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Santa Fe Agri-Leaders: Food and fuel are focus of Global Ag Symposium Thursday

Tuesday, January 29, 2013

Don Borgman delivers the keynote address Thursday, Jan. 24, at the annual Global Ag Symposium sponsored by Santa Fe Agri-Leaders. (Contributed photo by Sarah Reed)
The parallels of food and fuel: it's a topic composed of multiple elements that Don Borgman delved into as he asked local farmers and ag leaders to consider why demand for corn has changed.

Borgman, the director of Agricultural Industry Relations for John Deere's North American operations, touched on several of the factors affecting corn production during his keynote speech at Santa Fe Agri-Leaders' Global Agriculture Symposium this past Thursday in Concordia.

"What's happened from a bio-fuel standpoint, if you go back to about five years ago ... bio-fuels were kind of the savior," he said. "And then in 2008 ... we saw commodity prices jump up very, very rapidly."

Borgman noted there was plenty of corn in 2008, but the price increased early in the season.

"Oil was at about $120 per barrel," he recalled. "The price of corn peaked in the last week of June, first week of July. So we had planted the crop. We saw the price run up, because there was speculation among a lot of people that we were going to run out of stuff because of ethanol, and because the currency market wasn't working really well for those investors any more. And before we even combined the corn that fall, the price had dropped down."

The amount of yield didn't necessarily dictate the end result, which is apparent as the industry has had a higher supply of corn than the demand -- a primary reason ethanol has had a chance to take root in recent years. But developments throughout history also play a role in the development of today's bio-fuel industry. Historically, the decline of the cattle industry since 1975 and the rise in the poultry industry meant demand for corn was diluting. That trend has continued into current times. According to Borgman, approximately 650 million bushels of corn were left over in 1970. Jump to 2011, and the remainder was 7.3 billion bushels.

"The reason we ended up with ethanol in the first place is because we grow more corn than we can use," Borgman said. "Fundamentally, that's the issue. We stored corn for an awful long time."

The days of storing corn in bins along the roadside now come in flashbacks, much like the black and white portraits of silos and grain bins presented for those in attendance.

During his presentation, Borgman looked back through history, encouraging participants to consider other factors related to the development of bio-fuels, such as fuel changes for automobiles since 1920, for example. Albeit, ethanol plants had made an appearance in the early 1980s, they weren't profitable until yield increased considerably.

Plus, the switch to gasoline and then unleaded gasoline, the addition of governmental mandates on petroleum and then a move in 2007 to take roughly 36 billion gallons of fuel supply and make renewable energy were all factors leading up to today's ethanol industry.

In 2007, about 27 percent of corn went into fuel while 62 percent went into livestock when looking at a more global scale.

"Has technology moved just a little bit (since 1990)?" Borgman noted. "And my question is, is agriculture immune to that? Technology has impacted agriculture in a remarkable way."

He spoke of rapid technological advances in the past two decades, and the effects those have had not only in production and harvest, but also efficiency in communication and gathering data.

Participants seemed to reflect on those elements Thursday morning, as they became more and more interactive with the presentation, and began to question where they go from here. A dramatic shift in Americans' consumption of meats, fuel changes and regulations and technology have intertwined in a way that created a window leading to today's bio-fuels. But how long that window will remain accessible, and whether corn yields continue to stockpile faster than demand are reasons agriculture leaders should begin working together -- to strengthen their individual operations and the ag community as a whole.

The third annual Global Agriculture Symposium continued throughout the day with sessions such as "Farm Markets, Farm Policy and FAPRI"; "Life after the Drought"; "Making Sense of Variable Rate Data"; "Getting a Handle on Cover Crops"; and "Global Transportation's Effect on U.S. Agrictulture."


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