Ethanol a game-changer for agriculture

Farm Forum

The boom of ethanol has changed the look of agriculture in the state, providing a golden opportunity for young people to return, according to Lisa Richardson, executive director of South Dakota Corn Growers Association and South Dakota Corn Utilization Council. Despite lower commodity prices, ethanol will continue to be a vital part of the corn industry.

Richardson, hired by the association in 1997, said that year the price of corn in one part of the state dropped below $1. “That brought many visionary people together to develop a feasibility study for an ethanol plant,” she said. South Dakota Corn played a key role in the development of the state’s farmer-owned ethanol plants. The ethanol industry in South Dakota used 20 million bushels of corn in 2000, and now that has increased to nearly 400 million bushels of corn a year, according to Richardson.

“It’s a natural hedge for farmers, with cheap corn and a high basis,” she said.

Farmers, with their ability to adapt to technology, have more than doubled production in recent years. Corn production has overtaken the cattle industry in the state. There are real markets for crops and real money in the marketplace, Richardson said.

With the changes in technology, production has boomed. Three years ago, when many experienced drought conditions, the corn crop still saw outstanding production. This year, timely rains have fallen across the state. South Dakota producers planted 5.20 million acres of corn for all purposes, according to the USDA’s National Agricultural Statistics Service. This is down 10 percent from last year. Of the total acres, 97 percent were planted with biotechnology varieties.

Through the use of biotech, marginal land has been used to grow more corn. The average yield has doubled, with some pushing yields to 300 bushels per acre, as shown in the SD Corn Yield Contest. One farmer told Richardson, “Never underestimate the ability of the farmer to overproduce.”

Even though the demand is growing across the world, there are still many hurdles that need to be overcome including understand the role foreign market play in demand and the relationships within the government to handle regulations.

Farmers need to understand the impact places like China will have on the future of ag, Richardson said. In such places, soybeans is the new crop. They have a new generation of people who are literate and demanding more and better food. The country will play a huge role in production ag. The Chinese bought Smithfield; they are now buying land throughout the world. “We really can’t fathom the role they’ll play in the world,” she said, “But we’re sure to be impacted.”

The right thing is for farmers to grow as much as needed to feed and fuel the world, Richardson said.

While ethanol has changed the landscape of this state, Richardson emphasized the fight continues for access to the markets. She said, “It comes down to a David vs. Goliath fight as the oil companies never believed ethanol could garner 10 percent of the fuel market. The oil industry hates blender pumps. Changes to the Renewable Fuel Standard could increase the ethanol produced in the state. Ethanol is an octane enhancer. If we had market saturation that could mean a 2 billion bushel bump for the corn market.”

In her years with SD Corn, Richardson said she’s frustrated with the changes that come from Washington, D.C. “There is no predictability, no normal order, and compromise has become a 4-letter word,” she said. “Bills used to be brought before the legislative branches, now many of the rules are in the Federal Register. There is no process anymore. We have to continually monitor potential changes.”

“When I started my job, farmers wanted their kids to get an education and did not want to come back to farm,” she said. “Parents felt their kids could do better elsewhere. These were fourth and fifth generation farmers. Now the farm kids are highly educated, farms are getting bigger with more technology. Everything is bigger, better, faster.”

The resulting solid job growth is creating opportunities. It’s exiting to see the interest in ag, especially by those attending trade schools, Richardson said. She noted that SDSU has the highest enrollment at the College of Agriculture & Biological Sciences. “That’s an exciting and cool thing,” Richardson said.

Those young people want to be involved in ag and ethanol is helping in that quest. There are 10,000 to 15,000 farm families who own ethanol plants in the state and get a return from what they produce. The ethanol industry changed what corn producers look like.

Richardson is excited to know that Ringneck Energy is progressing with plans to build an ethanol plant near Onida. In the town that grain bins built, an economic study showed that 10 to 20 cents could be added to the value of each bushel.

“Many never thought corn would be grown that far west, and amazing numbers show what can be done,” she said.

Richardson said the Dakota ethanol story is like the David and Goliath battle. People like Ron Alverson of Chester, S.D., made the industry more forward. He worked to put people and money together to develop the industry. Corn growers like Alverson and Jeff Broin came up with a plan, raised money and did what needed to be done to get the industry off the ground.

South Dakota farmers harvested 787 million bushels of corn in 2014; South Dakota’s 15 ethanol plants will utilize 320 million bushels of corn this year. Richardson said those bushels will produce nearly one billion gallons of ethanol, 2.44 million metric tons of distillers grain (aka livestock feed) and 235 million pounds of corn oil per year which is being extracted at 14 of the state’s ethanol plants and can be used to produce biodiesel.

In 2014, America’s farmers were busy harvesting a record corn crop of 14.2 billion bushels. Not only was it the first time in history that corn production surpassed 14 billion bushels, but farmers also topped 170 bushels per acre as the national average yield for the first time ever. And those bushels keep increasing.

What can farmers do to help promote ethanol use? Richardson encourages them to tell their stories to those in other states, tell their story on Twitter, on Facebook. She said to get consumers to ask why they can’t have ethanol.

“We need to think about the woman trying to make a living to feed her children,” Richardson said. “The world is hungry and consumer demands for increased sustainable production doesn’t think about that. The ability to pay for food is what makes the choice. We may be able to go to the store and pay an exorbitant amount for produce. The woman on a minimum wage salary wants to be able to feed her family. The consumer making demands needs to meet the people who are starving. They are making the case for the rest of the world. The world is hungry and that’s wrong.”

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This edition of the Farm Forum looks back at the major changes in agriculture over the last 50 years. The story below details the arrival of the ethanol industry in South Dakota. For more articles like this one, see our 50th Anniversary Special Edition inserted in this paper.