That may have turned out to be a pretty good investment for Leno, but an even better one right now would be to invest directly into biofuels, whose prospects are soaring. This year may even be the first in which more corn is converted into ethanol than is exported to other countries–some 55 million tons in ethanol, compared to probably no more than 50 million tons or so in exports, according to recent USDA figures.
For a country whose corn farmers traditionally have depended on selling part of their harvests abroad, this is a significant development. And reducing this type of export ultimately may mean we can reduce another type of import: oil.
President Bush recently called upon us “to move beyond a petroleum-based economy.” America’s farmers are doing their part to meet the challenge.
Because of this, we’re moving away from Big Oil and toward Little Oil–it’s Our Oil, right here in the Midwest. And we’re about to boom, like an oil town in Oklahoma or west Texas. With the cost of traditional gas hovering around $3 per gallon, thanks to a huge global demand that almost certainly isn’t going to shrink, ethanol makes economic sense and people are investing in it. Bill Gates just put $84 million into a venture called Pacific Ethanol.
Fortunately, you don’t have to be a software billionaire to get involved in what’s happening. Here in Iowa, ordinary farmers are investing in biofuels such as ethanol. We’ve already got 22 ethanol refineries up and running. Another seven are being built right now and more than 20 others are on the drawing board. For just one of these new ethanol plants, we’re typically seeing around 600 families buying in.
Perhaps if somebody reinvents the Beverly Hillbillies TV series for the 21st century, the Clampetts won’t come from the Ozarks but from Rockwell City.
The biggest difference–other than (I hope) our manners–will be that our success won’t depend on strike-it-rich luck. Instead, it will come in the intelligent application of cutting-edge agricultural techniques.
Biofuel production isn’t surging merely because of external factors such as the rising price of gas, even if this is crucial. It’s also increasing because we’re able to squeeze more fuel out of each acre of crops than ever before.
Consider soybeans, a key ingredient in biodiesel. We’re now growing varieties of biotech soybeans that contain much more oil than conventional strains. Last year, this fact combined with excellent weather allowed us to out-produce normal levels of oil by three-tenths of a pound per bushel. That represents an extra 120 million gallons of biodiesel from our soybean harvest–and it shows how seemingly tiny improvements can have a big impact when they’re spread across large numbers of acres.
The amount of available acreage is also increasing. Traditionally, it’s been said that canola, an oilseed crop, won’t grow south of I-90, an east-west interstate highway that stretches from near the border of Minnesota and Iowa, through South Dakota, and into Wyoming. But now we’re coming up with new varieties of canola that not only produce more oil than previous versions, but also thrive below this familiar barrier.
Lately, there has been some ‘noise’ over how the growing demand for fuel will increase food costs, on the assumption that if there’s more corn going into gas pumps than there’s less going into grocery store shelves. Yet the picture is far more complicated and much less troubling. A significant byproduct of biofuel production is corn gluten and soybean meal. This can go into animal feed, which in turn lowers the cost of meat production. The bottom line is that our whole system of protein production is shifting beneath our feet as we come to understand the new crop markets that are suddenly available to us.
There are some who are envisioning the American Midwest as the ‘New Mideast’. That’s a lofty vision and a good goal. Assuming any of this happens–a safe bet, even for a conservative investor like Jay Leno—is an investment in the biofuels industry. It’s a great triumph for Little Oil – Our Oil, produced by ordinary Americans, right here in the heart of America.
Bill Horan, a Board Member for Truth About Trade and Technology (www.truthabouttrade.org) grows corn, soybeans and grains on a family farm in Northwest Iowa. Bill Horan actively supports the biofuels industry.