Brian Greenslit and George Goblish accept the Biodiesel Initiative Award for the Minnesota Soybean Growers Association from Joe Jobe (far left) and Ed Hegland (far right).

The conference wrapped up Wednesday with the Minnesota Soybean Growers Association taking home the Eye on Biodiesel Initiative Award along with the Iowa and Nebraska Soybean Associations.

“When the call to action came for the biodiesel industry to submit comments to EPA on its proposed Renewable Fuels Standard rules, soybean farmers answered the call. These three organizations led the way for the biodiesel industry and generated more than a third of the 8,000 comments biodiesel supporters submitted regarding the proposed standard,” said  Ed Hegland in presenting the award at the National Biodiesel Conference and Expo. “These comments demonstrated biodiesel’s and the Renewable Fuel Standard’s importance to a broad range of stakeholders.”

Feeding the Biodiesel Machine — Panel Discusses Future Feedstocks

As demand grows for biodiesel, eventually new feedstocks will be needed to meet that demand. On Wednesday morning, a panel of industry experts discussed potential new feedstocks for biodiesel.

The panel included Dick Auld, Texas Tech University; Mary Rosenthal, Algal Biomass Organization; Dallas Hanks, Utah State University, Freeways to Fuel, and David Slade, Renewable Energy Group, Inc.

Future of Feedstocks panel members

Auld is researching oil crops that could be grown on marginal lands with little water. He is studying winter saffron and castor as potential biodiesel feedstocks. He predicted that within five years, 20 million acres of federal lands in the Western U.S. could produce crops yielding more than a billion gallons of biodiesel a year.

Rosenthal noted that algae has great potential and will be commercially available within three years. She noted that algae can be grown on non-potable water and that co-location with a wastewater treatment plant, energy plant, or dairy will be important. Production is being targeted for the jet fuel industry.

Renewable Energy Group makes biodiesel ‘to spec’ from many different feedstocks. “We’re the scavengers in the biodiesel world,” Slade said. He predicts that within two years, biodiesel will be marketed and sold by cloud point and perhaps sustainability scores. He also says biodiesel will increasingly come from mixed feedstocks and that the industry will become feedstock neutral.

The roadsides are a huge untapped land resource that could produce biodiesel, according to Hanks. He is testing the potential of camelina, flax, safflower, canola and dwarf sunflower to be grown in Utah for biodiesel. He predicts that within five years, 50 million gallons of biodiesel will come from U.S. roadsides.

Analyst Shares Oil Outlook

Ann Frick

Ann Frick, senior oilseed analyst with Prudential, shared her economic outlook.  She indicated that record exports to China have depleted the record large U.S. soybean crop.  “The carryover stock is less than 200 million bushel so there’s no cushion against weather problems,” Frick said. She noted that South America is leading world soybean production growth and could influence the market. She says soybeans could rally higher this year, but over the next two years she expects lower soybean prices that trade within a 30-cent to 60-cent band.

Back to Minnesota

Our team flew back to Minnesota on Wednesday with a much better understanding of how the soybean checkoff works to build domestic markets like biodiesel for U.S. soybean growers.  We also made a lot of great friendships and connections on the trip. Thanks for following our trip on this blog

The SFY group applauded Enterprise Holdings announcement that it will convert its fleet of rental airport shuttle buses to B5 and ultimately B20

As we attended more sessions at the National Biodiesel Conference on Tuesday and Wednesday, it was apparent that this is a resilient industry that’s committed to doing whatever it takes to meet customer requirements and expand the market for biodiesel.  Many of us were surprised at the amount of effort that has gone into developing, protecting and growing this market.

With more than 30 information sessions offered, we definitely increased our knowledge about biodiesel, before heading back to Minnesota. The sessions covered topics related to markets, technical issues, policy and regulations, original equipment manufacturers and sustainability. We all have a new appreciation for the complexity of the industry and also for the amount of collaboration and cooperation that has gone on and continues in order to further develop the industry.

On Tuesday, we heard from all links in the petroleum supply chain as a panel discussed how they will meet the increased demand for biodiesel created by the Renewable Fuel Standard 2. We learned that the petroleum industry is willing to invest in the infrastructure needed to supply biodiesel to the nation. Companies are spending $2.5 to $3 million per terminal to add the infrastructure necessary to handle biodiesel. It was also interesting to learn that biodiesel is already being moved successfully through pipelines.

“Even though the industry has had a lot of setbacks, a lot of people are working together. Even the petroleum people are investing in biodiesel infrastructure,” noted Jim Willers, chairman of the Minnesota Soybean Research and Promotion Council.  “The biodiesel coalition is growing and we’ll be a much more viable industry in the future because of it.”

Biodiesel’s Positive Energy Balance Climbs

Ed Hegland, a Minnesota soybean grower and chairman of NBB, says collaboration is what drives the continuous improvement in biodiesel’s energy balance, which has climbed from 3.2 to 1 to an incredible 4.5 to 1.  “While petroleum becomes more energy intensive to make by the day, biodiesel becomes more efficient. We can thank our biodiesel producers, plant scientists and farmers for that,” Hegland said. “Like most farmers I am able to grow more with less thanks to the leaps American agriculture has taken in its technology and efficiency.  I expect to increase my soybean yields by 3-5 bushel per acre this year.  Think what that could mean on 75 million acres nationwide. That would be 375 million additional bushels on the same acreage, enough to produce an extra 562 million gallons of biodiesel on that land.”

There is strong support for biodiesel because it has the best energy balance and the best greenhouse gas reduction of any fuel that is currently in the commercial marketplace, and is the only advanced biofuel that has reached commercialization in the U.S.

