry magnate Lonnie "Bo" Pilgrim, one of the biggest polluters in Texas.

The Houston Chronicle reported this week that Pilgrim also paid $9,000 in airfare for Perry and three aides to headline an anti-biofuels press event in Washington, D.C., in June, and signed a $25,000 check to Perry's political committee one month after the governor launched the campaign.

While the Grocery Manufacturers point the finger at biofuels for food prices, Kraft Foods, which is on the Grocery Manufacturers' board of directors, boasts in a press release that company profits grew 9 percent in part because of its own "recent price increases." Kellogg's and General Mills are catching on quickly, crying publicly for the consumer while reaching deeper into their pockets in the grocery aisle.

The livestock industry is stoking the fire with millions of their own because they say biofuels are responsible for increasing the price of corn-based animal feed. Ethanol demand has slightly increased the price of corn, but a noted agricultural economist recently attributed 75 percent of the increase in corn prices to higher oil prices. Either way, they built their chicken empires on cheap corn feed, and they want their trough back.

When the Texas governor petitioned the Environmental Protection Agency to suspend federal biofuels policy, he referenced a biofuels study by Texas A&M. Except he forgot to mention the study's primary findings: The underlying force driving change in the agricultural industry is the price of oil, and that corn prices have "little to do" with food costs.

A simple analysis of farm costs tells the story. Of the major U.S. farm inputs, the prices of fuel and fertilizer have increased by the largest margin. Fuel costs are up by 100 percent in the past 12 months, as oil companies gorge on record profits. But fertilizer, also made from oil, is up 45 percent, the largest price increase of any farm input over the past 10 years.

Rising oil prices also spike freight costs. The average chicken travels 1,000 miles to market. This is because the vast majority of chickens come from huge poultry farms in Maryland or Arkansas. Imagine an 18-wheeler getting 6 miles per gallon from Arkansas to Sacramento. Now think about Arkansas to Maine. This is part of the reason why more than 80 percent of what we pay for food in the grocery store accrues after the farm, for marketing, packaging and transportation.

And this is where the Grocery Manufacturers' consumer concern becomes truly insincere. While using less biofuel might save the average family $15 per year for groceries from slightly lower corn prices – assuming Kraft passes along the savings – using less biofuel will increase gas prices by 15 percent to 25 percent, according to Merrill Lynch. That's about $500 per year at the pump per person.

And remember something about the federal biofuels policy that Big Food and Big Oil want to overturn: Sixty percent of the biofuels required by the law are advanced biofuels such as cellulosic ethanol. These are the fuels that that could fundamentally change U.S. fuel markets.

We must take the food crisis seriously, but it starts with an honest debate. Getting caught up in a manufactured food-vs.-fuel PR campaign will not discourage world leaders from defending bad trade policies that actually cause world hunger, and rolling back biofuel policy will not stop millionaires from trading food staples like baseball cards, infusing risk into basic commodities.

But suspending biofuel policy will do one thing. It will increase our dependence on foreign oil and spike gas prices even higher. And that's a consumer nightmare worth taking seriously.

http://www.sacbee.com/110/story/1093638.html

[timhyma]

OPEC - Leading the charge for disinformation
By CLIFF MAY, Scripps Howard News Service
Tuesday, July 22, 2008

The folks over at OPEC, the Organization of Petroleum Exporting Countries, must think we're pretty stupid. The other day, Chakib Khelil, the current OPEC president, asserted that "the intrusion of bioethanol on the market" is responsible for 40 percent of recent increases in the price of oil.

Now how exactly would that work? How does growing sugarcane in Brazil or corn in Iowa push up the price of oil sucked from holes in the ground in Saudi Arabia, Iran and Venezuela? If we roasted the corn and put the sugar in coffee -- instead of making it into alcohol fuels -- would oil prices go up less?


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And if mixing a little ethanol in with gasoline has caused much of oil's latest price rise, does it follow that replacing oil entirely with alternative fuels would result in even higher oil prices? By that logic, if everyone switched from Coca Cola to Kool-Aid, the price of a bottle of Coke would go up rather than down.

They say we live in an Information Age but where energy is concerned it's more like a Disinformation Age, thanks in no small measure to the money and clout wielded by OPEC -- a cartel whose sole interest is to preserve petroleum's near-monopoly of the transportation fuel market and keep the price of oil as high as possible.

Please note, too, Khelil's term for competition: an "intrusion" on the market. Guess OPEC won't be giving away any Milton Friedman Awards this year.

Perhaps Kheilil believes he can get away with blaming the global energy crisis on farmers because so much of the media embraced the earlier slander that ethanol production is causing hunger. In fact, of course, it's the other way around: Rising oil prices have contributed to higher food prices because oil is used to cultivate crops, to fertilize crops, to transport crops and to process agricultural products.

But doesn't devoting farmland to fuel mean there is less land available for food production? Not to any significant extent because we live in a country where there is so much arable land that for years the government has been paying farmers not to farm all of it (lest too much food be produced and prices fall so low that farmers can't make a decent living). Nor has agricultural science reached the limits of how much can be produced per acre.

