SDFU president suspicious of rail/oil connection

A member of the National Farmers Union Board says the problem with railways putting grain shipments on the back burner is as bad as it’s ever been and congressional investigation is likely needed. Doug Sombke, President of the South Dakota Farmers Union, says the Surface Transportation Board (STB) is not taking the issue seriously enough, “It’s very suspicious to think that now all this oil is being developed and they’re shipping all this oil that the railroad and the oil industry aren’t working together to eliminate the effects of ethanol. Because we all know that ethanol has kept the price of oil down.”

He tells Brownfield the NFU and other groups are considering a petition to ask for an investigation rather than STB just holding hearings. A South Dakota County Farmers Union official testified at one of those hearings last week.

Sombke tells Brownfield Ag News the problem is going to get worse this spring with less fertilizer likely being shipped to plants and, worse yet, the impact on the basis, “The difference between the Chicago Board of Trade and what we’re getting paid at the elevator is huge at this time and this should be a time when it’s at the lowest. If it continues at this rate, into fall harvest, it could be double what we’re seeing today.”

Sombke says Burlington/Northern, Santa Fe and Canadian Pacific need to be more reliable. He says the railroads are not charged a penalty the way grain farmers are if contracted grain shipments are late.

On Wednesday, the Surface Transportation Board said it would require the rail industry to report on its delivery of fertilizer to farmers in the upper Midwest to ensure it arrives for the upcoming growing season.

Interview with Doug Sombke (11:00 mp3)

Iowa announces ‘Fueling Our Future’ grants

Two Iowa fuel retailers with plans to offer higher blends of ethanol and biodiesel to their customers will receive some financial assistance through the state’s “Fueling Our Future” pilot program.

Farmers Cooperative in Mount Ayr and Oak Street Station in Inwood will each receive 125-thousand dollars in cost share funding to help with their projects.

Oak Street Station’s Brent Van Regenmorter (Ree-gen-mortar) says their new fueling site will offer E10, E15, E30 and E85, as well as several biodiesel blends.

“We’re excited to have this fuel that’s locally made here and to support the local economy—the farmers,” says Van Regenmorter. “And we’re also excited to offer it in different forms that people can just make their own decision on.  Just in the past month, I’ve had more people asking about the E85 product because of the price flexibility.”

Farmers Cooperative plans to build a new fueling site at its Country Store in Mount Ayr to offer E10, registered E15, E30 and E85 and biodiesel blends of B5, B10, B20 and B99.

Iowa received the 250 thousand dollars to support the Fueling Our Future pilot project from a U.S. Department of Transportation air quality program.  Applicants were required to provide at least a 50 percent match to receive funding.  The projects were selected by the Iowa Renewable Fuels Infrastructure Board.

AUDIO: Brent Van Regenmorter (2:46 MP3)

Link to news release on Iowa Department of Agriculture and Natural Resources web site

Ethanol supporters hoping for RFS reversal

Ethanol supporters are hoping that the avalanche of comments that the EPA received on its proposal to lower the ethanol volume requirement in the Renewable Fuels Standard will convince the agency to change its mind.

At the very least, a partial reversal, says Nebraska Ethanol Board administrator Todd Sneller.

“We’re hopeful that come mid-June or so, when that announcement comes out, that it will be a higher number than was required in the current proposal by EPA,” Sneller says, “although it may still be somewhat lower than the Congress had initially required.”

The EPA received more than 200-thousand comments on the RFS proposal.  Speaking to ag journalists in Washington last week, EPA administrator Gina McCarthy hinted that the final rule would probably be different than the one that was proposed, but did not offer specifics.

EPA’s proposal drops the corn ethanol requirement from 14.4 billion gallons to a little more than 13 billion gallons, an amount less than the 13.8 billion gallons required in 2013.

Sneller made his comments in an interview with Brownfield at the Ethanol 2014: Emerging Issues Forum in Omaha.

AUDIO: Todd Sneller (5:25 MP3)

Global ethanol production declined in 2012

A new report from the Worldwatch Institute says  the combined global production of ethanol and biodiesel fell slightly from 2011 to 2012. That was the first decline since 2000. Ethanol production actually declined for the second consecutive year thanks to high corn prices while biodiesel production increased slightly.

U.S. ethanol production declined 4 percent in 2012, in fact the U.S. became a net importer of ethanol during the year. Brazil’s production increased 3 percent reflecting a drop in sugar prices.

The top-five ethanol-producing countries in 2012 were the U.S. with more than 50 billion liters, Brazil with more than 21 billion liters, the European Union combined for more than 4.5 billion liters, China produced just over 2 billion and Canada was just under 2 billion liters.

The U.S. was also the world’s largest biodiesel producer with more than 3.5 billion liters followed by Argentina with just under 3 billion while Germany and Brazil produced more than 2.5 billion each.

The report goes on to say biofuel demand is “strongly driven” by mandates and subsidies. Seventy-six countries, states and provinces have some type of mandate. Global subsidies were estimated to be well over $20 billion U.S. dollars in 2012.

