Agricultural Marketing Resource Center - Press Releases

AgMRC Provides Information on Starting a Business in a Downturn

Mon, 01 Feb 2010 00:00:00 +0000

Economic downturns spark innovation and entrepreneurship. According to recent research by the Kauffman Foundation, more than half the companies on the 2009 Fortune 500 list were launched during downturns. Why? Perhaps layoffs released entrepreneurial talent, or the demise or an industry created opportunities in new ones. Creating a viable value-added agriculture business involves finding an idea or opportunity in the marketplace and then building a viable business to take advantage of the opportunity.

However, entrepreneurship in an economic downtown is not easy. Information from the Agricultural Marketing Resource Center (AgMRC) at Iowa State University can help.

Experts at AgMRC suggest the following steps as a guide.

1.    Write a business plan. This document should include the focus of the business, marketing, governance, finances and other details. Writing the business plan will force you to think through issues of how you are going to create a successful business or business expansion.

2.    Choose a business carefully. Financing your value-added business is a major aspect of business development whether you are starting a new business or expanding an existing business. Purchase second-hand; rent equipment or furniture and consider starting your business while still employed.

3.    Do research. Find out everything about your competition and determine how you can be better. Follow market trends. What is the success/fail rate for your type of business in your area? These are all things to consider.

4.    Market aggressively. Use as much free marketing as possible – emails, networking, word of mouth, press releases, etc. Make customers believe they need your product. Evaluate your marketing strategy constantly to assess results.

5.    Network. Find business mentors and join your local Chamber of Commerce, local industry group and statewide trade associations. Finding customers and business peers will benefit your business.

6.    Customer is king. Go the extra mile for your customers. Positive interactions encourage people to come back and spread the word about your product.

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

USDA Launches Program to Increase Construction of High Tunnels to Expand Growing Season

Fri, 15 Jan 2010 00:00:00 +0000

Agriculture Deputy Secretary Kathleen Merrigan unveiled a new pilot project under the 'Know Your Farmer, Know Your Food' initiative for farmers to establish high tunnels - also known as hoop houses - to increase the availability of locally grown produce in a conservation-friendly way.

"There is great potential for high tunnels to expand the availability of healthy, locally-grown crops - a win for producers and consumers," said Merrigan. "This pilot project is going to give us real-world information that farmers all over the country can use to decide if they want to add high tunnels to their operations. We know that these fixtures can help producers extend their growing season and hopefully add to their bottom line."

The 3-year, 38-state study will verify if high tunnels are effective in reducing pesticide use, keeping vital nutrients in the soil, extending the growing season, increasing yields, and providing other benefits to growers.

Made of ribs of plastic or metal pipe covered with a layer of plastic sheeting, high tunnels are easy to build, maintain and move. High tunnels are used year-round in parts of the country, providing steady incomes to farmers - a significant advantage to owners of small farms, limited-resource farmers and organic producers.

“Researchers at Iowa State University showed that commercial vegetable growers can provide a continuous supply of vegetables to the market by combining high tunnels and field planting, succession planting, and good variety selection,” said Linda Naeve, Iowa State University Extension Value Added Agriculture program coordinator.

According to Naeve, high tunnels offer growers several advantages over field production:

-    Crop protection from wind, hail, snow and other climatic factors
-    Raise soil temperature so that crops can be planted earlier, resulting in earlier yields and higher potential market prices
-    Greater production per square foot
-    Increased quality
-    Reduced incidence of plant diseases
-    Control over moisture, fertility and temperature

USDA's Natural Resources Conservation Service (NRCS) will provide financial assistance for the project through the Environmental Quality Incentives Program (EQIP), the EQIP Organic Initiative, and the Agricultural Management Assistance program. NRCS will fund one high tunnel per farm. High tunnels in the study can cover as much as 5 percent of 1 acre. Participating states and territories are Alabama, Alaska, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Pacific Islands, Illinois, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.

The deadline to sign up for the initial program is January 29, 2010. To sign up or learn more about EQIP assistance for high tunnel projects, contact a local NRCS office at http://www.nrcs.usda.gov/.

Buying Local Includes Christmas Trees

Tue, 01 Dec 2009 00:00:00 +0000

You may know that local food doesn’t travel far to reach the consumer, but this holiday season, neither does your Christmas tree. Real Christmas trees are an all-American product, grown in all 50 states, including Alaska and Hawaii.

When you buy from an independent, locally-owned Christmas tree farm, your money is used to make purchases from other local businesses, continuing to strengthen the economic base of the community.
There are more than 15,000 Christmas tree growers in the United States, and more than 100,000 people employed full or part-time in the industry.

Christmas tree farms stabilize soil, protect water supplies and provide refuge for wildlife while creating scenic green belts. Often, Christmas trees are grown on soils that could not support other crops.
A benefit to the atmosphere, real Christmas trees absorb carbon dioxide and other gases, emitting fresh oxygen. This helps prevent the earth-warming "greenhouse effect". One acre of Christmas trees produces the daily oxygen requirement for 18 people. With approximately one million acres producing Christmas trees in the United States that translates into oxygen for 18 million people every day. For every real Christmas tree harvested, three seedlings are planted in its place.

To find a local Christmas tree farm, visit the National Food Industry Market Maker website at http://national.marketmaker.uiuc.edu/ or the Christmas Tree Farm Network at http://www.christmas-tree.com/real/.

For additional resources on buying local, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

Indirect Land Use Emissions Pose Threat to Biofuels

Wed, 18 Nov 2009 00:00:00 +0000

U.S. mandates for the production of biofuels (corn ethanol, cellulosic ethanol, advanced biofuels, etc.) requires that biofuels must meet tests of reduced greenhouse gas emissions compared to gasoline. Proponents of indirect land use change (iLUC) are encouraging that iLUC emissions be added to the direct emissions from biofuel production, making the greenhouse reduction benchmarks are difficult to achieve, according to a new report by the Agricultural Marketing Resource Center at Iowa State University.

Indirect land use change is a mechanism that attempts to control the incentives for rainforest destruction. The basic premise states that rainforests are cut down to provide land for raising crops that subsequently provide profits for the destroyer of the rainforest. If world grain prices are high, the incentive for converting rainforest to cropland is increased. Conversely, if grain prices are low, the incentive is reduced.

According to Don Hofstrand, author of the indirect land use change study, the iLUC proponents want to attach this premise to biofuels production. In essence, if an acre of cropland is used for biofuel production (e.g. corn ethanol) rather than for food production, the price of grain will be increased because less grain is available for food, which subsequently increases the incentive to cut down an acre of rainforest to replace the acre that is shifted from food to biofuels. So, the greenhouse gas emissions from destroying an acre of rainforest would be attached to the acre of corn used for biofuels. This means the acre of biofuels will carry the greenhouse gas emissions from producing the biofuels (direct emissions) plus the emissions from the acre of rainforest that is supposedly destroyed as a result (indirect emissions).

Hofstrand’s report looks at indirect land use, its many potential causes and looks at reliably assessing the impact of biofuels production on iLUC. To read the full report, visit http://www.agmrc.org/renewable_energy/biofuelsbiorefining_general/perspectives_on_indirect_land_use.cfm.

Nations newest wineries popping up in non-traditional places

Tue, 03 Nov 2009 00:00:00 +0000

What type of value-added agricultural business has been popping up across the nation’s mid-section almost faster than ethanol and biodiesel plants? Most folks are surprised to learn that the answer is “wineries.”

The growth of small and mid-sized, locally-owned wineries has been taking off in the Midwest and Midsouth, as well as several other “non-traditional” wine-producing states. California still leads the way in the number of federally-licensed wineries, followed by Washington, Oregon, and New York. But over the last decade, there has been dramatic growth in states like Iowa, South Dakota, Texas and Nebraska.

