News Clips May 27, 2016
The Wall Street Journal
May 26, 2016
Banks are tightening credit for U.S. farmers amid a rise in delinquencies, forcing some growers to turn to alternative sources of loans.
When U.S. agriculture was booming this decade, banks doled out ample credit to strong performers and weaker growers alike, said Michael Swanson, an agricultural economist at Wells Fargo & Co. But with the farm slump moving into its third year, banks have become pickier, requiring some growers to cough up more collateral and denying financing outright to some customers who need it to pay for seeds, crop chemicals and rent. Farmers this year have been grappling with low commodity prices, mounting debt and weaker incomes.
Claude Sem, chief executive of Farm Credit Services of North Dakota, said he asked some farmers to put up more land or machinery to back loans this spring.
Collateral requirements could increase for more farmers if crop prices remain low, he said, noting that the cash price for wheat in northern North Dakota recently was about $4.50 a bushel, roughly a dollar below what it costs many farmers to raise the crop.
“Below break-even, everything tightens up,” Mr. Sem said, adding that falling land values also have spurred lenders to boost collateral requirements, with cropland prices down as much as 20% in some parts of North Dakota.
With traditional bank loans harder to come by, farmers are turning to sources like CHS Inc., a large farmer-owned cooperative in the U.S., which operates grain elevators and retail stores across the Midwest. CHS said its loans to farmers increased 48% in both number and volume in the 12 months to March and have more than doubled since 2014.
It “suggests there are many farmers struggling to obtain financing,” said Randy Nelson, president of the co-op’s financing subsidiary, CHS Capital.
CHS said its interest rates on farm loans for crop-production expenses generally range from 3.75% to 6%. Commercial banks in the Farm Belt recently have charged about 4.9%, according to the Chicago Federal Reserve Bank of Chicago and bankers.
A recent rally in some U.S. agricultural markets has brightened the picture considerably for growers of crops like soybeans, but many farmers still are facing losses this year thanks to a large buildup in global grain stockpiles that has pressured prices for other U.S. commodities like corn and wheat.
The Chicago Fed earlier this year said the volume of the district’s farm-loan portfolio with major or severe repayment difficulties hit 5% in late 2015, which compares with 2.9% a year earlier and is the highest in more than a decade. Illinois banker Eric McRae said repayment problems are deemed serious when growers carry debt from year to year or are 90 days delinquent on loan payments.
Farmers typically take out loans in the first three months of the year before spring planting begins. But this year, growers, including some who had been turned away by their primary lenders, had been searching for financing as late as April, when planters already were rolling in fields across the Farm Belt.
“There’s hardly a day that goes by that I don’t get approached by someone turned down by another bank,” said Grant Lindell, vice president of First United Bank in Michigan, N.D. As late as May, Mr. Lindell said he still was working with several longtime customers to help them make ends meet by selling equipment or taking out a mortgage on their land.
Farmers also are seeking more help from the government. Demand for loans from the Farm Service Agency, an arm of the U.S. Department of Agriculture that administers financial support to growers, is projected to increase 23% in 2016, according to the USDA. That rise in part reflects banks’ requests for government guarantees on farm loans and other types of loans like microloans to beginning farmers.
Loan demand has been so strong that the Farm Service Agency already has spent 75% of its allotted funds for the fiscal year, which ends Sept. 30, triggering an obligation to alert Congress to the quicker-than-normal lending pace.
The USDA has said net farm income will slide this year to $54.8 billion, down 56% from its peak in 2013 and the lowest level since 2002. Debt-to-asset ratios among farmers are expected to rise for the fourth year in a row.
Bankers said they generally don’t expect anything like the financial strain of the 1980s, when tumbling land values and rising indebtedness pushed many growers and agricultural lenders out of business. Lending activity in the U.S. is still strong, and delinquency rates on farm loans remain relatively low, though they have risen in some parts of the Farm Belt.
But lenders are closely watching their portfolios for signs of stress. Data from the nation’s Federal Reserve Banks in mid-May showed growers are appealing to lenders for more loans to cover farm operations even as the rate at which existing debt is being paid off falls.
Some borrowers this spring faced tough decisions over whether to sell assets like farmland or equipment, appeal to landlords to reduce rents or stop farming altogether, said Mark Jensen, chief risk officer at Farm Credit Services of America. About 90% to 95% of the bank’s farm loans are classified as “acceptable,” but its list of loans to watch is building, he said.
