Kruse keys in on ethanol

• David Kruse

David Kruse addresses attendees at the Nobles County Farm Bureau annual meeting Thursday night at Pioneer Village in Worthington.

Talk about it

WORTHINGTON — More than 200 people were on hand for the Nobles County Farm Bureau annual meeting Thursday night at Pioneer Village in Worthington, where they heard comments on the ethanol and grain industry by “Commstock Report” founder David Kruse, of rural Spencer, Iowa.

Kruse, whose opinionated agricultural commentary can be heard twice daily on local radio station KWOA, covered everything from the price of corn and the cost of inputs, to the attempts to undermine the ethanol industry and the differences between the two presidential candidates on the nationwide renewable fuels standard.

A strong proponent of the ethanol industry, Kruse said farmers and investors continue to be concerned about the profitability in ethanol. It used to be that in order to make a profit in ethanol, corn needed to be below $3 per bushel. Today, the break-even price is $5 per bushel.

Minnesota is fortunate in that many of its ethanol production facilities were built early on in the push toward renewable fuels, making the plants more efficient and the profit margins greater. Plants still under construction, or in the early stages of start-up, however, may face more challenges.

“Minnesota has been a leader in the industry,” Kruse said. “There’s a lower cost of production than in the newer plants in Iowa.”

Still, if it weren’t for federal subsidies, ethanol plants across the country would be struggling. And that’s a point quick to be made by those who have led an “assault” against the ethanol industry, said Kruse.

“There’s been a major assault over the past several months to undermine the reputation and vulnerability of the ethanol industry,” he said, adding that Republican presidential candidate John McCain’s platform calls for rolling back the renewable fuel standard. If that were to happen, it would “go to great lengths” to undermine the ethanol and cellulosic industries, said Kruse.

During the Bush Administration, McCain was one of 27 senators who requested to roll back the renewable fuels standard — a request neither the full Senate nor Bush have supported.

Threats to take away the renewable fuel standard is just one area of concern among investors in the ethanol industry, which has also faced criticism from corporate farms such as Smithfield Foods and Pilgrim’s Pride, as well as the oil industry.

“The ethanol industry was hit for taking food out of peoples’ mouths, but I don’t know how that can be,” said Kruse. “We’re seeing record exports in both corn and soybeans. We’ve had a surplus of corn — nobody’s run out of corn. We’ve met ethanol and feed needs.”

Kruse said it isn’t the price of corn that has caused food to increase at the supermarkets, but rather the rising energy costs.

“Ethanol has been a great boon to the Midwestern farmer,” said Kruse. “It’s led to the addition of new oil refineries (ethanol processing plants).”

Kruse said Midwestern corn farmers are going to need to improve efficiency in the years ahead to meet the global demand. That means increasing yields, improving efficiency in ethanol processing plants and continuing to push distiller’s grain as a feedstuff for livestock.

“Biotechnology is going to play a major role,” said Kruse.

In looking to the future, Kruse expects corn yields to continue to climb as improvements are made in seed technology. He also expects more acreage will be put into production, whether it is land taken out of the Conservation Reserve Program or gained by tilling up pastures.

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