Category Archives: corn

China is a Major Importer of Distillers Grains DDGS

This graph will show you what rising incomes and more meat consumption in China mean for the U.S. agricultural export market.

China’s demand for imported grains, much of it from the United States, has surged recently, with imports of cereal grains rising to 16 million tons in 2012 and 18 million in 2013. Imports in 2013 included 3 million tons of corn and 4 million tons of DDGS (distillers dried grains with solubles; a co-product of U.S. corn ethanol production used for feed) from the United States.

In 2013, the United States supplied 70 percent of China’s wheat imports and, for the first time, China became a major market for U.S. sorghum. China’s demand for feed grains appears to have reached a turning point, as a tightening labor supply and rising feed costs force structural change in China’s livestock sector.

Labor scarcity, animal disease pressures, and rising living standards are prompting rural households to abandon “backyard” livestock production and shift more production to specialized farm enterprises that rely more heavily on commercial feed. Because of this, China has switched from being a corn exporter to importing 3-5 million tons annually since 2009.

Rising feed demand has also pushed up costs and motivated feed mills and livestock producers to explore new feed ingredients like DDGS and sorghum.

source: usda

Corn Acres Increased 25% from 2006 to 2012

You will see from the data in this post that the RFS mandated corn ethanol program spurred corn acreage by 25 percent in the U.S. because of a new and rapid increased demand, which drove prices higher.

Below, is a recent graph and report from the USDA:

Positive grower returns have supported the expansion of U.S. corn area since the late 2000s. Returns to corn production—the value above total economic costs that include opportunity costs of land, labor, and other owned resources—have been positive since 2007.

Returns reached a high of $224 per planted acre in 2011 before declining to $48 in 2013. With economic profit available from corn production, planted corn acres increased nearly 25 percent nationally from about 78 million in 2006 to a record of more than 97 million in 2012. In 2013, however, lower corn price expectations pushed down planted area, and lower corn prices, along with higher land costs, reduced returns to corn production.

From 1997 to 2006, economic returns to corn production had been negative, averaging -$74 per planted acre. During this time, planted corn acreage was relatively stable between about 75 and 80 million acres.

source: USDA

The World is Drowning in Corn

Again and again we see that in agricultural commodities like corn, the best cure for high prices is high prices. The U.S.’s rapid ramp up in ethanol production created a sudden demand for corn, but now five to six years out, we, along with the rest of the world, have responded by producing more corn to cash in on the high corn prices of recent years.

Now, with low corn prices, ethanol producers will be more profitable and even Brazil, the king of sugar cane ethanol production, is considering turning more of their corn crop into corn ethanol.

The remainder of this post is from the USDA:

Global corn ending stocks forecast to be the highest in 15 years

Global corn stocks are forecast to rise to the highest level in 15 years by the end of 2014/15 (September/August), leading to downward pressure on U.S. and global corn prices. Stocks fell to relatively low levels during 2003/04-2006/07, prior to the 2008 spike in world commodity prices, but are now forecast to reach 188.1 million tons in 2014/15, just 3 percent below the recent high of 194.4 million tons in 1999/2000. Since 2008/09, world corn production has exceeded total consumption in 5 out of 7 years.

In addition to the United States and China—the two largest global producers and consumers of corn—production and stocks have been generally rising in Brazil, Russia, and Ukraine—countries that are also playing an expanding role as corn exporters. With a second consecutive above trend U.S. corn harvest forecast for 2014/15, the United States is expected to account for most of the 8-percent increase in global corn stocks forecast in 2014/15.

With growing inventories, the U.S. season average farm price of corn is expected to decline to $4.00 per bushel, down 10 percent from $4.45 per bushel in 2013/14, and 42 percent from $6.89 per bushel in the U.S. drought year of 2012/13.

source: usda

Photos: Land Use Change Destruction to Grow Biofuels

Conservation Reserve Program Losses

It’s been 15 months, now, since I wrote “Is Anyone Paying Attention? We’ve Lost 9.7 Million Acres of CRP Land in Five Years.” About eight months after I wrote that, the Associated Press did an in-depth story on the same subject in November 2013, concluding the same as I did, that the mandated use of corn ethanol was causing massive abandonment of conservation practices throughout the Midwest, especially in the Dakotas. The AP’s long feature article was splashed across front pages of newspapers across America and its journalist was interviewed on PBS Newshour. Also, two months ago, the Food and Environment Reporting Network covered the story in a piece titled “Plowed Under”.