Nathan Kauffman, Omaha branch executive at the Kansas City Fed, said lenders in his district are working to restructure debt for borrowers but can’t do so indefinitely. Mr. Kauffman said, “2016 is going to be a critical year.”
To view this story at its original source, follow this link:
DTN / The Progressive Farmer
May 26, 2016
USDA, livestock producers and Congress could find themselves in a race to see whether the Obama administration is going to dramatically overhaul rules under the Packers and Stockyards Act this year or face another appropriations rider that would block such action.
Based on Congressional hearings over the past few days in both the House and Senate, leaders of some livestock groups are upset that the proposals are being revived in USDA's Grain Inspection Packers and Stockyards Administration.
USDA came out with a statement Tuesday after some members of the House Agriculture Committee and livestock groups criticized the department's agenda regarding different provisions that highlighted major livestock industry rifts when they were first debated in 2010. USDA stated Congress should not return back to policy riders in appropriations bills to try to block the changes.
USDA stated, “Any efforts to once again block GIPSA’s rules to ensure fair treatment of livestock and poultry growers are not acceptable to this Administration, and do not look out for the best interests of America’s farmers, ranchers and rural communities. The incessant GIPSA rider demonstrates a complete lack of concern for honest, hardworking families. Maybe some people don’t remember the hardships recently suffered by our farming families in 2008 and 2009 when producers in Arkansas, Alabama, Florida, Georgia, Louisiana, North Carolina, Pennsylvania, Tennessee and Texas lost millions of dollars and their livelihoods when just one of the major poultry businesses went under. The focus should be on how to ensure a fair marketplace and a level playing field for our farming families—nothing less. Just ask the American Farm Bureau Federation, the National Farmers Union and the National Sustainable Agriculture Coalition—groups that represent our farmers—and you’ll hear that this GIPSA rider is bad for family farmers, bad for the agriculture industry and bad for our rural communities. Everyone deserves a level playing field. Everyone deserves a fair shot.”
The rider, however, wasn't in the 2016 funding bill that passed in December. The House Appropriations Committee has language seeking to reestablish the blocking move in the FY 2017 bill.
In the meantime, USDA detailed the proposals in the department's agency rule list for Spring 2016 under the White House Office of Management and Budget website. http://dld.bz/…
Based on the rules agenda, USDA is breaking up different sections from a more comprehensive proposal in 2010 on livestock marketing rules. Instead, USDA is seeking to introduce or propose different provisions of the controversial rule individually.
Scope and Unfair Practices
USDA seeks to finalize in September a proposal from June 2010 that would deal with the issues of litigation brought by poultry growers. The courts have often rules that in order for a plaintiff (a grower) to make the case that a packer imposed unfair discriminatory practices or undue preferences under Section 202 of the Packers and Stockyards Act, then the grower has to show that the packer's actions had "an adverse effect on competition." USDA is proposing to change the Packers and Stockyards Act to sway the courts into recognizing that unfair practices against an individual grower doesn't have to show harm to competition to be enforced.
A little more background here: The federal appeals courts have repeatedly looked at a grower's arguments in a case and concluded that the packer's treatment of the producer did not adversely affect the markets so the grower essentially has not case. Some of that was detailed in the 2010 appeals ruling, Terry v Tyson. http://www.ca6.uscourts.gov/…
Tournament System in Poultry
GIPSA will propose a rule in September under Section 201 of the P&S Act addressing the tournament system in poultry payments. Companies often group growers together and then rank them on performance with those who rank higher getting more pay and those that rank lower getting more. USDA states its rule would set some requirements for companies to determine a grower's payment.
"These requirements would help to ensure fairness for poultry growers who are currently being paid according to a ranking system regardless of type and kind of poultry, age range, and target weight of birds. A live poultry dealer’s failure to comply would be deemed an unfair, unjustly discriminatory and deceptive practice according to factors outlined in the proposed rule."
Undue Preference and Advantage
This language was one of the key provisions that set off a firestorm among cattle and pork producers. It has to do with whether contracts between packers offering producers special premiums or pricing create undue pricing advantages for those producers. The rule would set criteria for USDA to decide if elements of these contracts would violate section 202 (b) of the Packers and Stockyards Act.
