Dear U.S. Grain Industry...

Earlier this year General Motors (GM) made a commitment to exclusively offer electric vehicles by 2035. This goal is also in-line with their released goals to be carbon neutral by 2040. Ok. Great. But what does this have to do with grain farmers? 

Well, about 40% of all of the U.S. corn crop goes to ethanol production. That’s 36 million acres of planted corn going to ethanol, which is about the size of the total land area in Iowa. 

First, let’s go through a quick summary of ethanol production in the United States. A series of policies have built up the ethanol market over the past several decades. In 1975 when the U.S. began to phase out lead from gasoline, ethanol was beginning to phase-in. The Energy Policy Act of 2005 established a renewable fuels standard (RFS) which is a federal program that requires transportation fuel contain a minimum amount of renewable fuel. Ethanol is categorized as a biofuel even though it takes fossil fuel to produce ethanol in the first place. It is estimated that each gallon of ethanol delivers about 1/3 more energy than is used to produce it (Source). 

So now that we are all on the same page about ethanol and the fact that 40% of all the U.S. corn crop goes to ethanol production, the question we need to be asking is what happens to U.S grain farmers when ethanol goes away? When I ran a quick search of the GM electric vehicle decision along with ethanol, stories from small-town newspapers across Minnesota, Iowa, and other parts of the corn belt popped up with stories with headlines like this:

“Electrification of Cars will Hurt Farmers.”

My answer to that? Farmers need to wake up and be ready for this inevitable change! We are living in the year 2021. Climate change is real. Relying on grain production that is held up by subsidies by the federal government in the form of subsidized crop insurance or the occasional payouts that are now seemingly more of a regular occurrence (China Trade War, then the pandemic, who knows what’s next) is not a solid business plan, nor is it an economically sustainable solution.

But what’s more frustrating right now is that the farmers that want to change, that want to do something different, don’t really have many options. They are in deep with their investment into planters and combines that cost hundreds of thousands of dollars. They have farmed their land rotating corn and soybeans so many years in a row that the soil is dependent on the hundreds of thousands of dollars spent on synthetic fertilizer and other crop inputs relied upon to grow a crop. And these large grain crop farms are typically in a sea of other farms that also grow corn and soybeans and spray pesticides and herbicides that have drift issues and would destroy a piece of land trying to grow something else.

On top of all of these problems, markets are lacking for anything but corn and soybeans in many of these rural areas throughout the corn belt. In most places, there are no markets for niche or specialty crops. Just look at all of the farmers that jumped on the hemp bandwagon when given the opportunity to diversify; now there are no or few markets for their hemp crop.

So let me circle back to the fact that I personally think the electrification of cars is a great thing. In my opinion, this is the direction we need to go. We need to be thinking of solutions outside of the status quo and expect a world that looks very different from today. For the transportation industry, we need to not be thinking only about greater gas efficiency but about the electrification of cars and public transportation. For the agriculture industry, we need to be thinking not just about more efficiently farming corn and soybeans, but about diversification, new crops, creative solutions, and alternative land uses. And while farmers are pretty stuck in their ways right now due to investments in equipment, land, and knowledge capital, the fact of the matter is, change is coming. 

So what will become of our farms once ethanol goes away? What will we do with farmland the size of all of Iowa? We can’t put that problem solely on the shoulders of farmers. And I sure hope that the federal government’s plan isn’t just to provide more direct payouts to this system that is clearly broken in perpetuity. So we need to get creative.

As rural communities, as policymakers, as agri-food professionals, as farmers, as entrepreneurs, as baby boomers and millennials - all of these groups need to be proactive and not wait for change to happen to them. Let’s dive into new and out-of-the-box solutions and embrace change before change happens to us.