What’s driving the boom? Unlike corn and soybeans, it’s certainly not the price of the basic commodity, says Reg Clause, with the Ag Marketing Resource Center and Iowa State University Extension.

From a consumption standpoint, Clause says much of the growth can be attributed to interest in buying local or buying “place-based” products. “Some larger retailers jumped on the bandwagon, reaching out for local foods and otherwise differentiated products. This offered an opportunity for shelf space previously too expensive for the small operator.”

“Regional retailers have been stocking local wines for the past several years. While these wholesale margins are substantially less for a winery when selling through retail stores, it is getting labels greater awareness.”

From a production standpoint, growth was driven by farmers wanting to diversify into alternative crops.

“Many grape producers were looking for alternative crops or alternative activities. They were trying to slightly change their own production equation. The grapes were an enterprise within the business or in some cases a sideline for someone with a good day job. This offered what appeared to be a non-commodity approach even as the market was behaving in some commodity ways,” explains Clause.

Combine these factors with families willing to market their wines, while offering a mix of local entertainment and events, a dose of artisianship along with plenty of elbow grease, and you’ve got the ingredients for some of the nation’s newest wineries.

One example: Summerset Winery, located south of Des Moines, and operated by Ron Mark. Now in their eleventh year of business, Summerset fills a leisure and event niche as well as selling wine. “This is an example of the pure labor of love startup. Wine is just part of the value proposition in this business model,” adds Clause.

Even though Iowa has a strong history of grape production before Prohibition, the region is hard-core commercial agriculture with processing and manufacturing, says Clause.

“There is a serious undercurrent of folks seeking a gentler, more convivial scene and feel. This reach for some change of philosophy or culture offers both a pull and a push that is possibly motivating consumer and producer,” he adds.

Many of these smaller wineries found a broad range of research, technical and marketing support through USDA Rural Development’s Value-Added Producer Grants, the Agricultural Marketing Resource Center (AgMRC), state development efforts and the Land-Grant University Extension Service.

Clause says the Midwestern wine and grape industry is “extremely embryonic,” but predicts that the general levels of winemaking skill and the state of viticulture will all continue to grow and evolve. Markets are also expected to continue expanding. Figures released recently by the Wine Institute show U.S. wine purchases rose 7.9% last year to $30 billion, making the nation the world's largest wine market.

A good resource for anyone interested in entering the wine business is “The Total Wine Package”. To play the video, make sure you select the link that best matches your connection speed. It’s located on this site: http://www.agmrc.org/agmrc/commodity/fruits/wine/winevideo.htm.

Climate Bill Likely to Generate Net Gains for U.S. Agriculture

Thu, 03 Sep 2009 00:00:00 +0000

With the U.S. Senate due to tackle contentious climate change legislation when it returns September 8th, an Iowa State University assessment concludes that while cap-and-trade legislation “introduces uncertainty,” failing to act now could lead to even more uncertainty, more downside risk and “a much greater technological challenge.”

In a September AgMRC Renewable Energy Newsletter article, AgMRC co-director Don Hofstrand adds up the potential negative impacts that the House-passed Clean Energy and Security Act could have on U.S. farmers and ranchers due to higher energy prices. He finds that “The overall impact on net farm income is expected to be relatively small . . . down about 1 percent in the next decade, decreasing by about 7 percent by mid-century.”

Hofstrand writes that even the 7 percent drop may be an overestimate since farmers have a long track record of improving productivity. He points out that thanks to “improved machinery and equipment, enhanced energy efficiency, changes in tillage practices, improvements in genetic ability of crops to utilize fertilizer, increased livestock feeding efficiency, and changes in the commodities produced,” since 1973 “farm output has grown by 63 percent while energy consumption has declined 26 percent.”

On the plus side, Hofstrand sees farmers and ranchers earning substantial income from selling carbon offsets. He says no-till farming already gives farmers a way to store large amounts of carbon in the soil. As new technologies are developed, he sees far greater income opportunities from increasing soil carbon sequestration with charcoal, capturing ethanol plant emissions, developing new feedstocks for nitrogen fertilizer, and transforming livestock manure emissions from a greenhouse gas problem to a major energy source.

Hofstrand concludes with a pay-me-now or pay-me-more-later warning: “climate change has the potential to significantly impact the world’s agricultural production capacity. Not developing greenhouse gas reduction technologies today will lead to the need for developing technologies to help us adapt to climate change in the future. This will be a much greater technological challenge.”

To read the complete “Impact of Cap and Trade Legislation on U.S. Agriculture” article which includes four tables, visit http://www.agmrc.org/renewable_energy/agmrc_renewable_energy_newsletter.cfm.

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

E-15 Ethanol Concerns Could Drive Biofuels in New Directions

Tue, 11 Aug 2009 00:00:00 +0000

Plans to shift American drivers from gasoline to less polluting ethanol have run into a wall – the “blending wall” created by the federal 10% (E-10) limit on how much ethanol can be blended with gasoline for conventional vehicles.

In an AgMRC Renewable Energy Newsletter article, Iowa State University Energy Economist Robert Wisner predicts that ethanol supply will match E-10 demand “in the next two or three years, if not sooner.” He warns that “If the allowable blend is not increased, it is almost certain to not only halt construction of corn-starch ethanol plants but also to greatly curtail or halt investment in a cellulose ethanol industry.”

Wisner writes that calls for the U.S. Environmental Protection Agency (EPA) to raise the allowed blend from E-10 to E-15 are running about 18 to 1. But the EPA is required to base its decision on sound analysis – and the analysis is complex since higher ethanol blends may trigger unintended consequences. Wisner says more research is needed to pin down firm answers on tough questions such as how much greater ethanol use will affect the livestock industry and food prices, to what extent corn-based ethanol production may lead to converting pasture or forests in other countries to cropland, whether higher ethanol blends will increase some emissions including nitrous oxide and acetaldehyde, whether a hotter-burning E-15 blend will shorten the life of your car’s emissions equipment, and how E-15 will work with small engines like lawn mowers.

These complex question raise doubts about the ethanol industry’s future. Wisner sees the longer term result of not going to E-15 as “the development of other energy alternatives such as butanol, compressed natural gas, compressed land-fill gas, cellulose-based fuels made from non-fermentation processes, and electric vehicles.”

To read Prof. Wisner’s complete article on “Issues in raising allowable ethanol-gasoline blends to E-15 or higher for conventional vehicles,” click here.

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

Ethanol's Greenhouse Gas Report Card Keeps Getting Better

Tue, 11 Aug 2009 00:00:00 +0000

In the race to get greener, expect corn ethanol’s lead over petroleum to keep getting bigger. That’s because breakthrough technologies in both growing corn and converting that corn into ethanol as an alterative to gasoline promise higher corn yields with less use of fertilizer and more energy efficient biorefineries with lower emissions.

In an August AgMRC Renewable Energy Newsletter article, Iowa State University’s Don Hofstrand breaks down corn ethanol’s greenhouse gas (GHG) emissions. He shows 50% comes from crop production with fertilizer a major source, and 50% comes from biorefinery operations with natural gas and electricity accounting for 90% of these emissions.

Hofstrand calculates that corn ethanol currently provides “a 54 percent reduction in GHG emissions as compared to gasoline.” He sees this lead lengthening as corn yields increase and fertilizer management practices improve. He also forecasts steady improvement on the biorefinery side. Along with the prospect of powering biorefineries with biofuels rather than fossil fuels, Hofstrand points out that “Various ways of reducing the amount of thermal heat for ethanol production are being researched.” As well, he sees “the potential for reduced water use and the development of higher value co-products,” all adding up to more energy efficient operations which pump out more ethanol with lower GHG emissions.