Leaders from the National Pork Producers Council and National Cattlemen's Beef Association argue that giving GIPSA oversight of marketing contracts would simply translate into packers further vertically integrating and owning the livestock outright. NPPC and NCBA both complained about USDA's potential rules in hearings this week.
“Pork producers are very concerned about the so-called GIPSA Rule,” said NPPC past president Dr. Howard Hill before the Senate Ag Committee on Thursday. “The livestock industry will be fundamentally and negatively changed, and the increased exports and jobs created from TPP will be negated” if the rule is implemented."
Said Tracy Brunner, president of NCBA, "What we do not need is the USDA dictating how we market cattle or manage risk in the cattle industry. The industry has developed tools and alternative marketing arrangements that benefit cattle producers and consumers. We’re not asking the Senate to intervene in our contracts; we’re asking the Senate to play their role in expanding market access and ensuring we are not regulated out of business.”
To view this story at its original source, follow this link: https://www.dtnpf.com/agriculture/web/ag/perspectives/blogs/ag-policy-blog/blog-post/2016/05/26/battle-reignites-proposed-gipsa
May 26, 2016
In their second hearing on the state of their industry in the last three days, livestock groups did their best to make the case for less red tape and an increased international footprint.
Speaking before the Senate Agriculture Committee, representatives from five major U.S. livestock groups told lawmakers about their priorities. Many of the remarks were similar to what was said before a House subcommittee on Tuesday, a hearing that had two of the same witnesses and featured three of the same organizations.
The groups, with some exceptions, pushed an agenda calling for approval of the Trans-Pacific Partnership, a national GMO labeling standard, and a hands-off approach from USDA on any potential changes to the Grain Inspection, Packers and Stockyards Administration.
Howard Hill, a past president of the National Pork Producers Council, testified that an analysis of a 2010 proposed GIPSA rule, which USDA said would address market fairness, concluded the regulations would have cost the pork industry upwards of $350 million annually. Witnesses from the National Cattlemen's Beef Association and the National Turkey Federation also spoke against the rule, which NCBA President Tracy Brunner said would “make USDA the ultimate arbiter of how cattle are marketed.”
Kansas Republican Pat Roberts, who chairs the committee, mentioned a House Appropriations rider that would halt the implementation of the rule. He said he “would expect the same effort when we consider agricultural appropriations” on the Senate floor, which is expected to happen next month.
Of the witnesses, only the U.S. Cattlemen's Association's Joe Goggins took a different position on the GIPSA rule, saying that the Packers and Stockyards Act “needs to be modernized,” but he didn't elaborate on potential modernizations.
On the subject of GMO labeling, the witnesses all drew a line in the sand and insisted that meat products not fall subject to any potential GMO labeling law. Feeding animals genetically modified grain does not modify the genes of the animals themselves, they said, and Brunner said it would be “commercially impossible” to verify the grain fed to livestock throughout the production process.
Sen. Debbie Stabenow of Michigan, the committee's ranking Democrat, pushed back, pointing out that she thinks criticism of the Vermont GMO labeling law from meat groups might be out of place since meat and dairy products are exempted from that particular law. Stabenow and Roberts are currently trying to reach agreement on a national GMO labeling standard, and meat product designation is said to be a key sticking point. She said how to label meats “complicates the issue for us.”
Absent from the hearing was any talk of potential beef market collusion, despite an ongoing investigation requested by Senate Judiciary Committee chair and Ag Committee member Chuck Grassley. The Iowa Republican, who has introduced a bill to end packer ownership of livestock, expressed concerns about the share of cattle being traded in the cash market, which has dropped to about 21 percent as trading shifts to the futures market.
“To me, it seems like the cattle market has experienced a structural change over the last decade where the tail wagging the dog situation has developed,” he said.
Brunner did acknowledge the change and said it was likely due to new technology, specifically the advent of high frequency trading. He says NCBA is working to get data from the CME Group on the subject.
No matter what that data might say, Goggins said at the hearing that the futures market simply isn't working as a financial risk management tool for many producers.
“The futures board is no longer a viable tool for us due to the volatility of the market and the amount of money it takes to hold a position," Goggins said. "This may allow us only to feed half as many cattle going forward.”
To view this story at its original source, follow this link: http://www.agri-pulse.com/Barnyard-groups-hit-their-major-points-at-Senate-Ag-hearing-05262016.asp
May 26, 2016
The antibiotic resistance factor MCR, which protects bacteria against the final remaining drugs of last resort, has been found in the United States for the first time—in a person, and separately, in a stored sample taken from a slaughtered pig.
