Corn growers can’t count on exports; ethanol holds the key

By Gale Lush, Chairman of the American Corn Growers Association

Counting on corn exports has always been a questionable strategy.
U.S. trade policy, aimed at China is attempting to protect intellectual property rights of big corporations, but has boomeranged against farmers, due to Chinese retaliation, that has led to their investment in competitor exporting countries. Corn exports are extremely unpredictable and it’s getting worse.
Fluctuating currency values where the dollar has gotten stronger causes U.S. farm and manufactured goods exports to be more expensive in world markets. Given that reality our only serious demand growth strategy is ethanol. It is homegrown and untouchable by trade wars and a high dollar.
Ethanol has been a major, annual domestic consumer of 5.5 billion bushels of corn. Ethanol is also a massive U.S. economic and infrastructure development strategy, if our political leaders will only get on-board and use it to its maximum potential. It’s already a proven success. The ethanol industry is a major economic driver for the rural economy. According to ABF Economics the manufacturing activity alone in the ethanol industry employed nearly 366,000 and contributed $14.5 billion to the U. S. economy in 2018.
Ethanol is a net energy producer and helps clean the air by reducing toluene, benzene and other cancer-causing additives in gasoline. With modern high tech, low and no-tillage farming practices, and cover crops, corn farmers are improving the environment as well, while conserving and improving water quality as reported in a 2020 documentary by University of Nebraska Journalism students. “Land and Water: Farmers Adapt to Climate Change” is posted on the ACGF website at WWW.ACGF.ORG.”
U.S. trade wars with China and other countries are causing corn and soybean production expansion in countries like Brazil whose currency, the Real, is making all kinds of lows against the U.S. dollar thereby making Brazil a stronger competitor in foreign import markets.
South American countries are a clear example of this trend. Other countries are also taking advantage of the fact that a strong dollar makes U.S. commodities higher priced in the world market. This trend is further confirmation that U.S. policymakers in the Administration and Congress must recognize that ethanol expansion is not only an opportunity, it is an essential strategy to fix the rural economy. The Administration and Congress need to do what it takes to put a stop to oil refineries getting unwarranted ethanol waivers. That has to stop immediately.
According to USDA’s Export Sales Report accumulated U.S. corn exports as of May 21, 2020 have only reached 1.1 billion bushels vs.1.56 billion bushels at the same time in 2019. USDA projects current marketing year 2019/20 corn exports to reach only 1.775 billion bushels, down from 2.065 billion bushels last marketing year and way down from the 2.438 billion bushels of exports reached in 2017/2018. That means corn exports this year will be 663 million bushels less than just two years ago. This weak export performance is what comes from trade wars.”
Without ethanol-driven corn demand growth over the past 20 years the U.S. farm economy would have been in a constant state of economic recession. Given the extreme economic stress that farmers and the rural sector are under now, it is time for agricultural and rural groups to aggressively speak up and push for a major expansion of ethanol blending in gasoline. We need a nationwide 15 percent blend immediately with a target of having a 30 percent blend nationwide as soon as possible. It’s the only sure way to drive up domestic corn demand, raise corn prices and farm income and help mitigate unreliable corn export demand.


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