So the story of the recent unprecedented movement to plow up land and convert it to growing corn and soybeans is finally out there, yet if Gallop did a poll on the subject I shudder to guess how few Americans would actually be aware of what is going on in America’s Heartland. A new farm bill has become law since I wrote my piece and there are glimmers of hope in it, but it is disastrous policy for the soil and biodiversity, to pay out crop insurance which reimburses landowners for failed crops on land which should never have been plowed and planted with row crops in the first place.

Other stories go with this one, including the loss of Monarch butterflies, the loss of bee populations, the loss of pheasants, waterfowl and songbirds, and the loss of rural human populations, too, as the farms become larger and larger in the Midwest.

Today, I have some photos to share with you and at the end of this post I will call your attention to two important new developments which are very negative for the ethanol industry. Both knock down the industry’s repeated claim that it is a green fuel.

Nebraska Photos

First, let’s look at three photos that I took on a recent trip back to Eastern Nebraska.


This first photo shows a farm place which is about to become history. The house and trees around the place have all been bull dozed. Already, the farmer is growing corn right up to the piles of trees and lumber as close as he can get. I expect that next time I see this spot which is very near to the farm that I grew up on, all of the buildings will be gone. This type of sight is not unusual.


This, also close to my childhood farm, is a good example of farming right up to a waterway instead of leaving a strip of grass or treed area. There is nothing to capture the soil, fertilizer, and pesticide runoff during rains, when a farmer decides to farm every square inch of land in ways such as this. Also note the pivot irrigation system setting nearby. This is not over the Ogallala aquifer area, but rather has limited groundwater from which to pump. In the large majority of years, this region experiences adequate moisture to produce good crop yields, but the drought of 2012, along with high corn prices that year, prompted quite a few farmers to add pivot systems to their operations.


This is a photo overlooking a Cargillopoly located near Blair, Nebraska, not far from the Missouri River. This is all about converting corn to ethanol and making other bio-products such as bioplastics. The two-hundred million dollar Denmark Novazymes plant is also located here, as are German and other corn product manufacturing operations. Novazymes manufactures enzymes that are used by ethanol plants throughout the country.

It should be noted that bioplastics, because they decompose, release more greenhouse gases than petroleum plastics, which do not decompose.

That ends my photos from Nebraska.

North Dakota Photos

Next, are some photos taken by my North Dakota photographer friend, Rick, who is documenting the conversion of CRP land, wetlands, and prairie to plowed fields for corn and soybean row crops. They show the sad story of what has happened to highly erodible land in North Dakota. Current farm policy provides profit opportunities from plowing up our nation’s unique waterfowl habitat ecosystem found in this Prairie Pot Hole Region, otherwise it wouldn’t be happening.

In the new farm bill passed this year, you will recall that direct payments to farmers were dropped, while the crop insurance program was expanded, with a new higher bottom floor on prices. Many of Rick’s observations conclude that crop insurance is what makes it profitable for the farmer to plow these highly erodible lands in North Dakota.


Take a look at this “before” shot of a very rocky field left as grassland.


This photo shows us the “after” it’s been plowed version. Can you imagine?


This North Dakota photo pretty much speaks for itself. I asked Rick to send me a photo of a hill being farmed and this bean field is what he sent.


Here is another bean field after the crop and soil have been washed away. Crop insurance should cover it, not to worry.

These next three from Rick show a map marking three CRP fields in 2012 which were plowed in 2013. The top photo is a panoramic showing the fields after they were plowed. He notes that the white areas which show on the map are bare, soil-less hilltops.


(End maps)


Above is another North Dakota field showing severe erosion.


And another. The two photos above are both recently converted CRP (Conservation Reserve Program land) to cropland.


In the top photo taken in the fall of 2013, we see a hayfield/CRP with bales around a prairie pothole, and in the bottom spring 2014 photo we see that it has been plowed. This was taken in Stutsman County, North Dakota. Rick tells me that this county lost 36,000 acres of CRP in 2013. In 2000 it had 180,000 acres of CRP; in 2012 it had 106,000 acres of CRP; and, in 2013 the CRP acres in Stutsman County were down to 70,000 acres.


In a similar comparison, the top photo taken last fall shows a hayfield and bales, and the bottom photo taken this spring shows a plowed field with industrial equipment near a pothole lake. Rick said that this section of land had been in CRP for as long as he could remember.