Department of Defense researchers disclosed Thursday in a report placed online by the journal Antimicrobial Agents and Chemotherapy that a 49-year-old woman who sought medical care at a military-associated clinic in Pennsylvania last month, with what seemed to be a urinary tract infection, was carrying a strain of E. coli that possessed resistance to a wide range of drugs. That turned out to be because the organism carried 15 different genes conferring antibiotic resistance, clustered on two “mobile elements” that can move easily among bacteria. One element included the new, dreaded gene mcr-1.
The discovery “heralds the emergence of truly pan-drug resistant bacteria,” the DOD personnel, Patrick McGann, PhD of the Walter Reed Army Institute of Research and Kurt Schaecher, PhD of the Walter Reed National Military Medical Center, along with eight colleagues, write in the journal report.
Dr. Beth Bell, director of the National Center for Emerging and Zoonotic Infectious Diseases at the Centers for Disease Control and Prevention, said the CDC has begun working with the researchers and the Pennsylvania Department of Health to understand how the woman came to be carrying the highly resistant bacterium. (Later Thursday, Pennsylvania Governor Tom Wolf confirmed the case, and the CDC joint investigation, in a statement.) The DOD researchers who described her case, who did not immediately respond to a request for comment, provided no other information on her case, except to say that she had not traveled in the previous five months, suggesting she did not pick up the bacterium outside the U.S.
“It is extremely concerning; this is potentially a sentinel event,” Bell said in a phone interview. “There is a lot that needs to be done in terms of contact tracing and field investigation, to have a sense of who else might have been exposed or might be carrying this resistant bacterium.”
Bell disclosed that the U.S. Department of Agriculture will shortly announce the first identification of MCR in the United States in an animal. It was found in a stored sample of pig intestine that was collected as part of the National Antimicrobial Resistance Monitoring System, a shared project of the CDC, USDA and Food and Drug Administration that looks for resistant foodborne bacteria in people, animals and meat.
“We have been intentionally looking for this since MCR was first announced,” she said.
The Department of Health and Human Services subsequently confirmed the pig finding in a blog post Thursday afternoon.
The existence of MCR was reported for the first time just last November, in a report by British and Chinese researchers who said they had found the gene in people, animals and meat in several areas of China. Subsequently it has been found in people, animals or meat in at least 20 countries across the world.
MCR is so troubling because it confers protection against colistin, the last remaining antibiotic that works against a broad family of bacteria that have already acquired resistance to all the other antibiotics used against them. Colistin has worked up to this point because it is a toxic drug from the early days of the antibiotic era, seldom prescribed because of its side effects; because it was used so infrequently, bacteria had not adapted to it. But because it is effective, if harsh, agriculture adopted it instead, using it widely and legally for prevention of diseases in food animals. By the time medicine discovered it needed the drug back, resistance to colistin was already moving from agriculture into the human world.
Colistin is not actually used in animals in the United States, though it has been approved for use by the FDA. That makes the arrival of colistin resistance a mystery that will have to be plumbed through genetic sequencing.
Advocates who track antibiotic resistance, especially in agriculture, reacted to the news of US colistin resistance with the gravity it deserves.
“This shows that we are right on the verge of getting into the territory of routine bacterial infections being untreatable,” Steven Roach, the food safety program director at the Food Animal Concerns Trust, said by phone. “It underscores the failure of both the federal government and Congress, and the industry, to get a grasp of the problem. We can’t continue to drag our feet on taking needed action.”
The Pennsylvania woman’s diagnosis occurred thanks to a system set up within the DOD after MCR was discovered. Since last fall, any E. coli that was already resistant to a family of drugs known as ESBLs (extended-spectrum beta-lactams), as hers was, has been sent up the chain to Walter Reed, to be scrutinized for colistin resistance. That kind of systematic checking for antibiotic resistance, known as active surveillance, is rare in the United States. Most civilian surveillance systems are patchy; they focus only on foodborne illnesses, or rely on physicians or labs to report diagnoses, or draw from a few state health departments with already well-funded labs.
“This shows how much we need comprehensive surveillance, so that things are not discovered by accident,” Bell said. The CDC recently received additional funding under the Obama Administration’s national strategy for antibiotic resistance that will allow it to begin to set up regional lab networks. “We’ll be able to identify things systematically, identify clusters and begin contact investigations quickly,” she said.
