Category Archives: corn

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.

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

Financial Times Features Global Grain Surplus Story Plus Video

The Financial Times and commodities writer Gregory Meyer are known for their quality articles. They’ve covered the U.S. and global surplus of grain story in an article including a video (below).

Story here: Commodities: Cereal excess By Gregory Meyer. “Global grain supplies are soaring, which will cause an eventual slowing of food price inflation”

Ethanol Export Expansion Possible


This U.S. Grains Council chart illustrates potential ethanol use if countries enforced their current biofuels mandates.

The U.S. Grains Council is looking to export markets for ethanol expansion…

If countries enforced existing biofuels mandates using ethanol, their gasoline use in 2012 would suggest that the top 10 ethanol consumers would require 3.5 billion gallons of the renewable fuel. The next 10 would add another 393 million gallons of demand.

As examples of the potential ethanol demand that would be driven by enforcement of existing mandates, ethanol consumption in Japan would increase from 9 to 459 million gallons and in Mexico, from 4 to 236 million gallons. Starting this fall, the team will assess Japan and Korea, Latin America and Southeast Asia as potential markets for U.S. ethanol exports.

These markets represent the potential for a huge growth in global ethanol demand. The Council and its partners have initiated ethanol export market development programs in 2014.

Note that looking to expand the export of ethanol in today’s environment of surplus corn was highly expected. Maybe we should call it exporting our topsoil, exporting our tax dollars, and, exporting our Monarch’s and our songbirds to some forgotten place. Who are the winners? The big agribusiness companies.


source: http://grains.org/news/20140814/top-10-potential-us-ethanol-markets-20142015