Rick took this photo and commented that the corn field was still unharvested at the end of November 2013. If the land only produced a few bushels of corn per acre, it was not worth harvesting, yet, it was probably a profitable venture for the farmer because of crop insurance.


This is the final shot from Rick showing us the conversion of a grassland and hay field to plowed land which is badly eroded, in the Prairie Pothole region of North Dakota.

Corn Ethanol Greenhouse Emissions

In the introduction, I said I’d be pointing your attention towards some new studies that knock down the idea that the ethanol industry promotes – that ethanol is a green fuel. Because of the magnitude of environmental problems that it is causing, and its low or negative energy return, I’ve never considered it to be green, but some official reports have come out recently which should really get the attention of our top policy makers.

Just last week, the Environmental Working Group came out with a report telling us that corn ethanol raises greenhouse emissions, which is contrary to what the industry likes to tell us.

Although the RFS explicitly prohibits using converted land to produce ethanol, there is no regulatory framework to enforce this and the USDA has no way of knowing whether corn is being grown on converted land….

In 2012, an Environmental Working Group study found that from 2008 to 2011, more than 8 million acres of grassland and wetlands were converted for corn alone.

In 2013, EWG documented that 23 million acres of grassland, shrub land and wetland had been plowed under for crop production between 2008 and 2011. Eight million acres were converted to grow corn and another 5.6 million to plant soybeans, because the ethanol mandate pushed up soybean prices as well…

EWG’s research shows that roughly 306,000 acres of wetlands were converted to produce corn between 2008 and 2012. The emissions released by this conversion totaled 25-to-74 million tons of CO2 equivalent per year for each of those five years. The additional 8 million acres of grasslands and shrub lands converted to corn from 2008 to 2011 added another 60-to-162 million tons of CO2 equivalent emissions per year over the period, for a total of between 85 million and 236 million metric tons of CO2 equivalent greenhouse gases.

CONCLUSION: The intent of the Renewable Fuel Standard was to reduce greenhouse gas emissions, diminish America’s dependence on foreign oil and promote development of advanced biofuels. Instead it has resulted in rapid expansion of corn ethanol production, increasing greenhouse gas emissions, worsening air and water pollution and driving up the price of food and feed.

Ethanol Causes Increased Ozone in Brazil

A study done in Sao Paulo, Brazil, revealed that ozone air pollution increased when drivers were using ethanol. Again, we’ve been told the opposite, that by using ethanol in our vehicles, ozone pollution would be decreased. This is a huge deal, because for places like the front range of Colorado, which struggles with air pollution and also has mandated use of ethanol, we need to know whether it is worsening air quality, or not.

I wish that the Front Range Air Pollution and Photochemistry Experiment known as FRAPPÉ, funded by the National Science Foundation and carried out here in Boulder at the National Center for Atmospheric Research would study this. I contacted two people here at NCAR on the FRAPPÉ team and hope that they can figure out a way to do the study or set up the models. This region is growing very rapidly and because of its geography, air pollution is already increasing and struggling to meet goals, with added emissions from fracking, and more and more cars on the roads.

Conclusion

It is time for our highest level policy makers to reconsider biofuels mandates.

Now that the expensive infrastructure has been paid for and policy has set the mandated high levels of biofuel use here in the U.S., the industry has taken on a life of its own. As agricultural input costs keep rising, the cost of planting either corn or soybeans has gone up markedly. Taxpayers are helping to fund the profitability of these two crops, in spite of current high input costs, wherever they are grown. Automobile owners are also helping to fund them every time they fill their gas tank with fuel containing ethanol. Consumers are paying a price for this policy, too, every time they pay higher prices for meat, dairy, and eggs at their local grocery store.

All of the related industry beneficiaries of this policy maintain strong lobbying efforts in our nation’s Capital. It is very difficult to turn back the clock at this point, but that’s no excuse for lax environmental protection policies for our land and water natural resources.

8 Informative and Interesting Recent USDA Charts

For this post, I’ve gathered together some recent and especially noteworthy USDA charts with their accompanying descriptions. The subjects vary widely, so there should be something of interest for everyone.