“The first known case of MCR-1 in a U.S. patient underscores the urgent need for better surveillance and stewardship programs to combat antibiotic resistance,” agreed Dr. David Hyun, an infectious-disease specialist who is a senior officer in a long-running antibiotic resistance project at the Pew Charitable Trusts.
If there is any good news in the announcements of MCR’s appearance in the United States, it is that it has not, as yet, combined with other resistance genes into a completely untreatable organism. Bacteria acquire resistance genes like gamblers amassing a hand of cards, but the way the “cards” arrive is not step-wise—bad resistance, and then worse resistance, and then the worst—but randomly. What that means, in this case, is that the Pennsylvania E. coli possesses ESBL resistance (bad) and colistin resistance (worst)—but it remains susceptible to other intervening categories of drugs. (The stored pig sample has a yet different resistance pattern, colistin plus what is known as ASSuT, for the drug families represented by ampicillin, streptomycin, sulfas and tetracycline.)
But the random roulette of bacterial genetic recombination makes it more likely that an untreatable combination—of, for instance, colistin resistance plus carbapenem resistance, which the CDC has previously called “nightmare bacteria”—might occur. In fact, it already has occurred in patients in China, where MCR was first identified.
“We’re one step closer to carbapenem-resistant and colistin-resistant E. coli bumping into each other in someone’s gut,” Lance Price, a molecular biologist and the director of the Antibiotic Resistance Action Center at George Washington University, said by phone. “It doesn’t matter in which direction the transfer takes place—if the carbapenem-resistant strain picks up colistin resistance, or if the colistin-resistant strain picks up carbapenem resistance. It’s double jeopardy.”
Once bacteria begin to collect resistance to multiple families of antibiotics, the speed and direction of their spread becomes hard to predict, because using any of the antibiotics to which they are resistant allows them to increase in number. (Not because the drugs affect the resistant bugs—they don’t—but because they kill susceptible organisms nearby, freeing up additional living space and food.) That makes it crucial to create surveillance systems that can identify them early.
The Department of Defense system that detected the Pennsylvania organism is a model for how surveillance ought to be carried out, Price said: “We need active surveillance for multi-drug resistant or high-priority resistant organisms, in animals and people, throughout the U.S.”
To view this story at its original source, follow this link: http://phenomena.nationalgeographic.com/2016/05/26/colistin-r-9/
May 26, 2016
In the absence of Congress creating a national standard for labeling products made from genetically modified organisms, a flawed, de facto system has cropped up, Agriculture Secretary Tom Vilsack said.
After a Senate bill establishing a voluntary labeling system fell short in March, companies including General Mills, Inc. and Kellogg Co. began labeling products on their own (See previous story, 04/28/16).
“The problem with all of that is that there's no consistency, there's no predictability, there's no stability,” Vilsack told an audience at the Organic Trade Association's annual policy summit May 25. “The consumer can be easily confused, because everybody might do it slightly differently and there's no standard.”
Vilsack, who supports a mandatory labeling regime, called for Congress to pass a national labeling bill so that consumers can better choose between products made from organic or larger-scale, traditional farming methods.
Working on It
A mandatory labeling law is set to go into effect July 1 in Vermont, which could spark other states to enact similar rules. Most mandatory labeling backers and voluntary labeling backers say that a state-by-state, patchwork system would generate confusion and unnecessary costs, but so far lawmakers haven't been able to bridge the gap between the two policy positions.
Senate Agriculture Committee Chairman Pat Roberts (R-Kan.) told reporters May 24 that he and committee ranking member Debbie Stabenow (D-Mich.) are still working on a deal and “getting down to a much narrower scope” on points of disagreement.
Still, it's unlikely they will reach a compromise before lawmakers break for Memorial Day recess, he said.
“We're just not there yet,” Roberts said.
Senators are expected to return June 6.
That leaves a scant 19 working days for Congress to reach a deal, but Roberts added he still expects lawmakers to pass a national labeling standard before Vermont's deadline.
“I'm not going to wait around and let the Vermont label happen,” he said. “I'm just not going to do that. So we'll have a vote, one way or the other, and we'll see what the outcome is.”
