Western Producer reporter Sean Pratt recently attended a gathering of American wheat, corn and soybean growers in Florida and filed these reports.
TAMPA, Fla. – Only two of the 114 ethanol plants operating in the United States list wheat as a feedstock, and in both cases it is a secondary ingredient.
By contrast, nearly every ethanol project built, under construction or proposed for Western Canada will be using wheat as its primary input.
“We made a conscious decision about three years ago not to work on wheat ethanol but to work on straw instead,” said Daren Coppock, chief executive officer of the National Association of Wheat Growers.
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Confronted by an abundant supply of cheap corn that was typically trading in the range of $2.50-$3 US per bushel, a significant discount to wheat, the association opted for Plan B – using wheat straw to make cellulosic ethanol.
“We are not able to compete on a cost basis with corn as a starch source,” said Coppock.
But with the narrowing of the price gap between wheat and corn that started last year and continues in 2007, wheat-based ethanol is becoming more feasible. Corn is selling at a 10-year high of more than $4 per bu., while milling wheat is selling for about $5 per bu.
If corn prices stay steady, NAWG may have to broaden its ethanol policy stance and start encouraging the construction of wheat-based plants, said Coppock. They just have to look north of the border to see the business model can be feasible under the right circumstances.
Husky Energy opened Canada’s first big wheat-based ethanol plant last September: a 130 million litre facility in Lloydminster, Sask. Other large plants are either under construction or in the final planning stages.
“If you roll it out in the (Canadian) Prairies, it may seep across the border into Montana and the Dakotas,” said Coppock.
In the meantime, the focus remains cellulosic ethanol rather than devoting industry resources to grain-based fuel.
But with no commercial cellulosic plants in operation, wheat has been relegated to the sidelines of the U.S. ethanol industry, which will use an estimated 3.2 billion bu. of corn in 2007-08, according to the United States Department of Agriculture.
There have been some encouraging developments on the cellulosic ethanol front. The U.S. government has established a $2 billion US fund to provide loan guarantees to emerging energy technologies.
And the U.S. Department of Energy recently announced $385 million in grants for six cellulosic ethanol projects that will be using corn stover, wheat straw, wood waste, switchgrass and other cellulose-based feedstocks to make ethanol.
NAWG has joined the growing lobby for cellulosic ethanol. In a meeting last fall, the association’s board of directors unanimously adopted a resolution to expand the organization’s advocacy mandate to include representation of growers of biomass energy crops like switchgrass.
“Our friends both in Congress and in the renewable fuel industry are looking for an organization such as NAWG to step in and take up this cause,” said Dale Schuler, the association’s former president.
NAWG forecasts energy crops could eventually account for $13-$21 billion in additional farm income. By comparison, the current value of the entire corn crop is about $20 billion and the value of the wheat crop is about $7 billion.
“Are these blue sky or pipe dream expectations? Not if we put our organizational minds and weight behind the effort,” said Schuler.
