Author

Rick Tolman

Rick Tolman

Rick Tolman is the former CEO of the National Corn Growers Association. He served in that role for 14 years, from 2000 to 2014. Rick is now semi-retired and working as an independent consultant. He and his wife Linda now make their home in Liberty, Utah.


Nov 06, 2018

by Rick Tolman

Did you know? When it comes to greenhouse gas emissions, current research is showing that biofuels rock.  One of the best tools for the early ethanol detractors was the claim that ethanol production was bad for the environment, citing net energy balance, greenhouse gas emissions and so forth, but recent studies are proving those myths wrong. In 2010, the EPA projected that corn ethanol would emit 75 grams of CO2 per megajoule by 2022. 1 This was not a very favorable projection, and may have damaged the environmental reputation of ethanol. But recent studies by the Department of Energy and the USDA have turned the EPA projection on its head, showing that the carbon emissions of corn ethanol are already far lower than that estimate for 2020. A report released in January of last year 2 , showed that in 2014 the life cycle of greenhouse gas emissions for corn ethanol were already 43 percent 2005 gasoline and 30 percent below the EPA 2020 estimation. The report also estimated that corn ethanol’s carbon intensity would be a whopping 70 percent below the EPA estimate by 2020. Consider just a few example statistics 3 noting improvements in the efficiency of inputs to corn production: : 1990 – 18,048 grams/bushel; 2020 estimate – 6,588 grams/bushel : 1990 – 608 grams per bushel; 2015 – 383 grams/bushel – 1990 – 8 grams per bushel; 2015 – 6 grams per bushel : 1990 — 0.06 grams per bushel; 2015 — 0.01 grams per bushel And how about this stat on the products and byproducts of ethanol production—both food and feed: Today one bushel of corn can produce 2.8 gallons of ethanol as well as 19.5 lbs. of dried distillers’ grains. In 1977, U.S. corn farmers produced an average of 90.8 bushels per acre. This year, the average yield on that same acre is projected to be 178.4, or nearly double what it was then. Recent and updated studies are finally giving corn and ethanol production their due. Far from being the environmental nightmares that some have portrayed, they are indeed the rock stars of efficiency and improvement, and one of the best tools that we have for addressing greenhouse gas emissions. The views expressed in this article are the author's alone and not those of Farmer's Business Network, Inc., its affiliates or members. 1.  https://ethanol.org/GHG%20chart.pdf 2.  https://www.usda.gov/media/press-releases/2017/01/12/usda-releases-new-report-lifecycle-greenhouse-gas-balance-ethanol 3.  http://bluetoad.com/publication/?i=519490&p=&pn=#{%22issue_id%22:519490,%22page%22:0


Oct 19, 2018

by Rick Tolman

Did you know that exports of U.S. ethanol should reach record levels in 2018 even after hitting a new record in 2017? That is important and good news in a year when ethanol prices have dipped to a 13-year low. The U.S. is the world’s largest producer of ethanol, generating nearly 60 percent of the world’s output last year, and is also the world’s largest exporter of ethanol. Ethanol exports have steadily increased in the last few years and have helped support expanded production levels. In 2015, exports accounted for about 6 percent of domestic production, but in 2018 that figure now stands at 12 percent. Future growth in ethanol production should be crucially tied to export success. Consider the following: U.S. ethanol was shipped to Brazil, China, Canada, India, the United Arab Emirates and nearly 40 other countries last year. – During the past eight years, China’s consumption of ethanol has been less than 3 percent of its gasoline consumption. It is currently slow rolling an E-10 policy in certain provinces, but the entire country is scheduled to be under an E-10 mandate by 2020. There could be a tremendous gap between what they can produce and what they will need. – India currently is blending ethanol at about 2.5 percent of their gasoline consumption. They also have set an E-10 target and will need to import significantly more ethanol to meet that demand. – Japan has recently set a new goal to increase their blending of gasoline with biofuels to reduce greenhouse gas emissions. Nearly all of that increase will need to be imported, creating an opportunity for the U.S. – Brazil has an ethanol blending mandate of 27 percent. Brazil’s domestic production of ethanol is declining as it cannot compete with the price of ethanol imported from the U.S. – Canada is generally the second-leading destination of U.S. fuel ethanol, receiving nearly 330 million gallons in 2017, 5 percent higher than the level exported in 2016. Canadian demand for U.S. fuel ethanol is driven by different ethanol mandates for gasoline across Canadian provinces, ranging from 5 percent in Alberta, British Columbia and Ontario to as high as 8.5 percent in Manitoba. – These three countries have also set E-10 targets for the near future and will all have to rely on imports to reach that goal. Keep a close eye on ethanol exports and the state of trade pacts and trade negotiations. As the U.S. dominates in biofuels production and trade, increases in global demand likely means good things for U.S. exports of biofuels and potentially good things for the price of corn. ethanol's uncertain boost FBN chief economist, Kevin McNew.  Sources: https://ethanolrfa.org/issues/exports-and-trade/ https://grains.org/buying-selling/ethanol/ The views expressed in this article are the author's alone and not those of Farmer's Business Network, Inc., its affiliates or members. 


