Essential for those in ag to speak up for renewable fuel standard
“The challenges and threats in agriculture are huge and growing,” Mike Pearson, a nationally known television personality, told the South Dakota Corn Growers at their meeting on Saturday. “There are a small number of people who hate what we do. The bigger problem is that there is a massive sector of the population who has no idea of what we do. Because of that it’s vital to form connections, to get to know fellow producers, as that will be hugely important going forward.”
People are interested in agriculture because it’s something they don’t understand. “It’s a bizarre industry,” Pearson said. “Just try to explain basis to someone outside of ag.”
“The current rotation is corn, snow, corn, snow,” Pearson said. “This last year saw record corn acres planted resulting in a 14 billion bushel crop.”
Pearson suggested that farmers look at what goes into production each year with similar weather events and prices. It’s a globalized market, with billions of moving parts, billions of things that affect crops such as winds and rains, margins and exports.
“Who had fun with $8 corn?” he asked. “Who’s having fun with $4.25 corn? Ag is still a fun business, and it’s really fun when you can buy new paint.”
There is a tremendous demand for products, as the implementation of the Renewable Fuel Standard saw production skyrocket. America and world production raced to meet that demand in 2013.
The ag and energy industries have sustained the economy through the recession in several states, including South Dakota and North Dakota. Looking to the future, this trend is not going away. According to Pearson, commodities will continue to increase global wealth.
Ethanol is a very hot topic. Until Jan. 28, there is an open public comment period on the RFS rule. “Let them know what ethanol means to communities,” Pearson urged. “Log into regulations.gov to let the EPA know how essential ethanol is to the whole agriculture industry and rural communities. Get facts on the record for EPA by letting them know how important the industry is in providing prices, jobs and economic opportunities. The worst case scenario would be if the RFS were reduced, but what does that mean? It’s bearish, and we’d feel it in the markets, but ethanol will still be around. It’s important as an octane booster and oxygenater. The industry will not dry up, as oil companies will continue to use ethanol to blend with gasoline because it’s cheaper.”
Corn growers were urged to post comments or write letters to make the best case happen for the industry.
Pearson said that he sees the board price at $4.50 to $3.50 for corn, and some guys will make money.
The exports have picked up as well as the demand for feed. The livestock sector is going up. With prices at $1.44 for fat cattle, those in the trade want to fill the empty feedlots and they want to buy feeders. And they will need more feed, Pearson said.
The resulting growth in the livestock industry will keep corn prices stable
The new crop, by and large, will continue to be corn on corn.
Aggressive marketing will be the key to making the bottom line work, Pearson said. Many got spooked, but the feed and residual use will provide lots of opportunities.
Will producers switch to soybeans? Taking a sharp pencil and looking at soybean prices compared to corn, Pearson says he really doesn’t see the advantage. Will corn be going back to $2.50? Pearson said no. The price demand is there.
“We may be going back to buying junk equipment, but it’s not the end of the world in ag,” Pearson said. “We may have to tighten our belts, but it’s a stable industry and a growth industry.”
“There is lot of population growth,” Pearson said. “Every single day there is an additional 212,000 mouths to feed, which would be like adding another Sioux Falls to the world’s population. That’s why the future is bright for ag. We are in a great place to really farm efficiently.”
“It’s a competitive industry; as the supply increases there is some room for profit,” Pearson said. “Some producers will be losing money. Plan ahead, manage your overhead and it’s going to be a fun ride.”
Mike Pearson and his wife, Heidi, live in Grinnell, Iowa. Representing the sixth generation of Pearsons rooted in Midwestern agriculture, Mike grew up on a family farm in Iowa. He is the host of Market to Market, the Iowa Public Television weekly national agribusiness series.
Submit your comments on the Renewable Fuel Stanand, identified by Docket ID No. EPA-HQ-OAR-2013-0479, by one of the following methods:
• Online: www.regulations.gov. Follow the on-line instructions for submitting comments.
Mail: Air and Radiation Docket and Information Center, Environmental Protection Agency, Mailcode: 2822T, 1200 Pennsylvania Ave. NW., Washington, DC 20460.
Hand Delivery: EPA Docket Center, EPA West Building, Room 3334, 1301 Constitution Ave. NW., Washington, DC 20460. Such deliveries are only accepted during the Docket’s normal hours of operation, and special arrangements should be made for deliveries of boxed information.