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July 2008 Archive for Top of Mind

RSS By: Jeanne Bernick, Top Producer

Jeanne, Top Producer Editor, grew up on a beef cattle operation in Southwest Missouri and now writes from the heart of corn country in Eastern Iowa.

Split in the Show Me State

Jul 29, 2008
Ethanol has created a split in Missouri’s farming community.
 
The issue of ethanol’s demand for corn and resulting higher livestock feed prices is spurring heated debate across the state, from the Capitol to local farm organizations.
 
Now, a Missouri House committee says it will spend the rest of the summer studying ideas for keeping both the livestock and biofuels industries sustainable.
 
Only two years ago, Show-Me State lawmakers overwhelmingly voted to require a 10% ethanol blend be sold in all gas stations. Several lawmakers who voted for the state ethanol mandate sponsored a bill this year to repeal the requirement (the bill did not pass).

Republican candidate for governor Sarah Steelman is campaigning behind a call to repeal Missouri’s 10% ethanol mandate, stating that “since the state mandate was implemented in January 2008, gas prices have risen more than 35%” and that “ethanol is not as efficient as gasoline.” Instead, Steelman proposes to construct an oil refinery in Missouri to create jobs and expedite the delivery of fuel in the state.

The problem is the precedent set forth by Missouri, in which a state government develops a guaranteed market for a product and now wants to close off that market.

Missouri Rep. Charlie Schlottach, R-Owensville, told the Associated Press that his committee won't be looking to justify or debunk ethanol - just identify objective facts to help lawmakers in future public policy decisions. But he does acknowledge some worries about using crops as an energy source. As reported by the Associated Press: "Agriculture's No. 1 focus needs to be on food and not on energy," Schlottach said. "And I think we've taken our eye off the ball.”
 

Who's behind the RFS waiver request?

Jul 23, 2008
The EPA announced this week it would delay any decision on granting Texas Gov. Rick Perry’s request for a waiver on the Renewable Fuel Standard (RFS). The government agency says that given the amount of work remaining to sufficiently answer the Texas request (the EPA received over 15,000 public comments), there is no way it can offer a final decision by the deadline of July 24. It hopes to reach a decision by early August.
 
Although EPA Administrator Stephen Johnson says the process will remain “fair and open”, and that “no agreements have been made with any party in regard to the substance and timing of the decision on the waiver request,” can the same be said for Gov. Rick Perry’s decision to ask for the RFS waiver in the first place?
 
According to a story in the Houston Chronicle earlier this month, Perry's waiver request came after the governor met with Texas poultry producer Lonnie "Bo" Pilgrim. Six days after Perry met with Pilgrim in March, Pilgrim donated $100,000 to the Republican Governors Association, which Perry chairs. The businessman also spent more than $9,000 on airfare in June so Perry and three aides could attend a conference in Washington promoting the waiver, according to the Houston Chronicle.
 
And he donated $25,000 to Perry's political committee about a month after the waiver request was made.
 
In all fairness, Perry has opposed food-based ethanol production for some time, and his office has denied any connection to Pilgrim's donations, reports the Chronicle. Some of the country's largest grocery manufacturers have joined corn, livestock and poultry producers in a campaign against ethanol, blaming the motor fuel additive for rising grocery prices.
 

Floods Not Slowing Biofuels

Jul 08, 2008
The ethanol industry absolutely is not slowing down because of the flood. So says Monte Shaw, executive director of the Iowa Renewable Fuels Association, which represents the largest volume of ethanol production by state.
 
All of these media stories about the flood killing the biofuels industry "is the speculators talking,” says Shaw. He is referring to the rash of mainstream media stories highlighting delayed startup of new plants and canceled ethanol projects. Some say the Midwest flood, potential poor corn crop and high corn prices are causing a slowdown in the industry.
 
“Sure there are facilities that have completed and will not start up, and obviously they have their reasons, but you can't just say it's because of the flood. Each plant has a different debt load, different contracting and a different hedging plan than others.
 
“Of course if plants went and bought spot corn and tried to turn it into ethanol, they would lose money today,” says Shaw. “But that’s just not happening.”
 
As for the people who say the U.S. needs to change public biofuels policy in preparation for a bad corn crop, Shaw says simply this: “That is asinine.”
 
“You can’t take what is happening on July 1 and predict what the corn crop is going to be this fall. If we have favorable weather the rest of the way out, it could be our third best crop ever,” he says.
 
“So before we start changing public policy that is supposed to guide us over decades, let’s see how this crop year turns out,” Shaw says.
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