Is Organic Corn the Way to Go Next Year?

Let’s face it. Input costs for seeds and chemicals cost a lot when growing field corn.

Will the new farm bill step up to the plate and cover these costs with its new higher price floors?

Is it worth it?

What are the options?

Is it time to switch to growing organic corn?

Or, might policy increase the demand for corn and soy through biofuel policies – to pick up this over-production slack?

Or, should government conservation programs step up and pay more to idle land? (That is not the plan as far as I know.)

Today, let’s take a look at what Chad Hart over at Iowa State is expecting in negative returns per acre to grow corn this year and next. Then, let’s take a look at profit margins for growing organic corn from previous USDA data.

From Iowa State’s Hart:
Based on our ISU estimated production costs, corn margins are a negative $225 per acre and soybean margins are negative $100 per acre. After several years of significant profits for Iowa crops, these margin losses are large. And the margins don’t improve much as we look at the 2015 crops. For corn, the futures market is showing enough carry to push the projected 2015 season average price to roughly $3.50 per bushel. But that’s still $1 per bushel below projected 2015 production costs. Soybean futures for the 2015 crop aren’t provided nearly the same boost. The projected 2015 season average soybean price based on current futures is $9 per bushel. That’s $2 per bushel below projected production costs.

From the USDA:

In 2010, U.S. producers saw average returns of $307 per acre for conventional corn, compared with $557 per acre for organic corn, primarily because higher organic corn prices more than offset lower organic corn yields. Total operating and ownership costs per acre (seed, fertilizer, chemicals, custom operations, fuel, repairs, interest, hired labor, capital recovery of machinery and equipment, taxes, and insurance) were not significantly different between organic and conventional corn, although many of the individual cost components differed. Three major components of operating costs—seed, fertilizer, and chemicals—are lower for organic corn than for conventional corn, while some components of ownership costs—the capital recovery of machinery and equipment, and taxes and insurance—are higher for organic corn. Although the acres planted to organic corn nearly tripled between 2001 and 2010, organic corn accounted for less than 1 percent of total 2010 corn acres.

It will be interesting to see what the producers decide and how acreage numbers look next year. And it will be interesting to see if there will be more farms coming available for sale in corn country.

Reinert Interview: Energy Environmental Sacrifice Areas

Today is the third post in this Monday series of subjects covered during my summer 2014 interview of Bill Reinert, recently retired energy engineer for Toyota who played a key role in the development of the Prius and then assumed the role of future transportation planning of alternative-fueled vehicles at Toyota. See his full bio here.
–Kay M.

Alberta’s tar sands. Photo credit: NRDC.

K.M.: You’ve referred to the tar sands region of Alberta Canada as an environmental sacrifice area. There will be more environmental sacrifice areas as we continue to extract energy from this Earth. Paint a vision of the future for us. How ugly could it get, this thirst of ours for energy at any cost?

Reinert: Yes, I’ve flown over the tar sands area in a helicopter, and took photographs of it for Bloomberg news, and if you see the incredible destruction of the arboreal forest there you can’t imagine that it can ever be cleaned up.

There is destruction elsewhere. Parts of Africa have badly leaking and poorly maintained oil fields. You saw what happened in Ecuador with Chevron, and the destruction of indigenous species. You see ecological destruction in Brazil with the ever greater quest for ethanol because as sugarcane farmers push other farmers and cattle ranches further to the edge, the rainforest gets torn down. In Georgia, they’re clearcutting forest and exporting wood to the E.U. for the purpose of using renewables to replace coal with wood.

West Virginia comes as close as anywhere for being a sacrifice state. That’s where I grew up so I’ve seen how disgusting and ugly the mountain topping is for coal mining. I tubed on the Elk River when I was young, where the terrible chemical spill was earlier this year. There are some badly contaminated port areas. Then, there’s the Dead Zone in the Gulf of Mexico related to our ethanol production. I could go on and on.

To their credit many of the Middle East producers have the least amount of pollution for the amount of oil they produce. Their systems are very modern and their production plans balance the amount of oil produced with the life of the oil field.

We’re balanced on a knife edge, and we’re balanced on a commodity trading system that could go wrong real fast. We import about 50 percent of our oil and we export a lot, too, partly because of the way our refineries are set up. We refine high sulfur fuel oil and the Europeans refine the light sweet crude. We produce an over abundance of diesel, they produce an over abundance of gasoline, so we trade.

