Tout the Benefits of Ethanol in Agriculture

By Mike Bryan | October 18, 2011

It must be my age that drives me to rant on about things, but the article in the Modesto Bee, from Modesto, Calif., claiming that ethanol has put a large farm out of business because of the ethanol mandate, just made me angry. I have empathy for anyone going out of business, but to say that a farming operation that employs 185 people was put out of business because of the high cost of corn alone seems to me a bit of a stretch. No mention of the high oil prices, no mention of a weak economy, no mention of increased-cost fertilizers and other farm commodity issues. No, it was because of the ethanol mandate. 

Just behind Canada, ethanol is now the second largest supplier of fuel in the U.S.  Ethanol supplies more fuel to America than six other major oil exporting countries. The renewable fuel standard that is driving the mandate is necessary because without it, the oil industry would not use ethanol. So the mandate that the Modesto Bee is talking about is literally helping keep oil and gasoline prices in check and thereby helping reduce farming costs. If America were to remove ethanol from the market, oil prices would skyrocket. Eventually, with the advent of cellulosic technology, ethanol could replace 90 percent of our gasoline demand.

Ethanol production only uses 3 percent of the total world grain supply.  It’s a well-established fact that the current, and previous, price spikes in corn are largely driven by Wall Street speculators, not ethanol demand. Average corn yields in the United States continue to increase, from 50 bushels per acre in 1960 to 150 bushels per acre in 2011, while ethanol production from corn has now stabilized. The share of the dollar that farmers get from the commodities they produce is a pittance compared to the overall cost of food. Farmers receive less than 16 cents for every dollar of food cost and, when it comes to corn, it only represents 3 cents for every dollar of food.

From an environmental perspective, ethanol production continues to play a greater role in greenhouse gas reduction. Today’s ethanol facilities are powered by natural gas and increasingly by alternative clean energy sources. As farming practices and ethanol production technologies advance, so will the environmental benefits of ethanol. Included in these advancements are substantial reductions in the use of water, from nearly 6 gallons of water for every gallon of ethanol in 1998 to 2.7 gallons today and projected to go down even further in the decade ahead. Don’t even get me started on the whole indirect land use issue. While ethanol production has steadily increased over the years, deforestation has steadily decreased. In fact, deforestation of the Amazon has decreased by 72 percent since 2004. The indirect land use issue is a nonstarter when it comes to ethanol production.

If the Modesto Bee is serious about helping farmers in the region, then it should be touting the economic benefits that ethanol provides in agriculture. At a time when Wall Street is gouging America, ethanol provides a much needed boost to Main Street. Come on Modesto Bee, get with the program and stop giving me things to rant about.

That’s the way I see it! 

Author: Mike Bryan
Chairman, BBI International
mbryan@bbiinternational.com