To read the complete “Greenhouse Gas Emissions of Corn Ethanol Production” article which includes three tables, click here or access all the August articles.

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

Celebrate & Enjoy National Farmers' Market Week

Tue, 04 Aug 2009 00:00:00 +0000

As part of celebrating National Farmers’ Market Week August 2-8, U.S. Secretary of Agriculture Tom Vilsack is urging consumers to benefit from the nation’s rapidly growing network of some 4,900 farmers’ markets now operating in every state.

“One of the Obama administration’s top priorities is to make sure that all Americans, especially children, have access to fresh, nutritious food and USDA’s ongoing support of farmers’ markets is important to reaching that goal,” Secretary Vilsack says. “At the same time, farmers’ markets help support small family farms, help revitalize rural communities, and often promote sustainable agricultural practices.”

Iowa State University’s Extension Service is actively involved in the farmers’ market movement. Whether you’re a family shopper looking for fresh produce or run a restaurant or grocery store, you can find nearby farmers’ markets by clicking on agmrc.org and then clicking the “MarketMaker National Portal” link at the bottom of the left-hand column. The site is equally useful for farmers searching for new ways to market their products.

Iowa State’s Agricultural Marketing Resource Center (AgMRC) also provides links to useful information such as how to launch or operate a farmers’ market.

For more ideas about new revenue opportunities for rural America, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

Corn Ethanol's Success Sparks New Uncertainty in Farm Country

Thu, 30 Jul 2009 00:00:00 +0000

Once upon a time, corn prices and farm-belt profitability depended largely on weather and government support programs that cushioned weather-driven price shifts. The arrival of corn-based ethanol has changed that picture dramatically. It’s a change affecting not just farmers but “the seed industry, grain elevators, food processors, suppliers of fertilizer, trucking firms, non-ethanol grain and oilseed processors, farm machinery manufacturers and dealers, railroads, livestock producers, agricultural lenders, and other businesses closely associated with the crop sector.”

In an August AgMRC Renewable Energy Newsletter article, Iowa State University Energy Economist Robert Wisner makes it clear that watching the weather was a cinch compared to understanding how corn, ethanol and crude oil prices interact.

Wisner points out that up to three years ago when corn use for ethanol was less than 15% of total U.S. corn use, “the ethanol sector could have a large annual percentage growth with only a minor impact on corn prices.” What’s changed is that ethanol consumes about one-third of the U.S. corn crop today and, Wisner says, “Within three years, demand for corn for ethanol may well exceed the traditional largest source of demand for corn – livestock feeding.” He says this ethanol success story “has transformed Midwest agriculture from a sector that experienced excess production capacity, low prices, and government income supports to a growth sector with frequent periods of tight supplies even with good crop yields.”

Ethanol’s rise to power also means that “With the current large size of the ethanol industry, corn prices have become closely related to crude petroleum and gasoline prices because corn is now a major energy crop.” This change includes a further layer of uncertainty because ethanol is hitting the E10 “blend wall” – the federal limit of a 10% ethanol blend for most cars, with E85 blends only allowed for the small fleet of flex-fuel vehicles. Wisner says the blend wall “limits the market for ethanol, thus tending to depress its price relative to gasoline.” He forecasts that unless the U.S. EPA decides to authorize the higher E12 or E15 blends that ethanol boosters seek, ethanol prices may continue dropping relative to gasoline, slowing ethanol industry expansion and putting downward pressure on corn prices.

To read the complete “Corn, ethanol and crude oil prices relationships – implications for the biofuels industry” article which includes price charts, click here.

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

Wind energy generates jobs & tax revenue for North Dakota

Tue, 14 Jul 2009 00:00:00 +0000

As wind energy grows, so grows North Dakota’s economy. A close look at the Langdon Wind Energy Center in North Dakota shows that constructing 106 262-ft tall wind turbines pumped an immediate $225.7 million into the state. Since completion 18 months ago, the wind farm is providing North Dakota another $4.4 million a year in payroll, landowner payments, taxes, and other new revenue.

In a July AgMRC Renewable Energy Newsletter article, North Dakota State University Professor F. Larry Leistritz explains that “Concerns about the long-term environmental effects of consuming fossil fuels, together with the rising costs of oil and natural gas, have led to rising interest in renewable energy sources.” The good news for wind-blown North Dakota and other plains states is that “Wind power in particular has been experiencing rapid growth” and is “considered the lowest cost renewable energy source for the Midwest-Great Plains region.” He adds that “The Plains region is rated as having the highest project capacity factor and lowest costs for wind generation in the country.”

Leistritz says that because the Langdon wind farm hired local workers for eight of its ten permanent jobs, the project has created new jobs with minimal effects on public service needs such as schools, housing and roads. He concludes that wind farms can offer “a net gain to local budgets as there seem to be few local government costs associated with wind farm operation.” He points to one possible exception: damage to local roads during construction. But in Langdon, North Dakota’s case, he says local officials considered road impacts minimal and pointed out that the developer had agreed to be responsible for any needed road repairs.

To read Prof. Leistritz’s Wind Energy article which includes two tables, click here.

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

Ethanol ready to leap forward – if wild cards are played right

Thu, 02 Jul 2009 00:00:00 +0000

“The potential future growth of the corn-starch ethanol industry is at least 45% from current production levels.” But three big question marks hang over ethanol, raising doubts about whether the industry can snap back from the current wave of idled plants, losses, and bankruptcies.

These questions, according to Energy Economist Robert Wisner in a July AgMRC Renewable Energy Newsletter article, focus on three decisions which may determine the future for both today’s corn-based ethanol plants and tomorrow’s cellulosic ethanol:

Will the U.S. Environmental Protection Agency (EPA) raise the maximum blend rate for conventional vehicles from the current E-10 (10% ethanol blended with gasoline) to perhaps E-15?
Will Underwriters Laboratory (UL) approve using retail pumps and fuel dispensing equipment with a 15% blend?
Third, will California and the U.S. EPA re-think their calculations which threaten to downgrade ethanol’s environmental benefits by counting foreign “indirect land use changes” against ethanol?

Wisner points out that the 2007 Energy Independence & Security Act mandates blending 15 billion gallons of ethanol with U.S. gasoline in 2015, with the mandate climbing to 35 billion gallons by 2022. In an apparent case of “You can’t there from here,” Wisner says that despite the mandates, ethanol demand is limited by the combination of the E-10 limit for most cars and the relatively small number of flex-fuel vehicles which use blends up to E-85. As long as these limits remain in place, there may not be demand for much more than the 10.36 billion gallons of fuel ethanol being produced this year. That would mean continuing hard times for the ethanol industry and no incentive for investors to develop next-generation renewable fuels.

To read Professor Wisner’s “Wild Cards for the Ethanol Industry” article, click here.

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

Super Ethanol Grows Even Greener, Using Less Petroleum

Mon, 29 Jun 2009 00:00:00 +0000

Ethanol is getting greener as a new industry benefiting from steadily improving technology. In contrast, petroleum is a mature industry mining crude oil which gets harder to recover and requires more refining.

In a July AgMRC Renewable Energy Newsletter article, Don Hofstrand corrects some of the misleading information being circulated about corn-based ethanol. He points out that “If you are driving up to a gasoline pump to fill your car’s fuel tank, every Btu of gasoline you pump into your tank requires about 1.23 Btus of fossil fuels to produce the gasoline. . . Conversely, every Btu of ethanol you pump into your fuel tank requires about .74 Btus of fossil fuel to produce it.” The article goes on to show how and why ethanol is lengthening its already significant lead over gasoline both in terms of net energy balance and greenhouse gas emissions.