To view this story at its original source, follow this link: http://www.bna.com/de-facto-gmo-n57982073049/
May 26, 2016
The Project Liberty plant is a multi–$100-million effort to get ethanol for cars past the obstacles of food-versus-fuel debates, farmer recalcitrance and, ultimately, fossil fuels. It is also the fruition of a 16-year journey for founder and executive chairman Jeff Broin of ethanol-producing company POET—an odyssey that began with a pilot plant in Scotland, S.D., and progressed through a grant of $105 million from taxpayers via the U.S. Department of Energy (DoE).
The government invested because of hopes that such advanced biofuels could reduce global warming pollution from vehicles compared with gasoline. And making ethanol from inedible parts of corn plants is perhaps better than using the edible starch in corn kernels that could find use as food or feed for animals. “We’re processing about 770 tons a day of corn stover—basically the leftovers from the cornfield—into ethanol,” Broin told me during a tour of POET’s new Project Liberty facility, which makes ethanol from cellulose and is located next to a traditional facility that produces the fuel from the starch in corn kernels. “[It’s] one of the first plants in the world to do that, so we’re pretty excited.”
The ability to make fuel from corn stover is the result of nearly two years of tinkering since the plant officially opened in September 2014. And Project Liberty is one of the culminations of an American effort to break oil’s monopoly on transportation fuels in favor of domestically grown biofuels. Most recently, the U.S. Congress mandated that a certain percentage of the fuels used in U.S. vehicles come from biofuels under the terms of the Renewable Fuel Standard federal program, which came into effect in 2005 and mandates the development of biofuels. The RFS put a particular focus on biofuels that do not come from food, as traditional corn ethanol comes from starch that can serve as food or animal feed. The great hope was for cleaner, greener ethanol to be made from cellulose, the inedible plant fiber in the corn leaves, stalks, husks and cobs.
Getting Project Liberty up and running has already required an investment of at least $275 million from POET and its Dutch partner Royal DSM, including grants from the DoE and the state of Iowa. Assuming the kinks are now ironed out, the plant could use some 260,000 metric tons of the nonedible parts of corn plants to produce as much as 95 million liters of cellulosic ethanol each year. Already bales of stover sprawl around the new facility, waiting to be consumed by an industrial process—instead of by mushrooms.
Project Liberty basically industrializes what fungi growth and other decay processes accomplish naturally to release the solar energy stored up by green plants. The corn stover is first freed from its baling and shredded.
The strips of corn leaves and chunks of corncob are then bathed in sulfuric acid to begin breaking them down into fibers. Enzymes—biological proteins freed from their living hosts to do industrial work—eat into those fibers further, and the resulting sour soup is processed to remove water.
This mash, which looks like mud, then goes into giant fermentation vats where specialty yeast eats the sugars in it to produce ethanol.
At this point, the mud still contains leftover fibers, particularly lignin—the tough strands that allow cornstalks or trees to stand tall and resist decay while living—which becomes an industrial fuel for the facility’s boiler after being pressed into coal-like cakes.
And the rest of the leftovers are fed into one of the nation’s largest biodigesters—reactors that can hold some four million liters of leftovers for anaerobic digestion—to make methane that the plant can use for power, eliminating its need for natural gas fuel. This helps reduce greenhouse gas pollution, as does the facility’s main product—a fuel fermented from plant material that pulled carbon dioxide out of the sky while growing. Burning cellulosic ethanol as a fuel could result in just 10 percent of the CO2 emissions produced by burning gasoline.
One big secret to making it all work is the advanced biofuel refinery's location right next to a conventional corn ethanol plant, which makes ethanol from the starch in corn kernels. That facility is roughly half the size of its cellulosic fuel neighbor, costs less than half as much to build and run, and produces twice as much ethanol. It can use the leftover lignin and biodigested methane from the cellulosic facility as fuel for distillation and other processes. "We literally can shut off the natural gas valve to the starch plant," Broin notes.
There are plenty of cellulosic leftovers on farm fields and elsewhere in the U.S., not just corn stover but also from other energy crops such as switchgrass, along with wood waste and agricultural remains such as wheat straw. The DoE estimates that roughly 900 million metric tons of such material is available each year—a renewable resource that could make about 300 billion liters of ethanol. And there are plenty of conventional ethanol plants near which to locate—almost 200 according to the most recent data from DoE—and that is just in the U.S. "We see the opportunity to build these plants all over the world," Broin says.
