THOUSANDS OF IOWA'S CORN FARMERS SEE FUTURE IN ETHANOL PLANTS By Peter Slevin
LETTER: ETHANOL AS A PANACEA By George Naylor ETHANOL AS A PANACEA: A RESPONSE
By Keith Mudd WORLD BANK "FLOODED" WITH ETHANOL FUND REQUESTS By
Gilbert Le Gras DAIRY LEADERS TALK ABOUT FIGHTING FOREIGN SUBSIDIES By Dennis
Pollock MORE OF U.S. OWNED BY OTHER By Martin Crutsinger THEATER REVIEW:
"THE FIELD By Charles Isherwood
THOUSANDS OF IOWA'S CORN FARMERS SEE FUTURE IN ETHANOL
PLANTS By Peter
Washington Post May 21, 2006
--- The complex looks like a refinery and smells like a bakery. From a pipe at
the back flows a clear liquid that could be confused with vodka, except it can
power an automobile and, its backers hope, propel ordinary Iowans into biofuel
The pungent liquid called ethanol, made from corn, has Iowa farmers giddy. Inspired by high oil
prices and changing sentiment in Washington,
thousands of investors are pouring tens of millions of dollars into new
facilities, such as the gleaming $90 million plant here.
"We'll be the Arabs of the Midwest,"
mused John Becker, manager of a farm cooperative in Craig.
Ethanol prices are surging across the country as legislators add incentives to
spur usage and fleet owners rejigger their fuel orders to cope with $3-a-gallon
gasoline. The boom has meant profits for early investors, corn farmers,
truckers and suppliers, even as financial analysts and government officials
hurry to assess the fuel's staying power and its impact on such matters as farm
subsidies and national security.
With national capacity more than doubling in the past three years and set to
grow an additional 50 percent by the end of 2007, the wave is moving fast ---
from New York, where Gov. George E. Pataki (Rep.) this month announced
construction of the state's first ethanol plant, to California, where Microsoft
Chairman Bill Gates recently invested $84 million in Pacific Ethanol Inc.
Iowa, the top corn-producing state, is the
nation's ethanol leader, generating 25% of U.S.
ethanol in towns such as Coon Rapids
and Steamboat Rock. In addition to 22 ethanol refineries in operation, the
state has seven under construction and at least 20 are being planned.
The boom here has largely been a grass-roots phenomenon, fueled by clusters of
growers, bankers and small-town professionals. Aspiring biofuel plant owners
have been barnstorming the state, delivering investment pitches in firehouses,
schools and community centers.
Six thousand farmers have bought in.
"There's quite a bit of exuberance for the ethanol plants. They're paying
real good dividends," said Rockwell
City farmer Keith Sexton,
president of the Iowa Corn Growers Association and an investor in four biofuel
refineries. "It's coming on board almost faster than a person can keep up,
unless that's your day job."
The state legislature this year passed incentives designed to increase the
percentage of ethanol and biodiesel in Iowa
fuel sales to 25% by the end of 2019. Three of every four gallons of gas sold
in the state contain at least 10 percent ethanol, although most of the state's
production is shipped elsewhere.
Ethanol is the fuel Henry Ford originally envisioned for his mass-produced
Model T automobile. It is blended into three of every ten gallons of gas sold
in the United States,
although its percentage of the overall national fuel supply remains tiny. The
clear liquid burns more cleanly than gasoline and, unlike that of crude oil,
the potential supply is virtually unlimited and close to home.
In signs that big-time players are betting on ethanol's future, Illinois-based
agribusiness giant Archer Daniels Midland Co. recently announced a large
expansion, while car makers are increasing their commitment. General Motors
Corp. says it will manufacture 400,000 more flex-fuel vehicles, which will join
more than five million on the road.
Big manufacturers are also making engines that can run on biodiesel, a smaller
but fast-growing segment of the industry.
At a gas station in Hiawatha, outside Cedar
Rapids, an ethanol-infused gallon of 89 octane premium
gas recently cost $2.69, 10 cents a gallon cheaper than the weaker 87 octane
"Once ethanol got cheaper than gas, it really took off," said Bill
Horan, a farmer who is putting together investor groups for new plants.
The response to investment groups has been stunning.