Hofstrand profiles breakthrough production systems such as an eastern Nebraska irrigated production system that uses innovative crop and soil management practices to achieve high yields with improved efficiencies for both irrigation and nutrient management. Result: “a significant improvement occurs in the ethanol to petroleum ratio where almost 20 gallons of ethanol are produced per gallon of petroleum.”

Hofstrand also profiles a “Closed Loop Ethanol Production System.” The plant’s wet distillers grain by-product is fed to cattle in an on-site feedlot. An anaerobic digestion system turns manure from the feedlot into methane used to power the ethanol plant. Result: “Over half of the natural gas normally used in the ethanol plant is replaced with methane from the anaerobic digestion process. . . Also, nitrogen is captured by the anaerobic digestion process and used as nitrogen fertilizer. . . Well over two Btus of ethanol energy are produced for every Btu of fossil fuel energy. Also, GHG emissions are reduced by two-thirds from those of gasoline.”

To read Don Hofstrand’s complete article on “Efficiency and Environmental Improvements of Corn Ethanol Production”, click here.

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: www.agmrc.org.

Indirect land use calculations threaten biofuels development

Wed, 17 Jun 2009 00:00:00 +0000

With Congress, the Obama administration and industry clashing over biofuels policy, Iowa State University Biofuels Economist Dr. Robert Wisner warns that today’s contradictory mandates “could slow or halt the growth of some parts of the biofuels industry.”

Wisner warns specifically that both the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) are moving too fast in relying on unproven “indirect land use emissions impacts.” He writes that instead of downgrading the environmental benefits of U.S. corn-based ethanol based on possible conversion of pasture and forests to cropland in other countries, “Much more research is needed on these issues to accurately measure indirect land use impacts.”

EPA and CARB programs for reducing greenhouse gas emissions could make both soy-based biodiesel and corn-based ethanol uncompetitive. As a result, investors could pull back from building biodiesel and ethanol plants. That pull back in turn could undermine the biofuel industry’s ability to meet the federal Energy Independence & Security Act’s requirement for increasing biofuels use.

Wisner notes that EPA’s indirect land use calculations ignore the fact that agriculture is constantly changing. He writes that “direct emissions from biofuels refineries are being reduced over time through technological advances. . . Longer-term technological changes that bring increased crop yields per acre, changes in livestock and poultry feed conversion efficiency that reduce feed needs per animal, the amount of crop residue left on soils, and other factors will affect indirect land use emissions.” He adds that proposed CARB rules present the greatest threat since “California is the largest potential market in the U.S. for biofuels and at least 13 other states are considering adoption of its standards.”

To read Dr. Wisner’s complete biofuels article with tables and charts, click here.

For more from the June issue of AgMRC’s Renewable Energy Newsletter, click here.

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

Agritourism: A Recession Cure for Both Farmers and Vacationers

Sun, 14 Jun 2009 00:00:00 +0000

Chalk it up to Barack Obama catapulting his presidential campaign in Iowa, or to the recession switching travelers from vacations to stay-cations, or to nostalgia for the good old days, or to Americans’ new craving for “real food from real farms.” Whatever the reasons, agritourism has become a counter-cyclical big business all across Iowa – and all across the nation.

Iowa State University’s Extension Service now makes it easy for farmers to diversify by listing their farms as agritourism destinations. How much of an attraction and how much added income seem to be limited only by farmers’ imaginations. And ISU Extension agents are skilled at helping farmers with everything from imagination and pricing to drawing up maps to make sure the city folks can find their way.

Because farmers are creative in tapping this rapidly growing revenue stream, ISU’s www.VisitIowaFarms.org web site now lists agritourism businesses under eleven categories: Bed and Breakfast, Christmas Tree Farm, Farmers’ Market, Fruit/Vegetable U-Pick Operation, Hiking for a Fee, Hunting/Fishing for a Fee, Mazes for a Fee, Retail Stores, Trail Riding, Vineyard/Winery, and Other. Already including pumpkin farms, greenhouses, wildlife photography, conference sites, cooking classes, and even a Dog Biscuit Bakery, the “Other” category seems bound to continue expanding. But even now, the agritourism farmers listed with Iowa State University report earnings ranging from $500 to $75,000 per year.

While many lament the dwindling numbers of family farmers, now less then 2% of Iowa’s population, Iowa State and its growing list of agritourism entrepreneurs see a golden opportunity. Basic economics tells farmers willing to listen that their marketing opportunities will multiply this summer as more urban dwellers decide it’s time for a taste of country life – particularly when taking that Disney trip wouldn’t fit their budget this year. . . and certainly wouldn’t provide the same mouth-watering tastes of freshly picked sweet corn, just-caught brook trout, or sun-warmed blueberries.

For more ideas about new revenue opportunities for rural America, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

Biodiesel Economics - Costs, Tax Credits & Co-products

Tue, 02 Jun 2009 00:00:00 +0000

In his second article in a series on biodiesel, Iowa State University Biofuels Economist Dr. Robert Wisner provides a comprehensive analysis of:

the costs of producing biodiesel from soybean oil,
key influences on costs,
how costs have fluctuated over the last few years,
biodiesel prices, before and after the blending credit, compared with petroleum diesel prices,
alternative feedstocks being researched as possible sources of lower-cost biodiesel,
implications of the federal biodiesel blending mandates for the next few years.

Wisner’s AgMRC Renewable Energy Newsletter article begins with the good news: Biodiesel refineries typically are less complex and less expensive to build than ethanol plants, they require much less heat and water than ethanol plants, and only minor changes are needed to switch from soybean oil to other vegetable oils, animal fats, or waste fast-food cooking oil as feedstocks.

Next Wisner points out the bad news: “B-100 (100% biodiesel) biodiesel is currently unable to compete with petroleum-based biodiesel fuel on price alone.” Currently, high soybean prices leave biodiesel dependant on lower blends and a mix of federal mandates, clean air and greenhouse gas emissions rules, tax credits, and a variety of other federal and state support for biodiesel. But he notes that possible research breakthroughs lie ahead, including making biodiesel from algae grown in salt water rather than using cropland – and finding new markets for biodiesel’s co-product, glycerin, to improve overall returns.

For the year ahead, Wisner sees U.S. soy biodiesel production coming in far below mandated levels, with the shortfall partially offset by biodiesel made from other oils and from imports.

Read the full “Biodiesel Economics” article which includes four tables.

For more from the June issue of AgMRC’s Renewable Energy Newsletter, click here.

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

Biodiesel Profitability - Tracking Rapidly Moving Target

Tue, 02 Jun 2009 00:00:00 +0000

Volatile prices for soybean oil, methanol and natural gas, the three inputs for biodiesel production, result in extremely variable biodiesel profitability. Price swings for biodiesel’s co-product, glycerine, add to the volatility facing biodiesel producers and investors.

To track the profitability for typical soybean biodiesel production, Iowa State University has created an economic model of a northern Iowa biodiesel plant. The model is updated monthly with the latest biodiesel, soybean oil, methanol, natural gas, and glycerine prices to calculate profitability.

ISU’s model is interactive so users can enter their own adjustments to change the coefficients in the price data series to fit special situations. Any change in an input coefficient is reflected in the analysis tables and graphs. To use the ISU model to check biodiesel profitability month to month, access the Biodiesel-Profitability section of the AgMRC Web site by clicking here for: ISU’s interactive monthly biodiesel profitability spreadsheet.

To read a related article by Dr. Robert Wisner, “Biodiesel Economics,” click here.

For more from the June issue of AgMRC’s Renewable Energy Newsletter, click here.

