Last Monday I saw a show on ethanol, KET: Kentucky Tonight ”“ Ethanol, and learned several things. It was a round table and the participants were all closely aligned to agriculture and corn.
- Todd Barlow, executive director of the Kentucky Corn Growers Association
- Mark Haney, a Pulaski County fruit and cattle farmer and first vice president of the Kentucky Farm Bureau
- Stephen Bartlett, coordinator of Sustainable Agriculture of Louisville and a member of the Jefferson County chapter of the Community Farm Alliance
- Norman Harned, a lawyer, a Nelson County cattle farmer, and a member of the Kentucky Cattlemen’s Association
This is not the normal group of pundits you find on big media and their viewpoints were interesting. Some of the things I learned were:
- 20% of the corn production is going to ethanol plants. This is the excess production that might have gone overseas or could have been used to maintain low corn prices for cattle fattening.
- There are two products from the ethanol plants, ethanol and animal feed. The animal feed portion of the ethanol product mix is rarely mentioned by big media since it is a new market. This animal feed might reduce some of the price pressure in the chicken and hog feed markets.
- The production of ethanol is probably reducing the prices we pay for gasoline prices by 10%. It is my guess that ethanol is a more cost effective octane enhancer than those base on crude oil. I am not sure what petroleum based chemical ethanol competes with since I think benzene and MTBE have been removed from the market due to carcinogenic issues.
- No one was surprised that the price of corn and the other grains exploded. It seems that everyone there had been through previous booms and busts of the agriculture business. They had seen the symptoms of a boom before. The dramatic increase in corn prices affected most grains. The cost increases are related to the combined effects of ethanol, crude oil increases, inventories, and the weather. Everyone expects that there will be wide swings in prices until these price pressures sort themselves out.
- Everyone was curious how the ethanol market will fare without government subsidies.
- Everyone viewed corn as a transitional feedstock for ethanol production. There was a lot of speculation about new ethanol feedstocks and everyone thought that if the market lasted long enough it would sort out the winners from the losers. There was a lot of hope in celloustic ethanol using corn stalks, corn cobs, and other low value byproducts of farming. The primary ethanol feedstock source will probably vary by agricultural region. As an example sugar cane stalks would be a likely ethanol source in sugar growing regions.
- Everyone was curious how we could lower fuel costs in ethanol production. Most of the questions on whether ethanol results in a positive or negative energy balance to society hinged on the cost of fuel used to harvest and transport ethanol feedstocks.This problem remains even if corn is not used as the primary feedstock.