Commentary: From Grain Bin to Fuel Tank

Commentary: From Grain Bin to Fuel Tank

For much of its history, the United States has been a major food supplier to the world. It was the promise of natural resources, including food, that motivated the early explorers to seek out the New World. Much of our early troubles with England centered around agricultural products. In the past few decades, it has been grain that has driven our farm economy. The U.S. has been the world’s grain bin, providing large supplies of high quality corn, wheat, and soybeans to nations around the world. However, recent trends indicate that may be changing.

According to USDA figures, in 1980, 90% of U.S. agricultural exports were made up of bulk commodities. Only 10% were comprised of value-added products like processed food, including meat. Over the past 30 years that has changed. Today, 40% of what we sell overseas in the form of agricultural exports are comprised of consumer-ready products. Part of this growth is due to the increase in high quality meat products being exported, but it also includes processed and consumer goods like popcorn, ketchup, distilled spirits, pop tarts, and a host of branded food items. As the middle class in other nations continues to grow, they want more and better food choices, and the U.S. has what they want. Dr. Jason Henderson, Director of Purdue Extension, predicts this trend will continue and that the U.S. will move from being the world’s grain bin to being the world’s pantry.

Another aspect of U.S. agricultural exports that is changing is ethanol and its byproduct DDGs. In the past 3 years, U.S. exports of ethanol have grown significantly. Cary Sifferath, Senior Director of Global Programs with the U.S. Feed Grains Council, says 70% of the world trade in ethanol involves U.S. ethanol, most of which is produced here in the Midwest. He added that U.S. ethanol is the cheapest source of octane in the world. The U.S. even sells ethanol to Saudi Arabia that they use to blend with low octane gasoline. The Grain Council, which has traditionally promoted U.S. grain exports, now spends a good deal of time and effort promoting the sale of U.S. ethanol. The byproduct of ethanol production, DDGs, is also a growing U.S. export. Both Indiana and China have recently improved imports of this livestock feed. USGC has also stepped up its efforts to promote exports of DDGs.

Yet, U.S. farm policy remains stuck in the past, focused on bulk commodity production. Henderson said the new Farm Bill being crafted in Washington is primarily a commodity bill that focuses on programs that encourage and support production of bulk commodities. Funding that promotes demand for both value added and commodity products is minimum and often gets cut or flatlined in the final bill. The administration has proposed eliminating funding for cost share market development programs.

Even in ag circles an awareness of and approbation for the changes that are taking place in our export market are overlooked. Production has seldom been and is not now a problem for American agriculture. Finding demand for our farm products in an increasingly competitive world market is a challenge which we need to do a better job of addressing. Other nations are proving they can match the U.S. in agricultural production. Going forward, our advantage will be in the quality and variety of our value-added products. Processing more of our commodities here at home benefits both the farm economy and the general economy. It creates a market for farmers and jobs for both rural and urban America. We need to move from being the grain bin of the world to being the pantry and fuel tank to which the world turns. We need agricultural policies and programs that help promote this change.

By Gary Truitt

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