Just think what would happen if all of a sudden that trade were shut down. Things would run OK for awhile, but they’d run down pretty rapidly and then you’d see real destruction to get to those last resources. It could happen as easily as a dirty bomb in the Port of Los Angeles. That could shut down the commerce of the whole United States if we’d overreact like we did for 9/11.

May not be reprinted without permission.

To see last week’s interview on ARTIFICIAL PHOTOSYNTHESIS click here.

Coming next week will be Reinert’s thoughts about the limits to growth.

How Much Energy is Required to Grow and Harvest Various Crops and How Much Does it Cost?

Some like to say that food equals fossil fuel energy, and while I disagree with that over-simplification, we cannot deny that modern day agricultural methods rely upon fossil fuels. Today’s post comes from the U.S. Energy Information Administration. It breaks down some energy input numbers using data from the USDA as well as the EIA. Interestingly, it also compares energy inputs for growing crops to energy inputs for producing livestock. –Kay M.

Energy for growing and harvesting crops is a large component of farm operating costs

graph of operating expense for various crops, as explained in the article text

The U.S. agriculture industry used nearly 800 trillion British thermal units (Btu) of energy in 2012, or about as much primary energy as the entire state of Utah. Agricultural energy consumption includes energy needed to grow and harvest crops and energy needed to grow livestock. Crop operations consume much more energy than livestock operations, and energy expenditures for crops account for a higher percentage of farm operating costs.

Agricultural energy consumption includes both direct and indirect energy consumption. Direct energy consumption includes the use of diesel, electricity, propane, natural gas, and renewable fuels for activities on the farm. Indirect energy consumption includes the use of fuel and feedstock (especially natural gas) in the manufacturing of agricultural chemicals such as fertilizers and pesticides.

Energy makes up a significant part of operating expenditures for most crops, especially when considering indirect energy expenditures on fertilizer, because the production of fertilizer is extremely energy-intensive, requiring large amounts of natural gas. For some crops like oats, corn, wheat, and barley, energy and fertilizer expenditures combined make up more than half of total operating expenses. The proportion of direct to indirect energy use varies by crop. For example, corn, which is also used as an energy input for ethanol production, has relatively low direct fuel expenditures but has the highest percentage of fertilizer expenditures.

graph of U.S. direct energy consumption for crops and livestock, as explained in the article text

Source: U.S. Energy Information Administration, Annual Energy Outlook 2014

The energy consumed in livestock operations is almost solely direct energy consumption and is relatively low compared with crop operations, both as a percentage of total operating expenditures and on a total energy basis. Livestock operations consume direct energy for ventilation systems, refrigeration, lighting, heating, watering, motors, and waste handling, whereas crop operations use energy to plant, harvest, irrigate, and dry crops. The energy consumed in the production of livestock feed is not included in this analysis of livestock energy consumption.

Distillate fuel is the dominant fuel for direct energy consumption for both livestock and crop operations. Distillate is used for crop tilling, harvesting, weed control, and other operations that require heavy machinery. Crop drying is another fuel-intensive farm activity, and the amount of fuel used varies by the type of crop and its moisture content. High-temperature dryers are powered by either electricity or propane.

Supplying water can also be an energy-intensive task. Although some farms have access to public water supplies, most farms pump water from wells and groundwater sources. Most pumping is done with electricity, but pumps in remote locations may use diesel or propane.

The chemicals used by the agricultural industry are a subset of the bulk chemical industry and include fertilizers and pesticides. Nitrogenous (ammonia-based) fertilizers require large amounts of natural gas as a feedstock and provide heat and power for processing. EIA’s 2010 Manufacturing Energy Consumption Survey estimates that the U.S. nitrogenous fertilizer industry consumed more than 200 trillion Btu of natural gas as feedstock in 2010 and another 152 trillion Btu for heat and power.

In addition to being major energy consumers, some farms are using renewable resources to produce energy. Wind turbines, methane digesters, and photovoltaics are the most common on-farm renewables. Renewable energy can help to offset the need for purchased energy. In some cases, the renewable energy produced on farms is sold to electric power suppliers, providing additional income for farmers.

Principal contributor: Susan Hicks

What IF We Have Fusion Ten Years From Now? Here are 12 Possibilities.

Nuclear fusion has always been the dream of scientists as an ideal energy source, but has so far been elusive after many decades of work. However, two days ago, Lockheed Martin reported that it would have successful nuclear fusion available in a small-sized unit platform about ten years from now.


