Over 60 members and guests attended the Wayne-Pike County Farm Bureau’s Annual Spring Dinner on April 24.

Guest speaker John Urbanchuk, who teaches at Delaware Valley College, and is an expert in agriculture and the bio-fuels industry, gave a talk on ethanol.


Over 60 members and guests attended the Wayne-Pike County Farm Bureau’s Annual Spring Dinner on April 24.


Guest speaker John Urbanchuk, who teaches at Delaware Valley College, and is an expert in agriculture and the bio-fuels industry, gave a talk on ethanol.


Ethanol, is an “alcohol made from anything that has carbohydrates in it. And as an alcohol, it’s a fuel and it’s blended with gasoline to clean the air, to add octane and to displace gasoline,” he said, (It) helps reduce our dependence on imported oil.”


“In 2007, we produced 6.5 billion gallons of ethanol in the United States. That’s sounds like a lot, but we use about 130 billion gallons of gasoline. Well, gasoline is made from crude oil. And when you do the conversion, that 6.5 billion of ethanol displaces about 226 million barrels of crude oil ...That’s 226 million barrels that we don’t have to buy from someplace else. That’s money that stays in this economy and doesn’t go abroad. Because, as you’ve heard, we import about two-thirds of all of our petroleum and oil requirements.”


Urbanchuk says the United States and Brazil are the two largest producers of ethanol in the world. “We make ethanol from grain, primarily from corn, because we do corn better than anything else we do ...Brazil uses sugar, because they do sugar better than anybody else,” he said.


Corn for fuel                                                     
Diverting crops to make fuel is not creating world hunger, Urbanchuk says, “That’s not the case at all ...This year, I would say, we’re going to make ...close to nine billion gallons of ethanol in the United States,” he said, “That nine billion gallons of ethanol is going to require somewhere around two-and-a-half billion bushels of corn or about 27 percent of all the corn that we use in the United States ...For every bushel of corn that you grind to make ethanol, you get 17 pounds of distiller’s grain (used in livestock feed),” he said. When you make ethanol from corn, there are two bi-products, the distiller’s grain “the solid stuff that’s left over” and carbon dioxide which puts the fizz in soda. Urbanchuk says carbon dioxide is used in the food and beverage industry, as well as: steel, pharmaceuticals and medical. 


“As we move through the next 15 years ...we’re going to use 36 billion gallons of ethanol in the United States. With the Energy and Dependence Security Act of 2007  ...signed into law in November, said that we’re going to increase our use of bio-fuels. We’re literally going to be swimming in distiller’s grains and it’s going to provide a significant benefit to the livestock and poultry and dairy industries in the United States ...You’re not losing the feed value of that corn,” he said.


“A lot of people ...they see an ear of corn, and they think about the corn that you eat, when you find it on your plate. And it’s not the same thing. People have to realize ...the corn we’re talking about, you eat in the form of a pork chop, a steak, a glass of milk, an egg or a piece of chicken. It’s run through an animal before it gets to the human,” he said.


“When you make ethanol from corn, you’re not losing the full feed value. So this notion that you’re taking corn out of the food chain is incorrect. ‘Cause what you’re doing is you’re adding back a medium protein valuable feed ingredient that’s used largely in dairy and in beef cattle and then also swine and poultry,” he said.

 Corn and wheat prices up 
“Commodity prices, particularly corn and wheat prices have increased dramatically over the last two years,” says Urbanchuk.


 What’s the reason for the price hike? “It’s a complex issue and there are a complex number of factors behind it, clearly increased demand. We harvested a record 13+ billion bushel corn crop last year in the United States, the most we’ve ever harvested on 93.6 million acres, the largest number of corn acres planted in the United States since 1944. We’ve seen dramatic increases in average yields as well. While we had a record corn crop, we also had record exports, we had record level of domestic feed use. And yes, we had a record level of ethanol use ...but you can’t take the full increase that we’ve seen in food prices and say, ‘That’s the fault of ethanol.’ It’s not. It does have an impact on corn prices, along with a lot of other things, like the declining dollar, increasing foreign demand and increasing domestic demand for feed. So that is having an impact, but it’s muted by other increases, such as energy, which have a bigger impact than corn on food prices,” he said. 


State Farm Bureau Director Dave Williams says, “In soy beans, corn and wheat, the US exports have increased between 30 to 40 percent since 2005. That’s one of the major reasons for higher costs in food.” 

     
Urbanchuk says, “There’s been a tremendous increase in speculative investment into the commodities’ market that have helped push prices up. People are taking money out of financial sector and out of housing and they’re putting it in to hard physical assets. Agricultural commodities are chief among that,” Urbanchuk said. “Work that I’ve been doing in looking at this and some colleagues of mine out at the University of Missouri, we figure that somewhere around one-third of the current price of corn is due to speculative pressure. That’s ...called a bubble. And we all know what happens to bubbles. Sooner or later, they burst. Those prices are going to rationalize back down to more reasonable levels. That is, levels that are determined by supply and demand fundamentals,” he said. Urbanchuk figures in a year to 18 months from now, commodity costs will readjust.


“The food items that are increasing the fastest in prices are cereals and bakery products, because we had a bad world wheat harvest last year and wheat supplies are low. US wheat acreage and US wheat production has increased the last three years, we’re not the problem. The problem is elsewhere, but it’s a global market,” he said at the April 24 at the Wayne-Pike County Farm Bureau’s recent spring dinner. “Eggs and dairy products are up, primarily because of strong foreign demand, largely ...from China and to a lesser extent, India. We’re experiencing record levels of demand for dried egg products and for dairy products, non fat dried milk and other products, cheese and some other factors that are driving those prices up,” Urbanchuk said.
He says it’s not true, “When people are looking at increases in food prices and saying that all of it is the fault of the diversion of crops, notably corn, to make ethanol ...What we find is that things like energy: diesel fuel, gasoline, natural gas and electricity play a much greater role and ...twice the impact of corn when you look at the impact on consumer prices. And it makes sense when you think about it, because energy is involved in everything from the field all the way to the grocery store counter: packaging, transportation, processing, cooking, and storage,” he said.        
  
Ethanol plants
Urbanchuk says, “There are 147 ethanol plants currently operating, 55 under construction, only one in Pennsylvania, that’s Bio-fuels International Plant in Clearfield (Central, PA). It’s a 110 million gallons a year plant.”
The ethanol plant proposed for Indian Orchard, would produce about 55 to 60 million gallons of ethanol a year, says State Farm Bureau Director Dave Williams. Indian Orchard Renewable Energy, LLC is the name of the company currently holding an option to buy on the 91-acre property behind Kost Tire and Muffler on Route 6. Williams says the final feasibility studies, including wetland, compliance for the proposed bridge and traffic studies are being completed by Ceco Corporation in Lackawanna County.