Two years ago, it took less than three weeks to raise about $20 million from
472 investors for the Goldfield plant in central Iowa. The average investment was $47,000,
and two of every three dollars came from within 40 miles, said general manager
Recently, the money has started arriving even faster.
When Horan and his partners sought $20 million for each of three new biodiesel
plants, no request took longer than 10 days to fulfill. In one case, the offer
was fully subscribed in eight days and the organizers sent $2.5 million back.
Horan said banks have been willing to lend large sums with no collateral other
than the refinery itself.
"People will drive all the way across Iowa
to come to a meeting," said Horan, who grows soybeans and corn on 4,000
acres in Knierim, about 100 miles northwest of Des Moines, with his brother Joe. "It's
the opposite of Big Oil. It's Little Oil. It's our oil."
The added demand has increased corn prices as much as eight cents a bushel this
year. A typical plant generates at least 30 jobs in rural Iowa, even as it creates uncertainty in
long-established relationships among producers, cooperatives and buyers.
"Everybody in the corn industry is repositioning," said Joe Horan, on
the board of the Goldfield plant. "Everybody's just kind of dancing right
now, trying to find the right partner."
The way the Horans see it, the popularity --- and the political support --- for
biofuel will increase as the number of people with a stake in it grows.
"Every time a plant is built," said Bill Horan, "that's 500 more
ethanol supporters in a congressman's district. And they really care. It's not
just Ma and Pa on the farm. It's their dentist son in Chicago
who's interested in his inheritance, and his sister in San Francisco."
The farmers have their own incentives to find cheaper sources of fuel. To plant
their crop this year, the Horans will use 10,000 gallons of diesel. The fuel
costs continue through the summer to harvest season, powering the engines that
sow, tend, reap and transport beans and corn.
"There's all kinds of things that inspire us. We think it's going to be
here for the long term," said Dave Hoffman, owner of a farm supply store
in Merrill, about 20 miles northeast of Sioux
City, who is assembling a new investor group. He
pointed to environmental gains, profit margins, legislative support, the
spiraling cost of oil and sorrow over the war in oil-rich Iraq.
"We hate to see our soldiers go over and die for this," Hoffman said.
In June 2005, ethanol was going for $1.20 a gallon on the Chicago commodities exchange. At the end of
April, it was $2.68. And, after two successive bumper crops, the price of corn
is low, which adds up to substantial profits for the ethanol pioneers.
But suppose the price of oil declines --- if, for example, the economies in China and India slip, the global oil market
grows calm and a booming ethanol supply outstrips demand. Suppose Congress
supports President Bush's recent call to eliminate the tariff of 54 cents a
gallon on plentiful Brazilian ethanol.
"This is a cyclical business. There are going to be ups and downs,"
said Monte Shaw, executive director of the Iowa Renewable Fuels Association,
the biofuel trade organization. "But demand for these fuels is going to
grow. Of that I'm absolutely certain."
product, a potential competitor now in development is cellulosic ethanol, a far
more potent biofuel that can come from switch grass and farm waste. Production
is not yet cost effective, however, and Iowa's
biofuel believers say they can convert their plants and their business model if
"No threat. It's an opportunity," Shaw said. "We are in Iowa. All you see is
From their home at the intersection of two gravel roads in central Iowa's Rockwell
City, Keith Sexton and
his wife have invested in four biofuel plants. The oldest of the investments is
already giving them an annual return of 15 to 20 percent. But being a farmer,
vulnerable to unpredictable acts of nature that deliver glut and scarcity
alike, Sexton carefully guards his hopes.
"History tells us that when there's an industry that's very profitable,
there's going to be such an influx of people wanting to participate that it's
going to be oversaturated," he said. "But it appears that the demand
potential can sustain all the plants being built right now."
Bill Horan put it another way.
"We're three, four percent of the country's liquid fuel now," he
said. "We've got a long ways to go."
LETTER: ETHANOL AS A PANACEA By George
Washington Post May 29, 2006
The ethanol fuel boom in Iowa can seem intoxicating, but it is misleading to
claim that Iowa farmers in general have benefited ["Thousands of Iowa's
Corn Farmers See the Future in Fuel," news story, May 21].