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

Biodiesel plants experiencing severe economic pressures

Wed, 13 May 2009 00:00:00 +0000

Biodiesel made from soybeans, other vegetables oils, animals fats or used cooking oil arrived in a rush, with U.S. production jumping from just 9 million gallons in 2001 to about 700 million gallons for 2008, up 43% from 2007. As set by the 2007 Energy Bill, there’s a federal mandate to produce one billion gallons per year starting in 2012. But following the collapse of crude oil prices, biodiesel’s future is in doubt.

In an AgMRC Renewable Energy Newsletter article, Biofuels Economist Dr. Robert Wisner at Iowa State University’s Ag Marketing Resource Center, points out that “many biodiesel plants are experiencing severe economic pressures and a high percentage of the nation’s biodiesel production capacity currently is idle.” He predicts that the economic pressures will continue because vegetable oil demand is highly inelastic and significantly affected by international markets. He says “inelastic demand sets the stage for very volatile feedstock prices for the biodiesel industry.”

Dr. Wisner notes that if crude oil prices start climbing, ethanol plant margins will recover. This recovery could lead to more ethanol plants adding oil-removal technology to produce corn oil as an alternative biodiesel feedstock. That in turn would ease pressure on soybean prices and improve margins for both ethanol and biodiesel plants.

For more of Dr. Wisner’s perspectives on the complex interactions affecting biodiesel, ethanol, food prices and export markets, including three tables, click here.

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

Green home-grown ammonia could become king of the road

Wed, 13 May 2009 00:00:00 +0000

“Anhydrous ammonia (ammonia without water) can be a substitute for petroleum as a transportation fuel. It has the potential to make the hydrogen economy a reality in the near-term, at an affordable cost. . . It can be made from all primary energy sources so production sources can be diversified or production can focus on the cheapest, cleanest and greenest source.”

That’s the hope held out by Agricultural Marketing Resource Center Co-director Don Hofstrand in a May AgMRC Renewable Energy Newsletter article. He writes that there are drawbacks such as the fact although ammonia is high octane, its energy density is low compared to gasoline so a full tank will only take you half as far.

Hofstrand’s good news is that ammonia can be produced from a variety of renewable energy sources including wind, solar, municipal sewage, nuclear, geothermal, ocean and tidal energy and others. He cites studies showing that producing ammonia from sweet sorghum grown on marginal land can provide more energy per acre than either traditional corn-based ethanol or the cellulosic ethanol that’s now being commercialized.

Added reasons to switch to ammonia as a primary transportation fuel include:

“A storage and delivery infrastructure of pipelines, barges, rail and truck already exists for ammonia in the Midwest.”
To carry ammonia to other parts of the country, “existing natural gas and petroleum pipelines can be cost-effectively converted to carry ammonia.”

To read the complete “Ammonia as a Transportation Fuel” article, click here:

Read Don Hofstrand’s earlier article on ammonia, “Using the wind to fertilize corn.”

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

National Value-added Agriculture Conference Set for June 2-4 in Moline

Wed, 13 May 2009 00:00:00 +0000

The 11th annual National Value-added Agriculture Conference is set for June 2 to 4 at the Stoney Creek Inn and Conference Center in Moline.

"This conference is a ‘must’ for any public service provider or economic development agent that recognizes the importance of a strong rural economy,” said Ray Hansen, program director, Value Added Agriculture Program, Iowa State University Extension.

The conference will feature three tracks; local foods, agritourism, and business development. Integrated into the breakout sessions will be a focus on feasibility work as speakers provide a look at management, technical feasibility, finances, markets and more.

Conference keynote speakers include Gary Zimmer, Mary Holz-Clause, Sara Wyant, David Dahlquist and Michael Perry. Zimmer is a Wisconsin farmer and author dedicated to the biology of agriculture and continual soil improvement. Holz-Clause is interim assistant vice president for extension and outreach at Iowa State University and co-director of the Agricultural Marketing Resource Center. Wyant is president of Agri-Pulse Communications, a communications firm covering farm and rural policy issues from Capitol Hill. Dahlquist is a nationally recognized public artist and design consultant from RDG Planning & Design firm in Des Moines, Iowa. Perry is a Wisconsin humorist and author. His essays have been heard on NPR’s All Things Considered and he has produced segments for a public television show.

Conference participants also will have an opportunity to ride the mighty Mississippi River on the Celebration Belle.

Registration is $150 and includes conference materials, the opening night reception, refreshments, lunches and the concluding dinner on board the Celebration Belle riverboat.

To register or for more information, visit http://nvaa2009.homestead.com/.

The conference is sponsored by the Value Added Agriculture Program at Iowa State University Extension, the University of Illinois Extension, the Agricultural Marketing Resource Center and the National Food Industry Market Maker.

AgMRC Assists Producers in Applying for USDA Value-added Grants

Wed, 06 May 2009 00:00:00 +0000

The Agricultural Marketing Resource Center (AgMRC) is assisting producer groups in gathering information for use in applying for the USDA Rural Business and Cooperative Service (RBCS) value-added producer grants, announced in the Federal Register May 6, 2009.

AgMRC is a virtual library of agricultural value-added opportunities, business development and consulting resources for producers, located at www.agmrc.org.

“There is a direct link on the home page of the site to take producers directly to the federal notice of solicitation of applications, grant templates and a directory of consultants and service providers,” said Ray Hansen, co-director of the center. “Additional resources for producers to develop their business or to find a new market opportunity for an existing business are also available.”

Producers can investigate specific commodity information on many different niche opportunities and can locate specific laws, consultants and individual contacts within their individual state to assist them in the grant application process.

“The consultant database available on the Web site includes specific commodity consultants, business development consultants and those consultants specializing in grant writing,” said Don Hofstrand, co-director of AgMRC.

RBS announced the availability of $18 million in competitive grant funds for fiscal year 2009 to help independent agricultural producers enter into value-added activities. The grant will fund one of the following two activities:

Developing feasibility studies or business plans (including marketing plans or other planning activities) needed to establish a viable value- added marketing opportunity for an agricultural product; or
Acquiring working capital to operate a value-added business venture or an alliance that will allow the producers to better compete in domestic and international markets.

Value-added products are defined as follows:

A change in the physical state or form of the product (such as milling wheat into flour or making strawberries into jam);
The production of a product in a manner that enhances its value, as demonstrated through a business plan (such as organically produced products);
The physical segregation of an agricultural commodity or product in a manner that results in the enhancement of the value of that commodity or product (such as an identity preserved marketing system).

Value-added also includes using any agricultural product or commodity to produce renewable energy on a farm or ranch.

Applications must be completed and submitted no later than July 6, 2009.

Located at Iowa State University (ISU), AgMRC is a national center for value-added agriculture resources. For more information, visit www.agmrc.org or call toll-free at 866-277-5567.

How California's Low Carbon Fuel Standard Impacts Ethanol

Tue, 05 May 2009 00:00:00 +0000

California’s decision to launch the nation’s first Low Carbon Fuel Standard (LCFS) “is definitely a blow to Midwest ethanol. There is concern that the California ruling may be used as a model for other parts of the country too and potentially on a national basis.” That’s according to Don Hofstrand, co-director of Iowa State University’s Agricultural Marketing Resource Center. He warns that because California will measure indirect land use effects to calculate the greenhouse gas impacts of biofuels, “The danger is that these indirect land use factors may be adopted by other states and the EPA.”

Hofstrand insists that California should have included other indirect factors rather than single out the possibility that using corn for ethanol could lead to converting land in other countries to grow crops. He points out that a comprehensive accounting of indirect effects would include food waste, the estimated “27% of our food supply that goes into the garbage can rather than feeding people.” He also notes that turning corn into ethanol is highly efficient in contrast to the inefficiency of feeding corn to cattle to produce beef.