1. Conservation Program Funding in the New Farm Bill

While the new CRP acreage cap cuts maximum enrollment by 25 percent, the impact on program enrollment and related environmental benefits may be relatively modest. CRP acreage has been declining since 2007, falling from 36.8 million acres to 25.6 million—30 percent—by December 2013. Environmental benefits, however, may not be diminishing as quickly as the drop in enrolled acreage might suggest. CRP has shifted rapidly from enrolling whole fields or farms (through general signup) to funding high-priority, partial-field practices, including riparian buffers, field-edge filter strips, grassed waterways, and wetland restoration (through continuous signup). On a per-acre basis, these practices are believed to provide greater environmental benefits than whole-field enrollments while taking less land out of crop production. Because partial-field practices are more expensive, however, CRP annual payments have fallen by only 10 percent since 2007. At the end of 2013, the average annual payment for partial-field practices was $103 per acre, versus only $50 per acre for whole fields.


2. Global Demand and Rising Costs to Affect Prices of Corn, Wheat and Soybeans

Although market responses to high crop prices in recent years, both in the United States and in other countries, are projected to lower U.S. crop prices over the next couple of years, in the longer term prices for corn, wheat, and soybeans are projected to remain high relative to historical prices. The continuing influence of several long-term factors—including global growth in population and per capita income, a low-valued U.S. dollar, increasing costs for crude petroleum, and rising biofuel production—underlies these price projections. Corn prices are projected to decline through 2015/16, but then begin increasing in 2016/17 as ending stocks tighten due to growth in feed use, exports, and demand for corn by ethanol producers. Soybean prices are expected to initially fall from recent highs but then rise moderately after 2015/16, reflecting strengthening demand for soybeans and soybean products. Wheat prices are projected to fall through 2016/17, in response to rising wheat stocks and falling corn prices, but strengthen in the longer term due to export growth, moderate gains in food use, and declining stocks.


3. Agriculture’s role in climate change: greenhouse gas emissions and carbon sequestration

The greenhouse gas (GHG) profile of the agricultural and forestry sector differs substantially from the profile of other sectors. Agriculture is an emission-intensive sector; it accounted for less than 1 percent of U.S. production (in real gross value-added terms), but emitted 10.4 percent of U.S. GHGs in 2012. Energy-related CO2 emission sources—which dominate GHG emissions in most other production sectors—are dwarfed in agriculture by unique crop and livestock emissions of nitrous oxide and methane. Crop and pasture soil management are the activities that generate the most emissions, due largely to the use of nitrogen-based fertilizers and other nutrients. The next largest sources are enteric fermentation (digestion in ruminant livestock) and manure management. Agriculture and forestry are unique in providing opportunities for withdrawing carbon from the atmosphere through biological sequestration in soil and biomass carbon sinks. The carbon sinks, which are largely due to land use change from agricultural to forest land (afforestation) and forest management on continuing forest, offset 13.5 percent of total U.S. GHG emissions in 2012. ERS is currently involved in research on the economic incentives farm operators have, or could be provided with, to take steps to both mitigate GHG emissions and adapt to climate change.


4. U.S. Wheat Export Market Share Projected to Continue to Fall

Although global and U.S. wheat exports are projected to rise over the next decade, the U.S. share of the world market is projected to continue to decline because of competition from other exporters. Global demand for wheat is expected to expand, driven primarily by income and population growth in developing country markets, including Sub-Saharan Africa, Egypt, Pakistan, Algeria, Indonesia, the Philippines, and Brazil. The number of major exporting countries has, however, expanded in recent years from the traditional wheat exporters–the United States, Argentina, Australia, Canada, and the European Union–to include Ukraine, Russia, and Kazakhstan. Although variable, the wheat export volume of those three Black Sea exporters together now rivals that of the United States. Low production costs and new investment in the agricultural sectors of the Black Sea region have enabled their world market share to climb, despite the region’s highly variable weather. Competition from the Black Sea region, as well as from traditional exporters, has resulted in a decline in the U.S. share of expanding world exports from an average of about 39 percent in the first half of the 1980s to an average of about 20 percent over the last 5 years.


5. Food loss in U.S. grocery stores, restaurants, and homes valued at $162 billion in 2010

In the United States, 31 percent—or 133 billion pounds—of the 430 billion pounds of the available food supply at the retail and consumer levels in 2010 went uneaten. The estimated value of this food loss was $161.6 billion, using 2010 retail prices. Food loss by retailers, foodservice establishments, and consumers occurs for a variety of reasons—a refrigerator malfunctions and food spoils, a store or restaurant overstocks holiday foods that do not get purchased, or consumers cook more than they need and choose to throw the extra food away. Food loss also includes cooking loss and natural shrinkage, such as when leafy greens wilt. In 2010, the top three food groups in terms of share of total value of food loss were meat, poultry, and fish ($48 billion); vegetables ($30 billion); and dairy products ($27 billion). Meat, poultry, and fish’s 30-percent share in value terms is higher than its 12-percent share when measured on a weight basis due to these foods’ higher per pound cost relative to many other foods.