POET is not alone. Agrochemical giant DuPont opened its own cellulosic biorefinery next to a conventional starch-based fuel facility last October in Nevada, Iowa, and it should eventually be able to produce around 115 million liters of cellulosic ethanol per year. “You know, it’s been a long time coming but we’re proud it’s here,” Terry Branstad, governor of Iowa, said on October 30 last year at the opening of the new DuPont facility, which is still not running at capacity.
“Thirty million gallons of biofuel will be produced without consuming a single additional bushel of corn,” added U.S. Sen. Chuck Grassley, a longtime ethanol supporter and one of the architects of the RFS. “You have achieved here what Congress hoped: new biofuels that were cleaner, greener and more efficient.”
But the opening of DuPont’s new facility also occasioned the shutdown of DuPont’s other cellulosic refinery in Tennessee. “DuPont remains committed to the commercialization of cellulosic biofuel and will focus its resources on its Iowa facility,” Jan Koninckx, DuPont’s global business director for advanced biofuels, told Scientific American in an e-mailed statement.
Cellulosic fuels’ main hurdle seems to be economic. In April 2012 Blue Sugars Corp. of South Dakota produced the first batch of qualifying cellulosic ethanol, a little more than 75,500 liters, then promptly went out of business. In 2013 no cellulosic ethanol was produced but by last year—after several DoE-supported plants came online—all five of those biorefineries produced a total of 8.3 million liters of cellulosic ethanol, according to the U.S. Environmental Protection Agency, which administers the RFS. Already, Spanish multinational corporation Abengoa’s cellulosic ethanol plant—which opened in 2014 in Hugoton, Kans.—sits unused due to technology troubles as well as Abengoa’s bankruptcy. That plant consumed a $132-million loan guarantee as well as a $97-million grant from the DoE before idling.
Simply put, cellulosic ethanol is more expensive to make than ethanol fermented from cornstarch or from sugarcane, the world’s second-largest source of fuel ethanol. “Everything’s expensive here because it’s first of a kind,” Broin says. “The next plant will be a lot cheaper.”
On a more basic level, moving fibers and sludge through an industrial facility is tough to do without breakdowns. The corn stover arriving at POET’s cellulosic facility had as much as three or four times more sand and gravel mixed in than engineers had anticipated, and that grit wreaked havoc on pumps, valves and other equipment.
“We have made literally hundreds of small process changes,” including a thorough washing of the corn stover once it comes out of the bale, Broin says. There have also been not-so-small process changes, such as using large cranes to tear open buildings in order to replace equipment.
But Broin notes that ethanol from corn faced the same difficulties during its ascent over several decades. And cellulosic ethanol is now definitely being produced in meaningful quantities at Project Liberty. “We're shipping cellulosic ethanol,” Broin says. “We’re filling railcars.”
That's good because the EPA now requires nearly 1.2 billion liters of cellulosic biofuels in 2017 under the terms of the RFS. That's still well below where lawmakers like Grassley thought cellulosic ethanol would be by now—they had established a target of some 11 billion liters per year back in 2007. When that failed to materialize, the EPA mandated at least 465 million liters of cellulosic biofuel in 2015, but only saw 8.3 million liters mixed into the nation's fuel supply. So the rest of the nearly 57 billion liters of ethanol fuel came from corn kernels, with attendant concerns about industrial farming practices, water pollution and impacts on food prices.
“Everything about ethanol is good, there is nothing bad. It’s good for agriculture, good for the environment, good for economic development in rural communities,” Grassley told Scientific American at the DuPont opening in October. “We will demonstrate that we can produce food and fuel forever. We don’t need to worry about choosing between food and fuel.”
The combination of cellulosic biorefineries with starch-based ethanol plants could prove more potent economically, but it fails if the goal is to reduce the amount of ethanol made from corn. Instead of replacing corn ethanol, cellulosic ethanol may simply supplement it.
Regardless, the ethanol industry’s ambitions are much larger than just Project Liberty and its peers or even the hundreds of conventional ethanol fuel plants: The sector hopes to one day produce around 570 billion liters a year, including a major contribution from cellulose, according to Broin. “There’s a big market out there that we’d like to replace—that’s the entire gasoline market,” Broin says. “We can grow our way easily out of our reliance on fossil fuels and people just don’t understand that.”
To view this story at its original source, follow this link: http://www.scientificamerican.com/article/whatever-happened-to-advanced-biofuels/
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