Iowa State University Economics Professor Chad Hart adds that “In terms of corn-based ethanol, the California ruling was a body blow. California by itself is basically the sixth largest economy in the world and California has set out the rules which are not favorable for corn-based ethanol. Corn-based ethanol has been building up in an effort to fulfill future national demand for renewable fuels. The California ruling doesn’t take effect until 2011, but it already has ramifications as far as investment decisions and growth in the industry, starting today. Especially for any new plants coming on line, they’ve got to look at that as a major blow because it’s not just California. . . we may see other states follow.” Hart says “EPA is the next big player to watch as EPA moves forward in looking at how to evaluate greenhouse gas emissions from both biofuels and conventional fuels.”

Hart and Hofstrad agree that the few ethanol plants still powered by coal won’t survive as the industry as a whole reduces its carbon footprint by moving to greener power for ethanol plants. California Air Resources Board Chair Mary Nichols expects the same, predicting that “The LCFS as currently proposed will drive investment toward even cleaner low-carbon corn ethanol, increasing its market share over time. Our staff estimates that quantities of clean corn ethanol will more than triple in California by 2020.”

For additional information, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

Changes Needed to Make Federal Biofuels Blending Rules Work

Thu, 23 Apr 2009 00:00:00 +0000

Blending steadily increasing levels of biofuels with gasoline and diesel is easier said than done. To make sure blending takes place as Congress intended, Congress charged the U.S. Environmental Protection Agency (EPA) with enforcement. Result: EPA’s problematic Renewable Identification Numbers (RINs) used to track biofuels and confirm compliance.

In an AgMRC Renewable Energy Newsletter article, Iowa State University Professor Robert Wisner explains: “Companies that blend gasoline for the retail market are obligated to include a quantity of biofuels equal to a percentage of their total sales of gasoline. For 2009, EPA has set the Renewable Fuel Standard at 10.21 percent. This percentage is computed as the industry total amount of ethanol, biodiesel, and renewable biodiesel that is mandated to be used in 2009 as a percentage of expected total gasoline use. The company uses this percentage and its gasoline volume to compute its mandated biofuels volume. When the biofuel is actually blended into gasoline (or diesel fuel in the future), the blender turns the RINs in to the EPA to show compliance with the company’s portion of the RFS (Renewable Fuels Standard).”

Wisner points to problems ahead since the federal RFS mandate calls for blending half-a-billion gallons of cellulose ethanol by 2012. He says reaching that goal is doubtful due to slow progress in developing commercial-scale cellulose ethanol plants. If EPA decides to allow blending corn-starch ethanol to make up for any shortfall in cellulose ethanol, Wisner foresees higher corn prices and “significant implications for nearly all components of Midwest agriculture, including crop and livestock farmers, corn-starch ethanol producers, farm input suppliers, lenders and other agriculturally-related businesses.”

To read the complete article on biofuels blending rules, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

How to Tap USDA's Value Added Producer Grants

Thu, 23 Apr 2009 00:00:00 +0000

If you’ve got a dynamite idea for new value-added farm products, your nearest U.S. Department of Agriculture (USDA) office may have money for you from a new round of Value-Added Producer Grant (VAPG) funding. Even at a time of tight federal budgets, past VAPG successes make it likely that Congress will continue to add to more than $137 million already passed out since the program was launched by the 2002 Farm Bill.

In an AgMRC Renewable Energy Newsletter article, Kansas State’s Michael Boland, John Crespi and Dustin Oswald provide tips on getting VAPG funding which can be up to $500,000 per project, with a $153,576 average. They point out that the grants can be used to subsidize the development and marketing of value-added agricultural products, expand a value-added business, and provide working capital.

A survey of past grants shows they work best for “the Midwestern and Great Plains states which have a strong commodity-focused agriculture” as well as in California, Michigan and Washington which benefit from “a great amount of diversity and value-added agriculture.” Among other tips:

“Grants that added value to fluid milk, cut flowers, tree fruit, tree nuts, specialty meats, wheat and wine were found to result in a greater likelihood of VAPG success.”
“. . . inexpensive corn in Iowa and southern Minnesota is likely to lead to greater opportunities to add value to corn through corn sweetener plants or ethanol plants.”
Larger, vertically integrated operations with greater access to market intelligence “are more likely to achieve business success.”

For the full article which includes a breakdown of VAPG grants by state, click here:

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

Biofuels promise re-population & prosperity for rural America

Wed, 18 Mar 2009 00:00:00 +0000

Memo to rural America: If you love the new jobs and new rural cash flow already created by corn-based ethanol plants, you’re going to adore cellulosic ethanol! A new study from North Dakota State University finds that these new rural jobs – jobs which can’t be outsourced – could triple as ethanol production shifts from corn to using cellulosic feedstocks including crop residues, forestry wastes and non-food “energy crops” grown on lands with limited alternative use.

In an AgMRC Renewable Energy Newsletter article, North Dakota State Research Scientist Nancy M. Hodur and Professor Larry Leistritz acknowledge that their conclusions are tentative since cellulosic production is still at the pilot-plant stage. But they conclude that for the North Central states stretching from Missouri and Kansas to North Dakota, cellulosic biofuels would result in building 192 plants at a cost of about $34 billion. Along with pumping an annual $10 billion into rural communities, these 192 plants “would directly employ nearly 15,000 workers, as well as supporting many thousand additional jobs in feedstock harvest and transportation.”

As an example of the magnitude of the opportunity, Hodur and Leistritz forecast that cellulosic plants would add a net $800 million per year to the North Dakota economy, a financial contribution which would “exceed that of the state’s substantial coal mining and conversion industry.” The report concludes that “An emerging biofuels industry could offer new jobs that would help to support rural communities and farm households and provide the kind of economic stimulus many agriculturally dependent areas have been seeking.”

Read the complete biofuels article which includes two tables at the AgMRC website.

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA), at: http://www.agmrc.org/.

Is one answer to high farm input costs blowing in the wind?

Tue, 10 Mar 2009 00:00:00 +0000

Ames, Iowa – With nitrogen fertilizer imports continuing to climb and the cost of nitrogen fertilizer still taking a big bite out of most farmers’ budgets, Iowa State Extension’s Don Hofstrand offers an intriguing solution: harvest the wind for nitrogen.

In an AgMRC Renewable Energy Newsletter article, Hofstrand explains the chemistry which turns ammonia into nitrogen fertilizer – proven chemistry which German chemist Fritz Haber perfected in 1909 to turn plentiful atmospheric nitrogen into ammonia. Using this chemistry in lower-cost ways that don’t require high pressures and high temperatures could reverse the trend which has seen U.S. nitrogen fertilizer imports soar from 35% of usage a decade ago to almost 80% in 2007. This reversal would be tough on the main U.S. suppliers: the Trinidad and Tobago Republic, Canada, Russia and the Ukraine. But rebuilding domestic production would offer farmers, the U.S. economy, and the environment a range of benefits, Hofstrand writes, including:

Secure Access to Fertilizer – a domestic hydrogen source for producing ammonia can provide farmers with security of access to adequate supplies of nitrogen fertilizer.
Less Price Volatility – a domestic hydrogen source for producing ammonia can provide farmers with a more stable price for nitrogen fertilizer to assist them in financial planning.
Improved Carbon Footprint – a renewable hydrogen source for producing ammonia can reduce the carbon footprint of crop production.
Economic Development – a local hydrogen source for ammonia production can provide an economic development opportunity for farmers and rural communities.

