Fifteen years ago, I spent several weeks riding around the back roads of Northeast Missouri in Grover Gamm’s black Cadillac.
Grover and a few other visionaries had been working for quite some time to get an ethanol plant started in the area and now I was there to help. During our travels, we met with about 40 different groups of farmers. Many told me they were tired of seeing corn selling below the cost of production. It was obvious they needed a solution.
I was certain we could help.
Over and over, I told the ethanol story. From firsthand experience, I knew that by having an ethanol plant nearby, the area farmers could increase their farm income. First, since they now had another buyer for their corn, they could get a higher price. Second, by investing in the ethanol plant they could essentially hedge their corn against energy – a higher priced commodity. If corn prices were low, the ethanol plant would generate income for them. If corn prices were high, maybe the ethanol plant wouldn’t be as profitable, but they would profit on their corn.
We continued with the story. We told them that by increasing U.S. production of ethanol we would finally create successful “value-added agriculture” – something farmers had been trying to achieve for decades. And instead of exporting the oversupply of corn for ridiculously low prices, we’d be using it right here in the U.S. As a bonus, it would generate many good, local jobs and be an economic shot in the arm for their communities while reducing our nation’s need for oil imports.
Could this industry really be the solution to farmer’s price problems? Did they believe us? Some of them didn’t. But, fortunately, many small town Missourians believed this could work. They took the gamble and invested in ethanol. They saw a future for agriculture and rural America.
As I look in the rearview mirror fifteen years later, ethanol’s benefits to agriculture are no longer potential; they’re reality. Record farm income has taken rural America off life support. As a matter of fact, farm income is up by over $500 billion dollars since 2008. And cropland values are up a staggering 53% since 2008.
The industry has created over 400,000 direct and indirect jobs – most of them in small, rural communities – with an estimated $42.4 billion contributed to the United States economy in 2011. Furthermore, our oil imports are down from 60% in 2005 to 45% today.
While it’s fun to look back at these achievements, I am far more interested in looking at what’s ahead. Can we do more? The answer is a resounding “YES WE CAN!”
There are incredible opportunities for agriculture and ethanol. With a growing global population, demand for food, energy and other renewable products is certain to increase. And although some may wish to believe we have an infinite supply of fossil fuels, the fact is we don’t. We do, however, have almost unlimited agriculture potential that can feed and fuel the world. Doesn’t it make more sense to get our energy from the surface of the Earth than from below?
And now, with grain prices at sustainable levels for the first time in decades we’re already seeing record farm outputs in places like Eastern Europe and South America. And farming technologies continue to improve, increasing productivity. That’s why even with the drought of 2012 in the U.S., worldwide corn production was the second largest of all time.
As I look forward, to say I’m optimistic would be an understatement. Though we have temporary challenges from weather to regulatory issues, the potential of ethanol cannot be ignored. Ethanol is without question the lowest cost liquid transportation fuel on the planet Earth. Even at record corn prices ethanol is typically less expensive than gasoline. And it’s better. Ethanol’s high octane will be necessary for the lighter, higher compression engines of the future while cleaning up the environment and driving economies worldwide. Now that’s something to be excited about!
I wish you all a successful and prosperous 2013.