What's more, in other parts of the world -- Latin America and Africa, for example -- there are vast expanses of land that can be sown (excluding rain forests and critical habitat) -- if farmers have the tools.

Brazil provides an example: Over the past 30 years, Brazilian farmers have greatly increased the amount of sugarcane they produce and the amount of alcohol fuel they derive from it. They now have more than enough sugar for the table, and they also are on track to displace half the country's gasoline demand with ethanol -- at $45 per barrel, according to Florida International University scholar George Philippidis. As you well know, oil today is just over three times that expensive.

Brazil has gone from 80 percent foreign oil dependence to zero percent dependence. Over the same period, the United States has gone from 30 percent dependence to over 60 percent. In addition, Brazil should soon derive 15 percent of its electricity by burning sugarcane waste.

A more plausible rap against ethanol: In the United States, it receives government subsidies. But the research being done thanks to these subsidies is already giving rise to technologies that will allow fuel in the not-too-distant future to be made from crop residues, grasses, weeds, algae and perhaps plants bioengineered specifically for this purpose -- and able to be grown on land unsuitable for food crops.

What's more, do you really think oil is not subsidized? Former CIA director James Woolsey estimates that U.S. oil companies receive preferential tax treatment worth more than $250 billion a year -- and that doesn't include the military costs necessary to keep oil supplies flowing around the world. We do that because oil is a strategic commodity: Western economies cannot function without it. That will be true until the day oil is forced to compete with a variety of alternative fuels.

But that day will be long in coming if OPEC has anything to say about it. And OPEC has a lot to say about it, including Chakib Khelil's claim that the mere prospect of competition is driving the cost of oil up, rather than providing us with the only weapon that can drive it down. It's a lie -- a big, bold, and obvious lie. But OPEC figures we're stupid enough to believe it.

EDITOR'S NOTE: The writer is president of the Foundation for the Defense of Democracies, a policy institute focusing on terrorism. E-mail him at [e-mail]

http://www.courierpress.com/news/2008/jul/22/opec/

[timhyma]

Midwest senators renew ethanol pipeline efforts

7/21/2008, 2:45 PM CDT




U.S. Senators Tom Harkin (D-IA) and Richard Lugar (R-IN) on Monday introduced legislation aimed at helping to efficiently bring ethanol to communities across America by giving pipeline owners the same tax benefits they receive for moving petroleum products.

While the Midwest and Plain states produce the most renewable fuels, the country is lacking the infrastructure to most efficiently transport these liquid fuels to population centers in the East and elsewhere.

While the most efficient mode for transporting liquid biofuels is by pipeline, a provision in the tax code is effectively blocking Publicly Traded Partnerships (PTP) -- that build and operate most liquid pipelines -- from moving forward. By law, PTPs are supposed to earn 90% of their income from the exploration, transportation, storage, or marketing of depletable natural resources, including oil, gas, and coal, but not renewable fuels.



The Harkin-Lugar bill would change the tax code to state that PTPs can earn "qualified" income from the transport, storage, or marketing of any renewable liquid fuel approved by the Environmental Protection Agency.

"We must seize control of our energy future and shift rapidly and robustly to clean, home-grown sources of energy, including ethanol and other renewable fuels. Our bill makes a simple change to the tax code that meets the demands and realities of the 21st century energy marketplace, removing barriers so that biofuels producers in the Midwest and elsewhere will have an efficient, inexpensive way to transport these renewable fuels to the market. And it will continue to provide relief to consumers getting hit hard with rising fuel costs." Harkin said.

"We must explore every option for reducing our dependence on foreign oil. Overcoming problems in moving ethanol through pipelines, as Brazil has done, is important in developing the full promise of America's renewable fuels. This legislation will help determine U.S. infrastructure planning and development, Lugar added.

Harkin and Lugar have partnered together on several efforts to boost ethanol transport by pipeline. In March 2007, the two introduced The Ethanol Infrastructure Expansion Act of 2007, directing the Department of Energy to conduct a feasibility study on transporting ethanol by pipeline. The measure was included in the energy bill that became law on December 19, 2007. An expanded version of that measure was also included in the new farm bill passed in May.

[timhyma]

lol- such b.s., blaming everything, but high fuel costs for their delima:

Bakers press for government action

(Bakingbusiness.com, July 18, 2008)
by Josh Sosland

--------------------------------------------------------------------------------





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A.B.A. calls for bakers to take concerns to Washington
(Bakingbusiness.com, February 14, 2008)


WASHINGTON — The American Bakers Association is maintaining pressure on the Bush administration and Congress to take action in response to rising food costs.

"Congress and the Bush administration must act now in order to stave off further increases in consumer food prices," said Kenneth (Chip) Klosterman, president of Klosterman Baking Co., Cincinnati, and chairman of the A.B.A. "Consumers are at their breaking point. A.B.A. strongly urges members of Congress to take action before they return home for the August break, to alleviate the increasing food cost burden on the American consumer."

