It’s been a while since I did one of these. It isn’t that I’ve lost interest in what’s going on in the ag industry, it’s just that since I’m not personally involved any more it just hasn’t had the same importance for me. But a lot is going on out there in the farming business, and one thing I want to focus on is ethanol today.
2020 was a bad year for the ethanol industry. This was due to the pandemic, of course, but only partly. A lot of production facilities had to cut back, even temporarily close. Some shut down completely and will probably never be brought back online. Adding to the problems the industry is facing is the fact that they primarily use corn as the base material to make ethanol from, and corn prices have jumped up to $5.50 a bushel and show no signs of going down any time soon. (It’s a bit ironic that an industry that was created, at least partly, as a government mandated program to push up corn prices is now threatened by high corn prices.)
But the real problem with the ethanol industry isn’t the pandemic or corn prices, it’s the fact that the entire ethanol fuel industry is dead and the promoters of this stuff simply refuse to admit it. Like it or not, it seems that the future of transportation is not the internal combustion engine, it is going to be electric motors.
Electric vehicles are no longer a novelty item, they’ve gone mainstream, and consumers are buying them in droves. And it’s easy to see why. There is little to no maintenance. No more oil changes, no more cooling systems to flush and fill with antifreeze, no more transmission fluid to check and change and flush, no more exhaust systems rusting off that need to be replaced regularly. They’re quiet, efficient, with ranges of up to 300 miles depending on the model. Fast charging systems that can recharge a vehicle in a half hour or less are finally starting to turn up in a lot of cities, and will quickly become more common. It seems virtually certain at this point that the vehicle you buy in the near future is almost certainly going to be electric.
It isn’t just me who’s saying this. Several countries have already declared that they will ban sales of cars and light trucks with internal combustion engines within the next 15 to 20 years. California will ban the sale of new gasoline powered cars in 2035, as will the Canadian province of Quebec. Britain will ban the sale of new gasoline and diesel powered cars in 2030. Norway is doing it in 2025. China, of all places, is considering doing something similar.
And now GM, General Motors, has announced that it will only produce zero emissions vehicles by 2035 or 2040. And they aren’t the only car maker considering it. Heck, even the railroad and tractor manufacturers are getting into it. One company already has small utility tractors in the 30 – 40 horsepower range suitable for orchards, landscapers, organic farms and the like, in the $25,000 range. Run times are up to 4+ hours, and if you can’t wait to recharge, you can get a second battery pack and swap the uncharged one out, put the charged on in and keep working while the other battery charges.
The future is clear. The entire ethanol fuel industry is as good as dead.
It isn’t going to go down without a fight. It is spending millions of dollars lobbying politicians to try to keep itself on life support. It is about to embark on a massive lobbying campaign against electric vehicles, claiming they are actually more polluting than internal combustion engines, demanding ever increasing percentages in blending with gasoline, pushing for even more government subsidies and tax breaks… The industry will bluster and threaten and lie and bribe and do everything it can to try to hang on. It isn’t going to work. It’s time to nail the lid on the coffin of ethanol and bury it once and for all.
Instead of trying to continue to prop up a dying industry with ever more government bailouts and mandates, we should be preparing to deal with the repercussions of the industry shrinking and eventually going away entirely. This will cause problems that will ripple through the entire ag industry. Corn prices could potentially plummet. Livestock and dairy will have problems because they have come to depend on brewers grain, what’s left after the ethanol is made, as a relatively low cost protein supplement for cattle. All of this, and more, will happen. And it looks like no one is going to try to deal with this before it turns into a crisis.