Extension In-ServiceMarch 23, 2011
Charles Hurburgh, Iowa Grain Quality InitiativeConnie L. Hardy, Extension SpecialistChad Hart, Extension Grain Economist
Increased Grain Prices: Logistics Challenges
Iowa Ethanol Production and Corn Usage
Summary Statistics May-2010
nEthanol Producedmil gal/yr
Corn Usedmil bu/yr
DGS000 tons/yr
Current Dry-grind Plants 34 3,280 1170 10,237
Expansions and new construction
1 277 98 857
Wet Mills 4 500 178 1,557
Nearby Iowa 11 636 227 1,986
Total 50 4,6931,673
(69% of 2009)
14,637
Corn Yield Potential
Source: Monsanto, June 2010
Overall = 2.1 bu/a/yr; Last 10= 3.5 bu/a/yr; Seed industry = 4-6 bu/a/yr; +400-500 million bu/year Nitrogen use: 1.0-1.1 lb/bu down to 0.7-0.8 lb/bu
Fast Export Growth, Slow Yield Growth2%/yr, 3 bu/acre/yr
Trend Export Growth, Fast Yield Growth1%/yr, 5 bu/acre/yr
2010 2015 2020 2025 2030 20350
1000
2000
3000
4000
5000
6000
7000
8000
New Corn Storage as Piles"Pile"= 1,500,000 bu
Year
Nu
mb
er
of
Pile
s
3 bu/acre/yr yield increase
2010 2015 2020 2025 2030 20350
1000
2000
3000
4000
5000
6000
7000
8000
New Corn Storage as Piles"Pile"= 1,500,000 bu
Year
Nu
mb
er
of
Pile
s
5 bu/acre/yr yield increase
Corn Drying Capacity Needs
103516 516 516 516 516
28903406
39224438
49545470
3371
3973
4575
5177
5779
6381
0
1000
2000
3000
4000
5000
6000
7000
2010 2015 2020 2025 2030 2035
Nu
mb
er o
f D
ryer
s
Year
Corn Dryers Needed, US1 "Dryer" = 25,000 bu-pts/hour
New Total +1% MC
Summary• Corn production is increasing faster than
traditional uses can absorb.• Increase 3-5 bu/a/yr = 350-500MM bu• Major economic growth is several areas.• Huge surpluses very quickly if ……• Systems thinking in policy planning:
– Corn, soybeans, other grains together.– Growth connected with acreage balances
and continued process improvements
So….
Summary - OpEd
Grain is not the only natural resource increasing in price
Natural resource prices, especially grain, are locked to energy prices (Dermot Hayes)
Production agriculture is becoming more concentrated but has 2-5X the economic relevance of just 4 years ago.
Will production agriculture learn the leadership and influence skills that protect other low number but high economic impact industries? OIL! Etc.
Who will stand with our core business? It can supply both food and fuel.
Food has been cheap; some of the world can
now outbid us.