As farmers and investors in three ethanol plants, the production of ethanol and the Renewable Fuel Standard, otherwise known as the RFS, is very important to us. BUT - let me explain first why everyone in the US should be interested in ethanol production.
1. It replaced the carcinogen MTBE that oil companies use as an oxygenate for their fuel. (MTBE was found in water supplies in CA that necessitated the city of Santa Monica to shut down their two drinking water facilities and purchase bottled water.) That is how they reach the minimum 87 octane in the fuel you purchase, in fact, in recent years they are reducing the octane already in their fuel to 84% and making up the difference with ethanol.
2. Ethanol is renewable, whether you are talking about corn or cellulosic, we grow the corn each year and the residue is in the fields every year that feed the cellulosic plants. With the research in seed corn, the improving varieties are also producing more corn stover so removing some from the fields is not detrimental.
3. Ethanol is a clean burning fuel, China is contemplating importing more ethanol to help clean up their air, have you seen the videos of the pollution in their cities?
4. Ethanol is helping lower the cost at the pump for everyone, this is a quote from the National Corn Growers Website on the RFS:' a 2011 study by economists at the University of Wisconsin and Iowa State University (the Center for Agricultural and Rural Development, or CARD) found that ethanol reduced U.S. wholesale gasoline prices by an average of 25 cents per gallon from 2000 to 2010. The authors found that in 2010 alone, ethanol reduced gasoline prices by 89 cents per gallon. This equates to $800 in reduced spending on gasoline for the typical American household.'
Ethanol production began over 40 years ago and innovators persevered to make it into the competitive industry that it is today. In the early days, it did cost more to produce it than it sold for and there is a professor from Cornell, David Pimental who still spouts those 'facts' to anyone who will listen and report them. Looking into his research, he went clear back into the cost of producing the machinery it takes to farm the land! WOW! As if we would never buy another piece of machinery if there was not ethanol production!
I was an ethanol user long before I became a farm wife, driving 90 miles a day on my mail route, on roads bordered by corn fields, it just made sense to me. Why purchase fuel from countries who hate us, when we can produce our own from what we know how to grow?
Fast forward to the year 2001 when a small group of farmers, business owners and local leaders got together to brainstorm some way to raise the price of corn in our area by using it here, rather than seeing it shipped out on trucks and rail cars for someone else to profit from. Farmers know how to grow corn and for years it cost more to grow it than was received in sales and we received government payments to make up the difference. Kind of like farmer welfare and no one was happy with it.
Little Sioux Corn Processors, L.L.C. was born and after a LOT of hurdles, fundraising began in earnest to raise enough money to build our own ethanol plant and it was a struggle. A project like this was not for the faint of heart, I can't even imagine the hours that this dedicated group put into the project, uncompensated.
It was a very exciting day in 2003 when Bruce and our neighbor, Tim, a founding member of the discovery group and a board member, delivered the first loads of corn to be processed into ethanol.
Lots of people jumped on the ethanol tankwagon, so so speak, and building was going on in full force, there was a slight hitch in the process, the industry had to rely on Big Oil to distribute our product. Big Oil had taken notice of all the plants being built and did not like the competition, even though they needed us to add to their fuel, they only wanted to use as little as necessary.
Congress created the renewable fuel standard (RFS) program in an effort to reduce greenhouse gas emissions and expand the nation’s renewable fuels sector while reducing reliance on imported oil.
The RFS program was authorized under the Energy Policy Act of 2005 and expanded under the Energy Independence and Security Act of 2007, the amount of renewable fuel required increases each year, escalating to 36 billion gallons by 2022 when the law is set to expire. By then, the plants are expected to stand on their own feet but in the mean time it gives us investors, confidence to put our own hard earned money into these plants, knowing there is a market for that product.
Big Oil does not like the RFS, as the volume of renewable fuel required increases, the harder they fight against both renewable fuels and the RFS and you can believe they are throwing money at presidential candidates to get that done.
Iowa is ground 0 right now with the caucus' in three week so we are bombarded by TV, phone and print ads, the Hallmark Channel is ruined to me, if you watch it, you know why. I do not watch it live anymore, just recorded shows that I can skip over. We have heard over and over that Ted Cruz wanted to get rid of the RFS, not wait for it to sunset and that he was backed by Big Oil. We were challenged on Monday by a campaign caller in his camp, when I listed the reason we did not like him, to go ask him the question ourselves. We looked on his website and found he was coming to Cherokee on Tuesday afternoon so we took that challenge.