Skunk Works Compact Fusion Site at Lockheed Martin
Reuters Article on Scientific American: Lockheed Claims Breakthrough on Fusion Energy
Forbes: Lockheed Martin Claims Fusion Breakthrough That Could Change World Forever

If this is true it will change the world as we know it. On the other hand, claims of fusion have always existed somewhere off in the distant future. Is this time any different? We don’t know, but it’s worth considering how it could change the world if this announcement becomes the real deal.

Here are twelve likelihood’s.

1. Desalinated water would become cheap. The deserts of the world could become the farm regions for the world – if located near the sea. Warm regions could grow food year-round. Water woes would be mostly forgotten about and more people could locate in climates which are desirable but currently restricted by water supply. California’s water woes would be gone. So would the Middle East’s.

2. This would be a totally disruptive technology. We would no longer need the grid and would instead have distributed power. Transportation would go fuel cell, electric, and hybrid. We’d have much less need for today’s fossil fuels such as oil, coal, and natural gas and could greatly reduce human induced CO2 emissions. We wouldn’t need wind generators, either. Some solar photovoltaic might still be useful. Buildings which are heated with natural gas could be heated with electricity instead. Air conditioning and refrigeration would become cheap.

3. There would be no need for biofuels. Ships would be powered with fusion units. There is speculation that we could have unlimited flight time for airplanes, too.

4. Regions which are currently being farmed could be returned to the wild.

5. Urbanization could continue with much greater confidence. Today’s ideas of city greenhouses and hydroponic growing centers would be far more feasible with cheap available water and energy, especially along the coastlines.

6. Farms would continue to industrialize, but in modern technical ways, as opposed to today’s political-corporate ways. Tractors and combines would be powered by fuel cells. Fusion could be the energy source for producing nitrogen fertilizer.

7. Most of the developing world could advance far more rapidly if fusion becomes available. Computers, robots and technology would continue to advance at an unprecedented pace. Medical advances and longevity advances would be included.

8. Leisure time for humans would become a greater reality. Some economists already believe that it will become necessary to pay people to “exist” because jobs are not available as we become more efficient, as we use more and more robots, and as computers and communications continue to eliminate jobs. We’d need even fewer people to produce food and basic goods. New models would be needed which would pay people to be artists and service workers and other types of meaningful contributors to society. Economies should do well if cheap energy is available reliably since expensive energy is akin to a tax on industrialized nations, though they’d need to adjust to this disruption.

9. Population would continue to grow and grow with fewer limits to growth. Would we finally have the political will to place a value on the natural world and on biodiversity? Would pollution become our greatest problem, then, or could fusion help us to get rid of pollution? Perhaps it could.

10. We wouldn’t need hydropower anymore, so rivers could be undammed.

11. Perhaps every region or nation could become food secure.

12. Increased globalization: The world would become even smaller. So might the Universe. There would be a greater chance for peace. So be it.

What DO YOU think would happen?

Photo credit: Lockheed Martin.

Statistics on Global Family Farm Size

Over 500 million family farms produce the world’s food.

The vast majority of the world’s farms are small or very small, and in many lower-income countries farm sizes are becoming even smaller.

• Worldwide, farms of less than 1 hectare account for 72 percent of all farms but control only 8 percent of all agricultural land.

• Slightly larger farms between 1 and 2 hectares account for 12 percent of all farms and control 4 percent of the land.

• Farms in the range of 2 to 5 hectares account for 10 percent of all farms and control 7 percent of the land.

• In contrast, only 1 percent of all farms in the world are larger than 50 hectares, but these few farms control 65 percent of the world’s agricultural land. Many of these large, and sometimes very large, farms are family-owned and operated.

The above graphic shows global farms by farm size covering a total of about 460 million farms in 111 countries. (Since this data is difficult to obtain, numbers are estimated.)

The highly skewed pattern of farm sizes at the global level largely reflects the dominance of very large farms in high-income and upper-middle-income countries and in countries where extensive livestock grazing is a dominant part of the agricultural system.

Land is somewhat more evenly distributed in the low-and lower-middle-income countries where more than 95 percent of all farms are smaller than 5 hectares. These farms occupy almost three-quarters of all farm land in the low-income countries and almost two-thirds in the lower- middle income group.

In contrast, farms larger than 50 hectares control only 2 percent and 11 percent, respectively, of the land in these income groups.

Source: FAO.