To read Don Hofstrand’s complete article which includes a chart and photo, visit the AgMRC web site.

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA).

Ethanol industry bankruptcies present tough choices

Tue, 10 Mar 2009 00:00:00 +0000

Ames, Iowa – Ethanol plant bankruptcies are increasing and “If no additional government support is provided, the current global economic and petroleum market environments suggest that conditions may worsen for troubled ethanol firms.”

That stark warning comes from Iowa State University Professor of Economics and Energy Economist Robert Wisner. In an AgMRC Renewable Energy Newsletter article, Wisner writes that there’s no easy solution. If the federal government doesn’t step in to help, more corn-based ethanol plants will fold. But if the government provides additional credit or other support, Wisner warns, “Strengthening corn demand by bringing idled ethanol plants back into operation would tend to strengthen corn prices relative to levels occurring when they are shut down. That would add to feed costs and would worsen financial stresses in the livestock industry, triggering loss of equity in producer assets in a manner similar to that now being experienced in the biofuels industry.”

Wisner also notes that both Congress and the Obama administration strongly support development of “advanced biofuels” to replace corn-based ethanol with cellulosic ethanol made from non-food “energy” crops, crop residues, wood chips and urban waste. He warns that “Failure to assist corn-based ethanol plants that have responded to government calls for increased renewable fuels production would send negative signals to investors in cellulose ethanol plants. . . Cellulose ethanol investors would interpret lack of added support for corn ethanol plants as a sign that the government will not be a partner in sharing risks if those risks become substantially larger than currently anticipated.”

On the other hand, Wisner points out that supporting the ethanol industry now “would tend to delay the needed recovery in ethanol prices and improved net returns” and “would slow consolidation of the industry.” He says consolidation offers reduced production, transportation and marketing costs, along with more effective management of risks from volatile corn, natural gas, and ethanol prices.

Robert Wisner’s complete article which includes four charts is directly available on the AgMRC web site.

For additional resources, visit the Agricultural Marketing Resource Center (AgMRC), a virtual value-added agriculture center operated by Iowa State University and partially funded by the U.S. Department of Agriculture (USDA).

Olive Growers Council Develops New Products

Tue, 03 Feb 2009 00:00:00 +0000

Growing table olives in California has been a constant struggle says Adin Hester, President of the Olive Growers Council (OGC) in Visalia, California. That’s why he puts out a regular newsletter with tips on pruning and new market opportunities – and that’s why this farmer-owned bargaining cooperative has taken full advantage of the U.S. Department of Agriculture’s Value Added Producer Grant (VAPG) program.

In October, OGC was awarded its fifth VAPG – this time for $281,750 to develop olive snacks packaged in consumer friendly two ounce plastic pouches with zip-lock closures. That leaves Hester with two challenges. The first challenge is to come up with a matching $281,750 because the USDA program is a 50/50 cost-share program. The second is to find enough specialty table olives to fill the orders that OGC’s marketing efforts should generate.

Finding enough olives will be tough because OGC’s California’s table olive harvest last fall was down 56% from the ’07 crop. That meant record prices averaging over $900 per ton, up 15% from 2007. But many of OGC’s 200 grower members were left with little or no crop – along with high harvesting costs for whatever crop they did harvest. This roller-coaster ride isn’t new for the growers. Their best year was 1992, with a record-setting 163,000 ton crop. Growers expect ups and downs since olives are an alternate bearing crop, generally meaning that every other year brings a good crop followed by a short crop. But bad weather and other problems have led to steadily shrinking crops. With a normal crop around 120,000 tons, 2006 was a disaster with only 16,000 tons and 2008’s 55,000 tons wasn’t nearly large enough to offset past losses.

Adin Hester’s answer has been to come up with innovative ways to develop higher-value markets – such as using USDA VAPG funding to introduce olives as a snack product.

“We were extremely pleased to get the grants which certainly have helped us in developing value-added products, something we couldn’t have done without the grants,” he says. “We’re trying enhance olive values for the benefit of our growers because certain of the sizes that our growers sell to the processors bring a very low price, so we’re focusing on selling those olives as higher-value specialty snack foods.”

Hester points out that opening up a new market is very expensive, involving hefty legal fees and food-show expenses for travel, renting space, and providing samples. “Thanks to USDA’s Value-Added Grant Program,” he says, “we have been able to spend that kind of money because we recover as much as half of those expenses through the grant.”

Hester is optimistic about the future, pointing out that OGC’s snack foods tie in perfectly with USDA’s efforts to switch people from fries and burgers to fruits and vegetables – and with school systems across the country “trying to develop healthier snack foods in the schools, getting rid of the candy bar machine.”

After his experience with VAPG funding from USDA, Hester offers this advice to other farmer-owned cooperatives: “First, develop a unique idea or product with market potential. Then, find yourself a good grant writer.”

And don’t stop with just one good idea. The Olive Growers Council has used it’s USDA Value Added Producer Grants to develop and market:

•    Roasted Garlic and Chili (pouch pack)
•    Ranch Flavored (pouches and cups)
•    Salad Toppers (sliced in a pouch)
•    Macho Nacho topping (blended jalapeno and olives)
•    Stuffed Olives (garlic and jalapeno) for both retail and food service

To learn more about the Olive Growers Council, visit http://www.olivecouncil.com.

To learn more about USDA’s Value Added Producer Grant (VAPG) program and other resources, visit AgMRC, a virtual value-added agriculture center operated by Iowa State University and partially funded by USDA, at: http://www.agmrc.org/.

MaxYield Cooperative profits from combining old with newest

Tue, 06 Jan 2009 00:00:00 +0000

Like the farm sector itself, Iowa’s MaxYield Cooperative has had its ups and downs since its first stockholders met in 1915. But with plenty of local faith and investment, and support from various U.S. Agriculture Department (USDA) programs, MaxYield and its 18 locations across northwest Iowa are on a healthy growth curve.

One reason for recent well-directed growth is USDA’s Value Added Producer Grant (VAPG) program. Under the program’s 50/50 match rules, MaxYield received $30,500 in VAPG funding to study feasibility for a methane digester, followed by $50,000 in additional VAPG money to study biodiesel production. The two studies led to shelving the digester plan for now – and continuing to pursue biodiesel retail sales, but holding off on biodiesel production. These decisions played a part in turning MaxYield’s disappointing financial results during the 1990s into today’s very healthy profits picture. When the time is right, perhaps in another 10 years, then MaxYield will be ready to add methane to its mix of operations.

“The two Value Added Producer Grants were instrumental in our decision making process. The feasibility studies clearly showed that the time was not yet right for methane digestion here and that we should continue to expand biodiesel retail market share but hold off on entering into biodiesel production,” MaxYield CEO Keith Heim explains.

Billing itself as “not your grandfather’s cooperative,” MaxYield boasts that “we view ourselves less as a traditional input supplier and more as an entrepreneurial solutions provider, from organic nutrients to ethanol to precision agriculture.” MaxYield’s secret is being agile enough to incorporate the best new ideas – like ethanol, biodiesel and precision seed trait choice and nutrient management – but wise enough to avoid other ideas not yet ripe for commercialization. The result, says MaxYield Director of Sales and Marketing Larry Arndt, is that sales have doubled to $208 million over the past five years. Along with these record sales, MaxYield notched up another record by announcing $5.5 million in allocated patronage refund payments to its 1,900 members at its 94th annual meeting in December.

The operation remains a traditional 100% farmer-owned cooperative which handles over 80 million bushels of corn and 5 million bushels of soybeans per year. As well, MaxYield provides solutions by managing sophisticated marketing, seed, fertilizer, feed and fuel needs both for farmers and for major bioenergy companies such as Global Ethanol.

