In last month's (October 2023) issue of Progressive Farmer, I wrote about how rapid increases of corn and soybean production in Brazil and of wheat production in Russia the past 12 years or more have resulted in declining market share for U.S. grain export markets. Adding to concerns, Brazilian Ag Minister Carlos Favaro has been pushing a plan to convert Cerrado grasslands into nearly 99 million acres of new cropland over the next 10 years. Clearly, Favaro's plan, if carried out, does not bode well for U.S. producers.
I don't pretend to have easy answers, but the one ray of hope for greater profitability among corn and soybean producers has been and will continue to be the use of crops to make renewable fuels. Nearly 5.2 billion bushels of corn were used to make ethanol in 2022-23, 38% of the season's 13.73-billion-bushel corn crop. The amount of soybean oil used to make biofuels is currently soaring and was up 49% in June from a year ago. Some 57% of California's diesel on the road is now made from biofuels, a market that did not exist until recently.
Expanding market share of ethanol was an especially tough political battle from 2014 to 2021, when oil was widely available and U.S. gasoline prices were relatively cheap. Today, however, OPEC's production cuts are keeping world oil supplies tight at a time when domestic oil production is limited by the political push to go green. Today's spot crude oil price near $90 is roughly the same as in December 2007, when President George W. Bush, son of a Texas oil man, signed a bill into law promising at least 36 billion gallons of biofuels by 2022.
Instead, EPA has kept a 15-billion-gallon lid on the corn ethanol mandate through 2025 and has stubbornly resisted acknowledging ethanol's low-carbon properties. Recently, a draft from the EPA Science Advisory Board said it sees only minimal climate benefits to using ethanol and wants more research and, presumably, more research dollars to study the issue.
Several renewable fuels' groups quickly protested EPA's stance, referring to several third-party studies that have already highlighted the low-carbon benefits of ethanol. Representatives from the National Corn Growers Association, Renewable Fuels Association and Growth Energy all point to several studies that back up ethanol's low-carbon properties. One in particular from the Department of Energy's Argonne National Laboratory concluded the carbon intensity of ethanol is 44% lower than gasoline (https://www.dtnpf.com/…). Members of the Renewable Fuels Association have pledged net-zero emissions by 2050.
As the U.S. consumer watches gasoline prices climb higher, EPA stands in the way of granting American consumers greater access to a less-expensive, low-carbon fuel -- a fuel that could also offer American farmers an antidote to future losses of exports. I'm openly biased in favor of U.S. farmers and practical solutions, but this is one time when science speaks loudly enough on its own. With world oil supplies staying tight, the arguments favoring increased ethanol use are even stronger today than in 2007.
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