Unless you have been an "investor" in an ethanol plant during recent
times of expensive petroleum, the only way a farmer has participated in the
ethanol program has been by producing cheap corn and relying on government
subsidies to survive. The Iowa Corn Growers Association, like its farmer members
quoted in the article, has promoted ethanol for more than 30 years.
It even sounded reasonable to me when I was a young farmer on the first Iowa
Corn Promotion Board in 1978. Now, with catastrophic oil prices and corn prices
lower than when I started farming 30 years ago, it would be hard to imagine
ethanol plants not being profitable.
Unfortunately, the legacy of the cheap-corn subsidy system is an Iowa landscape of ghost
towns and environmental degradation, with corn and soybeans produced from horizon
to horizon, interspersed with polluting industrial livestock operations.
Boomtowns have never been known for their contributions to morality or culture
and often not even for their contribution to long-term prosperity.
Without sound energy and agricultural policies that ensure that farmers get a
fair price for their products, ethanol may be the illusory pot of gold at the
end of the agribusiness rainbow.
George Naylor is President of the National Family Farm Coalition (NFFC)
ETHANOL AS A PANACEA: A RESPONSE By Keith
of Competitive Marketing (OCM) June 1, 2006
I have to disagree with George. Ethanol has created additional demand for corn
thereby raising the price.
The additional demand has benefited corn farmers who are investors in ethanol
plants obliviously, but also those who are not. I see it locally.
George is correct when he states that farmers rely on the government subsidy to
survive in spite of this additional demand. The ABC (ADM, Bunge and Cargill)
cartel are predators. They still lurk in the shadows of a harvest time glut of
cash corn to take advantage of sellers. Most sellers of corn in the fall have
little or no storage and are forced to sell at harvest.
This creates opportunity for buyers to pay as little as they like because most
have regional monopolies. Farmers without storage have no choice but accept the
low prices offered and take advantage of the LDP's offered by the government.
THIS is the real problem. We need competition for our products and farmers need
to develop the ability to deprive the buyers of this cheap corn in the fall.
At the risk of sounding like a National Corn Grower disciple, farmers who can
store their product at harvest are much more likely to receive a price
substantially higher than harvest time lows. The harvest time low the past two
years has been about $1.50 a bushel here in Nebraska.
Both years I have had the opportunity to sell corn before harvest for December
delivery for over $2.50 a bushel. And prices have increased to over $2.30 for
summer delivery each year.
This tells me that it is opportunistic greed on the part of the large buyers
that gives us LDP's. Fundamentally nothing changes during harvest except some
people are forced to sell as they have no options.
Ethanol is part of the answer. A lack of competition and farmers inability to
withhold product from a unscrupulous buyer are the problem.
Keith Mudd is president of the Organization of Competitive Marketing (OCM)
WORLD BANK "FLOODED" WITH ETHANOL FUND REQUESTS By Gilbert Le
Gras Reuters News May 11, 2006
The World Bank's private sector arm is being deluged with funding requests for
ethanol projects around the globe as crude oil prices trade near record highs,
an International Finance Corp. official said on Thursday.
"We've been flooded with requests from lots of countries. There's some
requests from Latin America, we've had several from Africa and one or two in
East Asia," IFC's Marcelo Lessa said from a cane-ethanol mill in Brazil's Sao
In the past three years the IFC has invested $65 million in one ethanol plant
in India and another one in Brazil.
Now three more Brazil plant
investments, valued at between $35 million to $50 million each for the IFC, are
in line for approval as is another $20 million investment in Peru, he added.
"In other countries, the issue of ethanol really accelerated in the second
semester of last year, so we have received many proposals," the
agribusiness expert said.
Since November, sugar cane project funding requests --- largely in the
feasibility stage -- have come in from Mali, Guatemala, Honduras, the
Philippines, Colombia, Saint Kitts & Nevis, Mozambique, Tanzania, Egypt and
One corn-based project in Ukraine
and another beets-based plant in Romania have also sought funds.
He said inquiries have increased since President Bush last week called on the
U.S. Congress to reconsider tariffs on imports of ethanol, as crude oil prices
traded near the mid-$70s per barrel.
is the world's leading producer and exporter of ethanol, which is derived from
its massive sugar cane crop. It already blends its domestic gasoline with 25
percent ethanol and is looking to U.S., Japanese and Indian markets
to boost exports.