I do want to reiterate that ethanol is not the only thing we are basing our decision on, we have a lot of problems both in our country and abroad but it is very important to us. Just as our family members with young people trying to get a college education without coming out with crushing debt. Or family members struggling with low paying jobs with not much hope of that improving.
So Bruce and I dressed in our 'going to town clothes' and went to Danny's, a local restaurant, packed to the gills and found places at the back. Ted Cruz is a fine looking man! He's shorter than I thought, Steve King, our representative who we really respect, he has been such a renewable fuels champion, introduced him. We liked everything Ted said, but he didn't get specific on the RFS so I was ready when he took questions and my hand shot up so fast, it's a wonder I didn't throw my shoulder out! We had gone to see Dr. Ben Carson talk at Orange City and know they don't take too many questions. I asked him to explain his stance on the RFS. He was obviously expecting it and said all the right things about using all the available resources, be it bio-fuels, wind, solar, but the government shouldn't be picking winners and losers and he wants to get rid of ALL government subsidies. He was ready to move onto the next question but I was just as ready and I reminded him that the RFS was put into place to give confidence to investors and it has an expiration date of 2022, was he willing to just jerk the rug out from under us? I also reminded him that corn ethanol gets NO SUBSIDIES, unlike Big Oil, whose subsidies are written into law, they don't even have to go and beg for them as other bio-fuels, plus wind and solar.
This time, Ted went into more detail, he did say he would not 'jerk the rug' out from under us, he knows it has a sunset clause but he wants to gradually wean down the RFS, ending in 2022. But he also said he would remove obstacles that the government, specifically the EPA, has thrown in front of ethanol. This year we had a huge corn crop, every elevator around had outside corn piles, but the EPA, in all their 'wisdom' lowered the amount of ethanol to be produced, thumbing their nose at the standards written into law for 2015. It didn't make any sense, we along with thousands of others wrote letters but they know best.
We'd love to see someone take the legs out from under EPA.
I was happier with this answer but we shall see how things shake out. He only took two more questions and wrapped things up, Steve King was standing across the room and pointed to me to wait for him. But before he could get to me, I was mobbed by the media! I had microphones, cell phones, cameras shoved in my face, asking my name, where did I live, did we farm? Steve went into the back room with Bruce and other guys and I talked to the media. I tried to explain ethanol and the RFS and why it is important to us, I talked until I was so dry I could have spit cotton balls. One reporter from Austin TX was the one who wouldn't leave. He obviously knew nothing about ethanol and it was enlightening to me to try to boil it down so his eyes wouldn't glaze over. Just as you, the readers, are probably doing right now.
One thing I wish I would have brought up to the reporters, lest they think Bruce and I are just looking out for our own selves, is that Little Sioux, our flagship plant returned $40 MILLION, with an 'M' to our and surrounding counties in dividends for 2014. Since start up, we have received 5 times our original investment and the plant is debt free. It is a proven fact that the money will turn over 7 times, we purchase machinery, put up buildings, buy new cars, in turn those business' do upgrades, hire construction workers, who then stay in motels, eat in restaurants, etc.
So in a nutshell, that is why ethanol and the RFS is important to us.
Our niece, Anne, surprised me today with an email link to CNN, where they quoted me, it's not the video, it's in the story below.
Kind of exciting! If you want me to send you an autograph, mail me a self-addressed, stamped envelope!
If you would like to see an 8 minute video of our flagship plant, go to LittleSiouxCornProcessors.com, it is very interesting and will explain the process.
I have a flat butt, maybe that is TMI but I've sat here all afternoon, working and re-working this blog, writing is hard work. Now I turn it over to Bruce to proof read before I publish it.
I want to end with a shout out to Bruce's cousin, Dick Pedersen, who I know reads my blog. I read in the Marcus News that 80 years ago, in 1936, he was the first baby born in Cherokee County, making his appearance at 3:40 AM!
Fireworks in the Pedersen household!
Way to go, Dick, many more!!