Apr 05, 2018

by Rick Tolman

Next month will mark 43 years of marriage between my lovely wife and me. About the time that I got married was the same time that I first started following ag commodities markets. I do greatly admire those who are not caught off guard by market changes.I can say with some certainty, that despite the number of years I have been following the markets, I am unable to claim expertise or thorough understanding of the mysteries and intricacies of the markets , and  am often caught by surprise by them. This year may not be unlike those in the past in that 2018 has already begun with many significant and perplexing questions that we as farmers should be asking ourselves about the markets. Just as a start . . .   (All readable signs point to yes. The first shots have already been fired.)   They are seemingly negative. In general, U.S. ag has done very well with the current NAFTA. It is very hard to imagine an improvement.   My fingers and toes are crossed on this one - no!    Tighter world supplies and higher soy (and to some degree corn) prices Most likely as it is every year - geographically variable.  Indications by the experts are indicating that it will not as good as it was last year. Beyond these questions, here are several critical issues for the industry that I am watching this year: The saber rattling and announcement of tariffs and counter tariffs, in general, does not bode well for U.S. agriculture - farmers have more to lose than likely gain. The products where the U.S. currently compete well (corn, soybean, animal proteins, etc.) are likely and easy targets for retaliation. Food is strategic and at the same time emotional, and trade disruptions that impact food exports and imports tend to have long tails. They also tend to stimulate domestic production by importing nations to protect their vulnerabilities - history has proven this. As one large example of the complexities, there is no question, but that China is a bad actor when it comes to trade.  But, China is also the current largest overall export market for U.S. agriculture. Even more perplexing - it offers the most future potential. I will add this: There is a large difference between protecting and protectionism. The distinction is largely subjective. While many support free and fair trade, few want to admit that there are inevitably winners and losers. Wars have been fought over trade. What is occurring at present has incredibly high stakes and implications for U.S. farmers and deserves our closest attention. Two very important USDA reports were recently released. By now, all reading this know what was reported. There were two big surprises in the prospective planting. One was both corn and soy acres projected below 90 million acres. In my opinion, that happening does not seem very likely. I suspect that one or both will still break 90 million. Like most years, weather will be key.  An early dry spring favors more corn acres, while a later wet spring favors more soy acres. The second surprise was the projection for more soy acres than corn. If this occurs, then it will be the first time in 35 years that we will have planted more soy than corn. The market outlook is somewhat more bullish for soy than corn, but see the above comment regarding spring weather conditions, which, I think, will be the ultimate deciding factor. And keep in mind that the USDA projected sorghum and wheat acres up. Wheat acres are projected up by 3 percent. Despite that increase, it is the second lowest wheat acres since 1919. Not much good market news in the grain stocks report, though both corn and soy stocks are projected up from last year. Corn stocks would be a record level for the March report. Heavy stocks are the biggest factor hanging over the market and holding prices down. On the surface, 2018 looks again to be a challenging year, but all signs point to corn and soy prices being marginally higher in 2018 than 2017. Because it appears that planted acreage may be down, and because it is quite likely that yields in 2018 will not quite as good as they were in 2017, the combination of both would lead to a tightening of ending stocks, and as a result, higher prices. World corn and soy consumption continues to increase. 2018 could mark the first year since 2010 where world corn consumption exceeds production. The domestic and export markets for ethanol continue slow but steady growth and should show slight growth in 2018. And finally, any world weather event could quickly tighten supplies, sending prices higher. One thing to always remember, the difference between too much and too little in world grain markets is relatively narrow and can quickly turn.   The views expressed in this article are the author's alone and not those of Farmer's Business Network, Inc., its affiliates or members.