The report also notes global investment in biofuels declined 40 percent from 2011 to 2012. Investment within the G-20 nations has declined every year from 2007 through 2012.

Worldwatch Institute is an independent research organization based in Washington D.C. that works on energy, resource and environmental issues.

 

One side of the Renewable Fuels Standard debate

Debate about the Renewable Fuels Standard goes beyond repeal and extension.  During a program put on by TheHill.com, Vermont Democrat Peter Welch, a member of the House Energy & Commerce Committee, called the RFS a “well-intended flop”.

He adds the effects of the law have been beneficial to corn producers.  “It’s helped to prop up the prices,” he says.  “I think that we have to acknowledge that if you’re in the production of corn-based ethanol, that’s really been helpful to you.  I don’t begrudge that.  A lot of those corn farmers have had significant challenges and this has led to positive things for the Corn Belt.”

But, that success has come at a cost.  “It’s been detrimental, price wise, to the dairy, to the hog, to the poultry, and to the livestock,” he says.  “That whole side of the agriculture sector has had to foot the bill.  It has added significant expense to food costs.”

Welch says he’d like to see changes to the RFS, “I want to repeal the corn-based ethanol mandate.  That’s, like called, ending it.”

Illinois Representative John Shimkus, a proponent of the Renewable Fuels Standard, was scheduled to participate in the discussion, but due to a scheduling conflict was unable to attend.

Poll shows public RFS support

Americans surveyed in a poll overwhelmingly support the Renewable Fuels Standard (RFS). The poll is commissioned by the Renewable Fuels Association (RFA) and is conducted by American Viewpoint.   Of the one-thousand adults surveyed, 65% favor the standard, 26 percent oppose and eight percent are undecided.  A proposed reduction of the RFS by the Environmental Protection Agency is pending.

RFA takes railroads to task

The Renewable Fuels Association (RFA) is taking the nation’s railroads to task for creating what RFA calls “oil-induced rail chaos”. 

RFA president Bob Dinneen says disarray on the rail system in the first quarter of 2014 has forced ethanol producers to significantly curtail output.  He says onsite ethanol storage tanks were full and, in many cases, the railcars and locomotives needed to ship ethanol were simply not available. As a result, Dinneen says, ethanol stocks in key regions of the U.S. have been depleted and prices have increased, contributing to higher prices at the fuel pumps. 

The railroads blame the rough winter weather, but Dinneen says a more plausible explanation is the explosive growth in railcar shipments of Bakken and Canadian crude oil.  He says the railroads have failed to adequately address the needs of all its customers, with U.S. economy is suffering as a consequence.

Iowa Biodiesel Board names new director

The Iowa Biodiesel Board has selected Grant Kimberley as its new executive director.

Kimberley has served as director of market development for the Iowa Soybean Association since 2006. He succeeds Randy Olson, who accepted a position earlier this year with the U.S. Soybean Export Council.

The Biodiesel Board’s mission is to promote the commercial success of biodiesel in Iowa.

Valero purchases ethanol plant

Valero Energy has purchased a 110-million gallon ethanol plant at the Port of Indiana – Mount Vernon with initial plans to reopen the idled facility later this year.

Rich Cooper, Ports of Indiana CEO says the facility will provide Valero with a strategic advantage in the distribution of ethanol.

“When you combine the resources and expertise of a world-class company like Valero with one of the world’s richest grain producing regions and the port’s multimodal capabilities, there’s a strong likelihood this plant will once again be one of the largest ethanol producers east of the Mississippi River,” Cooper said.

The 1,200 acre port handles over 2,000 barges per year of grain, coal, ethanol, dried distillers grain, fertilizer, steel, minerals, and heavy lift cargoes, and provides connections to five Class I railroads.

“This ethanol plant is a very important facility for the port and the Southwest Indiana region,” said Phil Wilzbacher, port director for the Port of Indiana-Mount Vernon. “Valero’s investment into the facility will have a positive impact for farmers, agribusiness, industrial service providers, truck, rail and barge operators, as well as many other area businesses.”

Economist: EPA may rollback RFS proposal

An economist watching the RINS trading market says there are indications that the EPA’s proposed changes in the Renewable Fuels Standard are likely to be rolled back.

Scott Irwin, with the University of Illinois, says if traders think the ethanol mandate will exceed the blend wall, then, ethanol and biodiesel RINs prices should be close. But, starting last July, he says, they diverged sharply only to come back together, “In very late January they came rather suddenly back together in a pattern indicative of the market expecting the ethanol mandate to once again exceed the blend wall.”

Irwin says that’s an indication the EPA has listened to the comments and the political pressure that’s been put on the agency and the cuts to the ethanol mandate are likely to be rolled back but – in his words – “we just don’t know how much.” The EPA is expected to release its decision this summer.

RINs are the tracking mechanism used to make sure petroleum blenders and refiners meet their requirements under the Renewable Fuels Standard (RFS).

Interview with Scott Irwin (15:00 mp3)