"We'll turn several (plans) down because we believe ethanol production has
to be competitive with costs in Brazil;
otherwise you might be hurting a country economically," Lessa said.
Projects that are more likely to be approved are in countries with a
well-established sugar cane infrastructure such as Colombia,
Peru, Mozambique, Angola,
Thailand and Australia.
a very large producer. They have efficient mills but they have very high costs
because of problems on the agriculture side," such as small farms, he
Another benchmark is costs, using Brazilian output costs as the standard. That
cost is about $227 per cubic meter, but an 11% rise in Brazil's real
against the dollar from January to April has made some proposals uncompetitive.
"You shouldn't mandate ethanol blending into gasoline if your production
costs are substantially higher compared with Brazil
has very low production costs," he said.
Conservative industry estimates in Brazil point to an increase of 85
million tonnes of sugar cane processing capacity over the next three to four
years through expansion of existing plants and up to 20 new mills coming on
line, he added.
Still, Lessa agreed with an International Energy Agency estimate that, at best,
ethanol could make up ten percent of world gasoline by 2025.
Ethanol, an alcohol most often made from grains and sugar cane, is blended with
gasoline to reduce tailpipe emissions in cars and trucks.
DAIRY LEADERS TALK ABOUT FIGHTING FOREIGN SUBSIDIES By Dennis
Pollock The Fresno
Bee June 1, 2006
Some of the nation's top dairy industry leaders met in Easton on Wednesday and talked about the
balancing act needed as they seek to open new markets while competing with
nations whose dairy producers are heavily subsidized.
Rep. Jim Costa, Dem.-Fresno, explained how the 2007 Farm Bill will be
influenced by world trade talks aimed at cutting tariffs and subsidies by the
end of June, a target date that many see as elusive.
"We cannot unilaterally disarm," Costa said, referring to export
subsidies elsewhere, notably the European Union. The Bush administration has
sought agreement from U.S.
farm groups for a 60% cut in their most trade-distorting subsidies and asked
for reciprocal action from the EU.
Costa cautioned industry members to beware of trade pitfalls such as that faced
by the United States when Brazil
challenged subsidies for cotton in the 2002 Farm Bill.
"You'll need to look closely in the next 18 months at agreements reached
under the [World Trade Organization]," he said.
Paul Rovey, vice chairman of the U.S. Dairy Export Council in Arlington,
Virginia, began Wednesday's discussion by
talking about the need to open new markets "while seeking to make sure
that the U.S.
does not become a dumping ground for others by unilaterally deciding to be the
one to step forward first on fully free trade."
Costa pointed to the closure in March of the De Francesco & Sons plant west
of Firebaugh as a casualty of trade that saw a huge influx of garlic from China.
But industry leaders are mistaken if they think they can block imports into the
United States, said Jerry
Kozak, president and CEO of the National Milk Producers Federation, also based
At the same time, he said there is no doubt U.S. producers "suffer from
very low tariffs" compared with those in place in other countries.
Both dairy organizations produced a booklet that calls attention to high export
subsidies elsewhere, calling them "the biggest impediment" to
dairy exports. It also cites triple-digit tariff rates for some trading
partners and calls for an effort to harmonize tariffs.
Kozak urged industry leaders to participate in talks on trade: "If you're
not at the table, you'll be on the menu."
The meeting concluded with remarks from members of the audience. They included:
Easton dairy operator Fred Machado, who said he
believes the dairy industry "is missing the boat" by not aggressively
pursuing exports to China.
"We need to reach out to 1.2 billion customers," he said. "Hell,
just one glass of milk a day ."
Machado said he also opposes dairy price supports: "I never did like being
partners with the government."
Richard Cotta, senior vice president of California Dairies Inc., who asked for
more congressional oversight when trade agreements go awry.
He cited the example of an administration requirement that dairy products
shipped to Cuba
be paid for in advance.
"Nobody does that," he said. "You can't get money ahead of time
from a guy in Fresno."
Cotta also said some export of milk powder to Mexico was curtailed because the
country balked at prices for steel and cement.
Jim Tillison, executive vice president and CEO of The Alliance of Western Milk
Producers in Sacramento,
who urged that the federal government explore tax credits for utilities as an
incentive for dairy operators to add methane digesters.
