By Lindsay Croke
Illinois corn farmer profitability is a problem your checkoff is ready to tackle. We’re opening our strategic playbook to give you a glimpse of the long-term investments we’ve made to drive corn demand and set the future of the corn industry up for a win.
The profitability equation of the last decade was driven by increased ethanol demand. Passage of the Renewable Fuel Standard in 2005 and the Renewable Fuel Standard II (RFS II) in 2007 set an ethanol usage goal of 15 billion gallons by 2015. Now, the growth of the ethanol industry has not only reached the end of the RFS II lifetime but is also being blocked by a de facto electric vehicle mandate from the U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA). The long-term play is to pass new policy that will allow corn-based ethanol to be an integral part of the decarbonization of the transportation sector and to make sure the infrastructure is in place for that transition to happen immediately.
Ethanol Demand
Your checkoff has cheered for the IL Corn Growers Association as they supported the drafting, introduction, and debate of the Next Generation Fuels Act. The bill is not an ethanol mandate but creates a new certification fuel for all vehicles that must meet efficiency standards and greenhouse gas emissions standards. Ethanol fuel is the lowest cost fuel that meets both standards as the bill is written today. Passage of the Next Generation Fuels Act is essentially a sack on the EPA’s and NHTSA’s rulemakings that force the purchase of electric vehicles.
As ethanol policy debate continues, the Illinois corn checkoff is investing in infrastructure that will power higher blends of ethanol made available upon the bill’s passage. One of the current problems with the plan for a nearly immediate switch to electric vehicles is that the infrastructure for charging, selling, maintaining, and disposing of the vehicles and their components is not there. Positioning for growth in ethanol fuel use, we continue to install pumps, hoses, and nozzles capable of pumping higher ethanol blended fuels, and we have worked with the auto industry to make a transition to a higher blend of ethanol a touchdown for everyone.
Export Demand
Most of the corn grown in Illinois is shipped out of state, to foreign countries via the Gulf of Mexico, but also to domestic feedlots, hog, and poultry operations. A significant portion of the ethanol produced in Illinois also moves out of state and around the world. IL Corn has been making strategic investments in international markets that are on the cusp of driving significant demand.
An investment of not only funds but also of time and relationships paid off when Japan allowed U.S. ethanol exporters to access 100 percent of its fuel market in March 2023. The shift increased U.S. exports to Japan by 3,070 percent or $434 million annually. Japan was the third-largest market for U.S. corn and pork, and a top market for U.S. beef products in the 2022/2023 marketing year. A growth of over 3,000 percent seems unrealistic, but 100 percent true because your corn checkoff team, together with the U.S. Grains Council, worked steadily with Japanese industry and government officials to show that their analysis of corn-based ethanol’s greenhouse gas emissions was outdated. Argonne National Laboratories in Lamont, IL and University of Illinois Chicago supplied updated data about ethanol based on production improvements and climate-friendly growing practices; our team scored a hard-fought touchdown in the Japan market.
Southeast Asia saw more landmark progress when the Philippines acted in May 2024 to cement the country as one of the world’s most progressive ethanol and biofuels markets. Now, Philippine retailers may voluntarily increase ethanol blends to E20 (a 20% blend of ethanol). The new E20 policy will increase the potential ethanol demand in the Philippines by 86 million gallons, following a 55-million-gallon import quantity of U.S. ethanol in 2023. This demand growth is driven by Illinois corn checkoff strategic investments and fruitful partnership with the U.S. Grains Council.
Regarding the export of corn grain, exports to Mexico have been increasing, even as the country attempts to block U.S. corn from entry. Two long-term projects funded by the Illinois corn checkoff are helping. In one project, IL Corn and the U.S. Grains Council partner to help international countries understand how to store corn appropriately. In another project, the University of Illinois’ Dr. Vijay Singh is working with international purchasers to prove that the higher starch availability of U.S. corn, as compared to other origins like South America, can help increase processors’ profitability. U.S. corn is occasionally critiqued on quality (broken kernels, dust, etc.) but this research shows that the visible quality of corn does not always translate to increased corn value. Though the presentation of this data is a slow process built on relationships, we are improving the perception and “brand” of U.S. #2 yellow corn, driving eventual corn export demand growth.
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