“In the last fiscal year, we have become a very ‘Lead with Seed’ company. That’s what we call it, because seed trait technology today demands that we focus on seed solutions for our clients,” Arndt explains. He says “Agriculture is probably the most exciting thing going on around us in terms of economics and the world perspectives,” because there are:

•    More people to feed in the world,
•    More consumers demanding more protein, and,
•    More bright young people pursuing agriculture.

MaxYield can attract the bright young people because of the exciting new programs it has developed – such as SciMax Solutions and the SciMax Nitrogen program which use ½-acre grid maps to precisely manage seed types and fertilizer needs for 25 growers and nearly 40,000 acres.

MaxYield Cooperative (previously West Bend Elevator Company) is headquartered in West Bend, Iowa and serves these Iowa communities:

• Algona
• Ayrshire
• Bancroft
• Belmond
• Britt
• Dickens
• Emmetsburg
• Fostoria
• Garner
• Hobarton
• Klemme
• Lakota
• Mallard
• Meservey
• Rodman
• Spencer
• West Bend
• Whittemore

Phone: 515-887-7211   Toll Free: 800-383-0003   www.MaxYieldCooperative.com

To learn more about the MaxYield Cooperative, visit www.maxyieldcooperative.com.

To learn more about USDA’s Value Added Producer Grant (VAPG) program and other resources visit AgMRC, a virtual value-added agriculture center operated by Iowa State University and partially funded by USDA, at: http://www.agmrc.org/.

The biofuels boom – will it last?

Tue, 04 Nov 2008 00:00:00 +0000

New industries used to emerge over decades or generations. All that changed first with the computer revolution, then with the Internet revolution, each transforming our planet within a few years. So the breakneck speed of today’s biofuels revolution is no surprise. But new uncertainty about what happens next for ethanol and other alternative fuels is a concern.

Should investors and government invest in biofuels? Is it a safe investment? Are there better alternative fuels? Is Brazil’s successful ethanol program the best model for other countries? How is the current financial crisis impacting biofuels? Will climate change and expected carbon cap-and-trade legislation catapult biofuels to new heights?

Iowa State University agricultural economist Don Hofstrand and his colleagues at ISU’s Agricultural Marketing Resource Center (AgMRC) are trying to understand ethanol and the future of the biofuels industry.

Hofstrand explains that “All ethanol plants are different of course, with different break-evens, but we’ve built an ethanol model on our AgMRC site, a hypothetical ethanol plant in Northern Iowa and we track its profitability month by month. At the present time, it’s right about at the break-even level.” Hofstrand says it was predictable that the surge in ethanol profits in 2005-2006 led to a surge in building new ethanol plants. As expected, this was followed by a narrowing of ethanol profit margins which has precipitated a decline in new ethanol plant construction.

With Wall Street still waiting for Washington’s $700 billion rescue package to take effect and with crude oil prices at half their July ’08 peak, Hofstrand expects less ethanol plant investment until markets stabilize. He says that “attracting capital to build more ethanol facilities, especially with the margins we have now, is going to be much more difficult than it was a year or two ago.”

Hofstrand says a “wild card” for the renewable fuels industry is climate change. Both presidential candidates John McCain and Barack Obama have promised to tackle climate change. If a new administration “puts a price on carbon” with cap-and-trade legislation or a carbon tax, he says, “It will change the calculus of economics for the whole energy industry.” It should give an immediate boost to renewable alternatives like wind, solar and geothermal. But there is uncertainty about how it would impact ethanol because of the controversy over the greenhouse gas emissions caused by the corn ethanol industry. Hofstrand and co-author Gene Takle have laid out the issues associated with agriculture and climate change in a series of articles in the AgMRC Renewable Energy Newsletter.

Hofstrand has built an economic model that looks at “Who profits from the corn ethanol boom?” Hofstrand concludes that the ethanol boom has rewarded different segments of the industry at different times. Initially the rewards went to the ethanol producers. However, the producers expanded capacity, bid up the price of corn, and transferred the rewards to the corn producer. Higher production input prices and land rental rates are eating into the corn producers rewards. If the boom continues, the “eventual beneficiary” will be land owners because “Cropland is the eventual limiting resource in the supply chain.” However, the current drop in ethanol price has tightened the margins for the entire industry. So it will be interesting to see how the economics for each industry segment will evolve over time.

To read Hofstrand’s profitability analysis with a full explanation of the following chart which is updated every month – or to sign up for the monthly AgMRC Renewable Energy Newsletter, go to: http://www.agmrc.org/renewable_energy/.

To visit AgMRC, a virtual value-added agriculture center operated by Iowa State University and partially funded by USDA, go to: http://www.agmrc.org/.

New supply/demand link connects farmers, markets & consumers

Tue, 04 Nov 2008 00:00:00 +0000

MarketMaker on the web offers a free new tool to connect family shoppers with farmers – and with everyone in between including restaurants and grocery stores. That’s good for consumers who wonder where to find fresh local products and good for small farms with no marketing budget. For everyone, it’s Internet easy – just visit: agmrc.org and click the MarketMaker link.

States already part of MarketMaker’s growing network include Georgia, Illinois, Indiana, Iowa, Kentucky, Michigan, Mississippi, Nebraska, New York, and Ohio. Colorado, the District of Columbia, South Carolina and other states are expected to join soon.

“MarketMaker began as an online database of Illinois businesses and was so successful that now other states have joined the effort,” says University of Illinois Extension specialist Richard Knipe. “University of Illinois developed and owns the tool but the multi-state partnership that is able to pool large amounts of food industry data and provide it to the public really adds value to the resource.”

Family shoppers can use the MarketMaker web site to search for restaurants or places to buy everything from freshly picked or pick-your-own produce, to maple syrup and wine. Farmers can search for farmers’ markets, grocery stores and other outlets to sell their food products.

The original web site is located at marketmaker.uiuc.edu. From there, visitors can search for restaurants, grocery stores, farms and other production facilities across several states. “It’s more than a directory of information because it has interactive features like mapping and search capabilities so users can really target and focus on the data that they need,” says Knipe.

Each state has a unique site but all the data from all other MarketMaker states can be accessed from any location. The national MarketMaker link at agmrc.org is hosted by the national Agricultural Resource Center (AgMRC.org) at Iowa State University. The AgMRC link provides a clickable map of the entire United States. Participating states are highlighted, making it easy for users to navigate from state to state or to regionalize their data searches.

Farms and businesses can sign up for a free listing on the MarketMaker site by Clicking Here or go to: http://register.marketmaker.uiuc.edu/MMregistration/index.php?state=19.

“Our goal is to make the site a resource for all farmers and businesses in the food supply chain,” says Knipe. “We are as interested in helping a grocery store find farm-fresh eggs as we are in helping the farmer find a place to sell them, so it’s important to include as many producers in our database as possible.”

Access MarketMaker through the national MarketMaker link at www.agmrc.org

For more information about MarketMaker, contact any member of the development team:
Richard Knipe - rknipe@uiuc.edu; 309 792-2500
Darlene Knipe - dknipe@uiuc.edu; 309-792-2500
Sandy Shetler - sshetler@uiuc.edu; 815-441-0300
Raymond Hansen - hansenr@iastate.edu; 515-294-3890

MarketMaker was developed through a collaboration between the University of Illinois Initiative for the Development of Entrepreneurship in Agriculture (IDEA), the Illinois Department of Agriculture and C-FAR (Illinois Council on Food and Agricultural Research). The project was funded by the Illinois Department of Agriculture, University of Illinois Extension, the Illinois Council on Food and Agricultural Research (C-FAR) and the Agricultural Marketing Resource Center at Iowa State University.