"The digesters usually produce more electricity than can be used by the
dairy itself," he said. He added that dairy operators do not receive
enough money for excess generated power to compensate for costs of building and
operating a digester.
MORE OF U.S. OWNED BY OTHERS By Martin
Associated Press March 20, 2006
The furor over efforts by an Arab company to buy U.S.
port operations has focused attention on a little noticed economic fact of
increasingly is foreign-owned.
From the Essex House hotel in Manhattan,
owned by the Dubai Investment Group, to the nationwide chains of Caribou Coffee
and Church's Chicken, owned by another company serving Arab investors,
foreigners are buying bigger and bigger chunks of the country.
must borrow more than $2 billion per day from foreigners to finance its huge
trade deficits. In 2005, there was a record deficit of $805 billion in the
current account, the broadest measure of trade.
Foreigners sell their cars and oil to Americans and hold dollars in return.
Those dollars are invested in stocks, bonds and other assets, including real
estate and factories.
Foreigners own half of the U.S.
government's publicly traded debt. As of January, some $2.19 trillion in
Treasury securities were in the hands of central banks, including China and Japan, and private investors
At the end of 2004, the total foreign direct investment in this country ---
actual factories, office buildings and other tangible assets as opposed to
stocks and bonds --- came to $1.53 trillion, 8.2 percent more than in 2003.
That investment shows up in all of the 50 states.
In Oakland, Maine, it's a customer service center for
T-Mobile USA Inc., which is a subsidiary of German-based Deutsche Telekom. In Glendale, California,
it's the U.S.
headquarters for Nestle, the Swiss-based food and beverage company.
Arab investment has gotten the most scrutiny of late because of the
now-withdrawn bid by a Dubai-based company to buy operations at six major U.S. ports. But
statistics show that Arab investments represent only a fraction of the total
direct investment by foreigners.
European nations accounted for $977 billion, or two-thirds, of the $1.53
trillion of foreign direct investment, according to the Commerce Department.
By contrast, Arab countries in the Middle East accounted for $9.3 billion, led
by $4.7 billion in investment from Saudi Arabia. The United Arab Emirates
was second among Middle East Arab countries with $1.8 billion in investments,
according to the data.
DP World of Dubai said last week it intends to
sell its U.S.
operations to an American-owned company. But that has not stopped some members
of Congress from seeking to overhaul the way such deals are reviewed by a
secretive government panel.
A bill by the chairman of the House Armed Services Committee, GOP Rep. Duncan
Hunter of California, would bar foreign
ownership of U.S.
infrastructure deemed critical to the national security.
Opponents say his proposal would mean the fire sale of billions of dollars of
assets in foreign hands and end up hurting the U.S. economy.
Consider that for more than a decade, French tire maker Michelin has been the
exclusive supplier of tires for NASA's space shuttles. DSM, a Dutch company,
makes body armor for U.S.
troops, while French-owned Sodexho provides many meals for the troops.
Nearly one in five U.S.
oil refineries is owned by foreign companies. Foreign companies also have a
sizable presence in running power plants, chemical factories and water
treatment facilities in the United
"People don't understand how integrated the U.S. economy has become with
the global economy, how dependent we have become on other nations," said
Clyde Prestowitz, president of the Economic Strategy Institute, a Washington
THEATER REVIEW: "THE FIELD" By Charles
Isherwood New York
Times June 2, 2006
In "The Field" John B. Keane draws a portrait of rural life in
Ireland in the mid-20th century that is both loving and damning, sorrowful and
censorious. In the hearts of villagers involved in the cover-up of an act of
violence, cowardice and an easy accommodation with brutality sit alongside a
robust humor, loyalty to clan and class, and a fierce love of the land.
Those virtues ennoble --- or at least explain --- the morally destructive
compromises the characters are forced to make to guarantee the survival of
their way of life. The mournful larger question raised by "The
Field," written and set in 1964, is whether a culture so poisoned by
corruption is worth preserving.
Mr. Keane, who died in 2002, was one of Ireland's leading writers in the
second half of the 20th century, the author of a long list of plays and novels
that spanned more than four decades. But his theatrical work has been less
celebrated abroad than that of his contemporary Brian Friel, whose "Faith
Healer" is currently being revived on Broadway.
