King Corn’s Sleepy Reign?
W hen it comes to top crops, corn is king—at least domestically. U.S. farmers alone are responsible for one-third of the world’s corn production. For the 2023 crop year, the USDA once again has Super Bowl expectations for this golden commodity. Expected planted acreage: 92 million. Expected average yield: 181.5 bushels per acre.
Where Do The Bushels Go?
Cattle, pigs and chickens eat away nearly 40% of corn. But ethanol is the real animal. It devours close to 45% of all the bushels of corn grown domestically.
Buckle up, this biofuels joyride could get a little bit bumpy in the next decade. Ultimately, market factors may dethrone king corn.
The greatest disrupter to the status quo is on roads today and was the theme of almost every automobile ad during this year’s Super Bowl. Electric vehicles (EVs) are in. Horseless carriages powered by internal combustion engines are out. Teslas, Nissan Leafs and Ford Lightning pickups require plug-ins to refuel instead of pumps. Without pumps, there is no need for ethanol no matter what blend—E10, E15 or E85.
The switchover to electric vehicles will not take place overnight. Nor will it be as disruptive as Apple iTunes rendering your CD player obsolete quicker than Casey Kasem could finish his weekly Top 40 countdown. It will not be that fast. But things are picking up speed because of the convergence of technological, political, societal and environmental trends pushing the conversion to EVs.
Here’s The Critical Math
About one-quarter of U.S. drivers want an EV, but in the first half of 2022, just 4% of the vehicles coming out of American factories were electric. However, change is ramping up and will be massive. In November 2021, six major automakers, including Ford and General Motors, signed a pledge to end sales of gas- and diesel-powered cars worldwide by 2040—and possibly five years earlier in markets such as the U.S. So in less than 12 years, Ford and GM could not produce a single gas-powered vehicle.
From The No. 1 Corn State
A year ago, the editorial board of the Des Moines Register saw enough writing on the wall and said “it’s time to pivot and figure out what’s next” when it comes to ethanol. The Iowa Chapter of the Sierra Club put out communications encouraging the Iowa Department of Agriculture and Land Stewardship to “develop a plan for dealing with significant declines in ethanol demand.”
What Does A 40-Million-Acre Pivot Look Like?
A pivot doesn’t have to mean a 180° turn like betting the farm on some savior crop, such as hemp, or transitioning every acre to organic. One possible pivot for corn farmers is to start looking up for answers—35,000' up. Ironically, U.S. corn’s salvation might end up being a high-flying cousin. Sustainable aviation fuel (SAF) is the hottest thing in biofuels right now, and it has the potential to dramatically soften the hurt inflicted by EVs on the ethanol industry. Plus, airlines need a more direct way to curb greenhouse gas emissions than just buying carbon credit offsets.
Putting an all-electric, 300-passenger commercial aircraft in the air involves a lot more hurdles than putting a four-passenger Tesla sedan on the road. Plus, the average lifespan of a commercial airliner is nearly 30 years. Therefore, airlines are not just going to park their jet fuel-powered aircraft in the fence row tomorrow. This timeline alone gives SAF a lot more runway than traditional ethanol.
Companies like Gevo are already making this particular pivot a reality. The biofuels producer recently broke ground on its first commercial-scale SAF facility, which is dubbed Net-Zero 1, in Lake Preston, South Dakota. This is the keystone plant that kicks off Gevo’s plans to ultimately supply the aviation industry with a billion gallons of SAF. That’s good because the demand for SAF is expected globally to be 7 billion gallons and still growing by 2030. That could definitely take the edge off some of the losses expected in the 15-billion-gallon domestic ethanol market.
SAF certainly isn’t the only answer to what’s next for king corn or the acres it takes to grow it. We as an industry need to prove U.S. agriculture can adapt and supply solutions to today’s marketplace no matter where it may be—at the dinner table, the highways or the wild blue yonder.
