New seed variety gives ethanol industry the jitters
A new corn hybrid that may have one-half of one percent of the market this year has the ethanol industry worried that it could jeopardize exports of distillers dried grains and solubles (DDGS).
Last week Bob Dinneen, president of the Renewable Fuels Association, wrote officials at Syngenta expressing concern about the possibility of Agrisure RW corn winding up in in the export market when, at this point, only one country outside of the U.S., New Zealand, has approved its use.
"Syngenta is incorrect to assume that all distillers grains produced at dry mills will be used domestically," Dinneen said in his letter. "The dramatic growth of the industry is quickly changing the customer base for distillers grains. The U.S. ethanol industry produced a record 12 million metric tons of distillers grains in 2006. Export markets are quickly becoming a major component of the distillers grains market. More than 10% of U.S. distillers grains production was exported in 2006..."
Dinneen said that Mexico and the Pacific Rim are the fastest growing markets for distillers grains.
The issue concerns ethanol producers in Iowa, Monte Shaw, Executive Director of the Iowa Renewable Fuels Association told Agriculture Online.
"We've surveyed our members here in Iowa and the vast majority of them will not accept Agrisure products," Shaw said. Late last week he hadn't heard back from all of the 27 members surveyed, but he said he doubted that more than a handful would accept the product if it's not approved for export to major customers.
The problem for many ethanol plants is that not all export DDGS directly. Many go through brokers and may not know who the ultimate buyer is. "Most of our plants export at least some portion of their DDGS," Shaw said.
His group, too, has written Syngenta. asking the company to make sure that farmers who buy the seed know that not all dry mill plants will accept the product.
In the grain use/marketing commitment that Agrisure buyers sign, farmers are asked to list how they plan to use the harvested corn. One option is "Deliver to a dry grind ethanol facility listed below."
Chuck Lee, head of corn products for Syngenta, told Agriculture Online that "We haven't named any (ethanol) facilities that are taking it or not taking it," The agreement that farmers sign has a space for the farmer to list the end user.
"We would like the grower to channel grain away from the export markets," Lee said.
The other options listed on the agreement include feeding grain or silage on the farm and delivering to domestic feedlots, feed mills, poultry operations and domestic nonexport elevators.
Lee questioned whether, with high demand for corn this year, it's wise to wait on foreign government approval before using the latest developments in corn production such as the rootworm control offered by Agrisure.
"Just to feed the demand that we think we'll have in 2008, we've got to drive yields up to 160 bushels an acre and that's going to be hard to do without these technologies," Lee said.