"The Field" is one of Mr. Keane's best-known plays, but it also
suggests why his work has not found a wider audience outside of Ireland.
Carefully carpentered, with well-drawn characters and flavorful dialogue, it
also presents a more moralistic, less psychologically rich view of a man's
struggles (and a village's) than Mr. Friel's finest work does.
It was, nonetheless, filmed by Jim Sheridan in 1990, with Richard Harris
receiving an Oscar nomination for his performance in the central role of
McCabe, an Irish farmer known as the Bull, who goes to desperate lengths to
secure his right to buy a piece of land that has symbolic and economic
significance to him.
A sturdy new production, directed by Ciaran O'Reilly, opened last night at the
Irish Repertory Theater. Bull McCabe is played by Marty Maguire, an actor who
puts his own strong stamp on the role. With a fierce glower and a rough swagger
that make the thick wooden pole he carries seem an ominous presence, even when
it sits idle as he knocks back a stout, Mr. Maguire's Bull boils with a fury
that brings a tense focus to the play's strongest scenes.
These mostly come in the tighter first act, which turns on the auctioning of
the field of the title, a precious four acres that provide the only passage to
water for the Bull's cattle. He's had the use of the land for years and tended
it with loving care, but the field's owner, the elderly widow Maggie Butler
(Paddy Croft), has decided to sell it to the highest bidder.
Using emotional blackmail and physical threats, the Bull sets about to make
sure that he will be the only bidder. The auctioneer, Mick Flanagan (Malachy
Cleary), is reluctant to bend the law to cheat a widow out of her due. But he
shamefacedly succumbs when the Bull vows to lead a boycott of his saloon. Since
the Bull is related to half the town, that's not idle talk.
Although Mick's wife, Maimie, played with sly, lively wit by Orlagh Cassidy,
has a sharp tongue and a clear sense of the sordidness of the deal, she knows
that the only way to protect the fortunes of the family (nine children and
counting) is to acquiesce. Only the Flanagans' sensitive older son, Leamy (Paul
Nugent), retains enough innocence to squirm at their dishonorable role in the
But fraud turns to something more repellent when a stranger from England,
William Dee (Mr. O'Reilly), unexpectedly shows up in town on the morning of the
auction, and brushes aside the Bull's attempts at intimidation. Violence flares
when the Bull and his son Tadhg (Tim Ruddy) encounter Dee
at night, on the field itself.
Mr. Keane's empathy for the Bull's tortured soul is manifested in the gruffly
lyrical speeches this character delivers about his affection for the land and
the way of life that he sees being threatened by the encroachment of industry
and outsiders. But the integrity of his ideals is tarnished by the cruelty of
Similarly, the townsfolk's loyalty to a man of their class, in opposition to
the representatives of authority, like priests and policemen, is seen as
benighted but not entirely dishonorable.
The second act tends to belabor Mr. Keane's observations about moral corruption
bred by fear and blind allegiance to questionable ideals. A prescriptive note
enters the play: not for nothing does "The Field" contain a long
sermon delivered by the local priest, who harangues the villagers for
protecting the wrongdoers in their midst.
But Mr. Keane does suggest the people's suffering awareness of their own
iniquity. The actors convey the conflicts in their souls in ways that register
subtly but surely, as when Maimie almost whispers to her son, when he complains
of their complicity, "God we're a pity, Leamy ... the whole bunch of
Mr. Keane hasn't the heart to condemn his people entirely; there is compassion
even in his censure. For these God-fearing Catholics, he suggests, the painful
knowledge of their own sins will be punishment enough.
By John B. Keane; produced and directed by Ciaran O'Reilly; sets by Charles
Corcoran; costumes by Martha Hally; lighting by Jason Lyons; sound by Zachary
Williamson; fight direction, Rick Sordelet; hair and wig design by
Robert-Charles Vallance; dialects, Stephen Gabis; production stage manager,
Elis C. Arroyo; stage manager, Janice M. Brandine; managing director, Patrick
A. Kelsey. Presented by the Irish Repertory Theater, Charlotte Moore, artistic
director; Mr. O'Reilly, producing director. At 132 West 22nd Street, Chelsea,
(212) 727-2737. Through July 18. Running time: 2 hours 30 minutes.