6. Dynamic growth projected for world poultry trade

Poultry meat imports by major importers are projected to increase by 2.5 million tons (34 percent) between 2013 and 2023, led by rising import demand in North Africa and the Middle East (NAME), Mexico, and Sub-Saharan Africa (SSA). Similar factors are expected to drive import growth in each region. Rising incomes and the low cost of poultry meat relative to other meats are projected to favor growth in poultry meat consumption among the low- and middle-income consumers in each region. At the same time, limited local supplies of feed grains and feed protein in all three regions are expected to continue to limit the expansion of indigenous poultry meat production. The NAME region currently accounts for 47 percent of imports by the major poultry importers, and is projected to account for nearly 80 percent of the increase in their poultry meat imports between 2014 and 2023. In contrast, little import growth is projected for Russia, where policies continue to deter imports in favor of domestic producers, and for China, where domestic production is projected to keep pace with demand.


7. World population growth is projected to continue slowing over the next decade, rising about 1.0 percent per year for the projection period compared to an annual rate of 1.2 percent in 2001-10.

• Developed countries have very low projected rates of population growth, at 0.4 percent over 2013-23. The projected annual average population growth rate for the United States of about 0.8 percent is the highest among developed countries, in part reflecting immigration.

• Population growth rates in developing economies are projected to be sharply lower than rates in 1990-2010, but remain above those in the rest of the world. As a result, the share of global population accounted for by developing countries increases to 82 percent by 2023, compared to 79 percent in 2000.

• China and India together accounted for 36 percent of the world’s population in 2013. China’s population growth rate slows from 1.0 percent per year in 1991-2000 to less than 0.4 percent in 2013-23, with its share of global population falling. The population growth rate in India is projected to decline from 1.8 percent to 1.2 percent per year over the same period, increasing its share of world population.

• Brazil’s population growth rate falls from 1.6 percent per year in 1991-2000 to 1.0 percent annually in 2013-23. The population growth rate in Indonesia is projected to decline from 1.7 percent to 0.9 percent per year over the same period. Although Sub-Saharan Africa’s population growth rate declines from 2.6 percent to 2.4 percent per year between the same periods, this region continues to have the highest population growth rate of any region in the world and its population decline is modest relative to other regions of the world.

• Countries with declining populations include Greece, Germany, most central European countries, Russia, Ukraine, and Japan.


8. Global trade: Wheat, coarse grains, and soybeans and soybean products

Global trade in soybeans and soybean products has risen rapidly since the early 1990s, and has surpassed global trade in wheat and total coarse grains (corn, barley, sorghum, rye, oats, millet, and mixed grains). Continued strong growth in global demand for vegetable oil and protein meal, particularly in China and other Asian countries, is expected to maintain soybean and soybean- products trade well above either wheat or coarse grain trade throughout the next decade.

• Globally, the total area planted to grains, oilseeds, and cotton is projected to expand an average of 0.5 percent per year. Area expands more rapidly in countries with a reserve of available land and policies that allow farmers to respond to prices. Such countries include Russia, Ukraine, Brazil, Argentina, some other countries in South America, and some countries in Sub-Saharan Africa. On the other hand, in many countries area expansion is less than half that rate, and cropped area even contracts in some countries. Over half of the projected growth in global production of grains, oilseeds, and cotton is derived from rising yields, even though growth in crop yields is projected to continue slowing.

• The market impact of slower yield growth is partially offset by slower growth in world population. Nonetheless, population growth is a significant factor driving overall growth in demand for agricultural products. Additionally, rising per capita income in most countries supplements population gains in the demand for vegetable oils, meats, horticulture, dairy products, and grains. World per capita use of vegetable oils is projected to rise 6.5 percent over the next 10 years, compared with 15 percent for meats and 7 percent for total coarse grains. In contrast, per capita wheat use does not rise, and per capita rice consumption drops 1 percent.

• Increasing demand for grains, oilseeds, and other crops provide incentives to expand the global area under cultivation and the intensity of cropping the land. The largest projected increases in the area planted to field crops are in the former Soviet Union (FSU) and Sub- Saharan Africa. Large expansions are also projected for Brazil, Indonesia, and Argentina, including some uncultivated land brought into soybean and palm oil production in response to increased world demand for vegetable oils.