The A.B.A. cited recent Consumer Price Index data showing food inflation of 1% in June, and up 9% over the past year. Historically, food inflation has been 2.5%.

"Congress and the administration should take immediate action by implementing A.B.A.’s action plan, which includes returning non-environmentally sensitive Conservation Reserve Program acreage to production repealing detrimental food for fuel mandates," said Robb MacKie, president and chief executive officer of the A.B.A.

The A.B.A. noted that more than a year ago it submitted a request to then Secretary of Agriculture Mike Johanns to allow farmers a release from the Conservation Reserve Program immediately and without penalty, up to 10 million acres.

Since then, the A.B.A. has met about the issue on multiple occasions with Secretary of Agriculture Ed Schafer, White House and congressional leaders to press the matter.

"The C.R.P. currently idles millions of acres of productive farmland," Mr. MacKie said. "If C.R.P. land would have been released last summer, farmers would have been able to plant additional wheat in the fall, possibly avoiding the runaway spike in wheat price in early 2008, which are contributing to today’s record consumer prices for baked foods. Congress missed the opportunity to proactively address this issue during the farm bill. Consumers cannot afford further congressional and administration inaction."

[timhyma]

Gov. Edward G. Rendell last week signed legislation designed to increase the production of biofuels statewide and boost an ailing economy.


"Record-high fuel prices are straining family budgets and pinching the bottom lines of our businesses," Rendell said at a July 10 bill-signing ceremony in the Army National Guard Facility in Plymouth Meeting.

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"We need to reduce our dependence on foreign oil and keep our energy dollars in Pennsylvania - to invest in our economy and create jobs."

Rendell signed two separate bills at the ceremony. The first, Special Session Senate Bill 22, requires the state to create an annual $5.3 million subsidy for in-state biodiesel producers, providing eligible companies with up to $1.9 million per year each until June 30, 2011.
House Bill 1202, sponsored by State Rep. Mike Gerber (D-148), requires fuel producers to blend increasing quantities of biofuels with petroleum as in-state production of biofuels rises.

All gasoline available for retail sale must contain 10 percent cellulosic ethanol once production of that fuel reaches 350 million gallons. (Most cars can run on 10 percent ethanol without being modified, according to Rendell.)

Once in-state production of ethanol and other biofuels reaches 400 million gallons, diesel fuel retailers will be required to sell a blend containing 20 percent biofuel. Blending requirements will increase over time, starting with 2 percent biofuel when in-state production hits 40 million gallons.

Pennsylvania biodiesel producers currently can put out 60 million gallons per year. A facility under construction in Clearfield County, a rural area in the midwestern part of the state, is expected to produce another 100 million gallons per year.

If widely used, cellulosic ethanol could reduce greenhouse gas emissions, a major contributor to global warming, by up to 86 percent, according to the U.S. Department of Energy, while biodiesel could cut those emissions by 50 percent.
When the governor first introduced his energy plan 16 months ago, there was no provision calling for increased production of cellulosic ethanol, which is derived from non-food sources.

But corn-based ethanol has since been linked to rising food prices worldwide, as many American farmers have decreased food production in favor of planting corn for fuel.
Rendell's administration pushed for changes to the legislation to address concerns about food prices and tap into the state's variety of biofuel sources.

"Pennsylvania can be to cellulosic ethanol what corn-based ethanol was to Iowa and the Midwest," Rendell said. "Pennsylvania has an abundant supply of cellulosic ethanol feedstocks, including switchgrass, woodchips, municipal waste and agricultural waste. This alternative fuel law ensures that Pennsylvania farmers and businesses will fully realize the benefits of these resources."
Increased biofuel production will also create more jobs in Pennsylvania, according to Rendell.

A research study commissioned last year by PennFuture, a state nonprofit that lobbies for environmentally sound investments, concluded that offsetting 900 million gallons of petroleum-based vehicle fuel with fuels derived from coal and renewable energy sources, including biofuels, could create up to 25,775 new jobs in the state economy and generate $1.5 billion in new revenues.
But Rendell noted that increased biofuel production alone will not resolve the state's lingering environmental and economic issues.

"We can never make production to meet demand," he said. "We have to reduce demand. We have to incentivize conservation, and we have to do it quickly."

Rendell said the state legislature will address conservation this fall along with the 30 to 70 percent rise in electricity prices expected to come next year when the legal cap on energy prices expires.



http://www.zwire.com/site/news.cfm?newsid=19855104&BRD=1681&PAG=461&dept_id=40467&rfi=6

[OldPro]

hopefully it was a courtesy...

meeting to explain to the TX Gov why they can't grant the waiver - of course this was explained only after Johnson listened to TX reasons for wanting it and they discussed other ways for EPA to help TX. who knows.

My theory is that President can't take chance that gas prices spike on news of granting the waiver - not in an environment when supposed to be doing all to lower gas prices. Anyway, Pres trying to help TX by giving more drilling rights/options - can't give them everything. Have seen a few estimates that ethanol currently lowers gas prices $0.29 - $0.40 per gallon.

Over-simplifying somewhat - but things are using simpler than they appear. We'll know later this week.