Awareness of biodiesel is growing and opinions are widely positive. Among voters, 86 percent are aware of biodiesel and 80 percent of consumers surveyed say they are very or somewhat likely to use biodiesel.

Enterprise Announce Fleet Conversion to Biodiesel

At the National Biodiesel Conference, Enterprise Holdings announced plans for its entire fleet of more than 600 Alamo Rent A Car, Enterprise Rent-A-Car and National Car Rental airport shuttle buses across more than 50 North American markets to begin using at least 5 percent biodiesel (B5). Further, the company will immediately convert buses in nine markets to 20 percent biodiesel (B20) as a first step toward the company’s goal of converting its entire bus fleet to B20 over the next five years.

It expects to complete the conversion to all B5 by spring of this year, with at least 50 percent converted to B20 by the end of next year. Buses in nine markets are immediately being converted to run on B20.

“This investment in biodiesel follows our commitment to our customers and our business to use our fleet to help grow the clean fuel market. By embracing alternative fuels and engine technologies, they have a greater opportunity to become commercially viable,” said Lee Broughton, director of corporate identity and sustainability for Enterprise Holdings. “Biodiesel’s benefits to the environment support our commitment to environmental stewardship, as well as our sustainable approach to managing our business for long-term success.”

Enterprise Holdings also provides strong support for renewable fuels research. In 2007, the company’s owners, the Taylor family, made a $25 million grant to the Donald Danforth Plant Science Center in St. Louis to create the Enterprise Rent-A-Car Institute for Renewable Fuels. Led by renowned plant researcher Dr. Richard Sayre, top scientists work at the Institute to develop alternatives to finite fossil fuels by finding new ways to create fuel from renewable, reliable plant sources.

Brian Greenslit, domestic marketing chair from Franklin, Minn. is excited about the growth in fleets using biodiesel. “The widespread use of biodiesel in fleets, particulary in municipalities, both on and off road is very promising,” he said. Acceptance is high and fleet managers are reporting almost no issues whatsoever.”

General Motors Announces B20 Models for 2011

General Motors told biodiesel supporters at the National Biodiesel Conference that the company’s 2011 model year Duramax 6.6L turbo diesel engines will be fully compatible with a 20 percent blend of biodiesel (B20). The company made the announcement, which covers all 2011 GM heavy-duty products including Chevrolet Silverado, GMC Sierra, Chevrolet Express, and GMC Savana, after extensive evaluation of B20.

GM joins Ford and Chrysler in formalizing its support for B20, providing a big boost to the biodiesel industry. These three companies produce more than 80 percent of the diesel light vehicles sold in North America.

“It’s a huge win for the biodiesel industry to have GM’s support for B20,” said Steve Howell, technical director for the National Biodiesel Board (NBB). “Over the past seven years, a tremendous amount of cooperative effort has taken place between the biodiesel industry and the auto and equipment manufacturers to secure broader support for B20 blends in their vehicles. From the development of stringent new ASTM specifications for blends up to B20, to intensified fuel quality enforcement efforts and emphasis on the BQ-9000 program, to sophisticated testing with new particulate and NOx aftertreatment technology – this has truly been a substantial team effort, and it’s finally paying off.

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The NBB and the National Renewable Energy Laboratory spent more than $10 million testing B20 during the last five years to ensure the fuel’s compatibility in new diesel engines and after-treatment technology. Most of the NBB funding for the testing was provided by U.S. soybean farmers through the soybean checkoff-program.

Peter Johnson a soybean grower and director from Lake Lillian, Minn. said, “It’s neat how Ford, Dodge and Chevy are getting so innovative and participating in biodiesel areas. They are seeing a demand there and they want to be a player.”

Joe Jobe

“This last year has been a huge struggle for our industry with the economic recession, the credit crunch, volatile oil prices, the blocking of export markets and the delayed implementation of RFS2. Even with the tax credit in place 2009, it was really tough,” said Joe Jobe, CEO of the National Biodiesel Board (NBB), at the opening session of the National Biodiesel Conference. “We thought it couldn’t get worse, but for the last 39 days we had neither the tax credit or the RFS2 (Renewable Fuel Standard 2) in place. The industry has shut down. Businesses are going under and jobs are being lost. Retroactive reinstatement of the $1 per gallon biodiesel blenders tax credit is the National Biodiesel Board’s top priority.” Jobe’s comments were met with cheers by conference attendees.

See for Yourself participant Ron Obermoller, a soybean grower and director of the Minnesota Soybean Processors biodiesel plant in Brewster, Minn. contends, “without the tax credit the industry won’t survive.”  He noted that farmers are losers too, “Since we lost the blenders credit, the price of soybeans in our area is down $1.50 per bushel and still dropping. It’s all related to biodiesel losses.”

Jobes expressed hope, “Washington’s focus has shifted from health care to jobs and the economy so I believe that Congress will reinstate the credit as part of a bipartisan jobs bill in the next few weeks. In addition, Senators Chuck Grassley and Max Baucus have said the bioediesel tax credit is a high priority for them.”

Once that’s accomplished NBB will work on a 5-year extension to the biodiesel producer tax credit.  Many biodiesel producers say that’s needed because banks aren’t willing to lend capital  to them based on a single year extension of the tax credit.

EPA’s RFS2 final rule, announced on Feb. 4, is very good news for biodiesel. “It took enormous effort by the NBB to ensure biodiesel was included in the renewable fuel standard,” Jobe said. “EPA acknowledged that NBB’s comments were the most substantive and impressive that they’ve ever received.”  This resulted in a workable program that will result in 700 million to 1 billion gallons of biodiesel being used this year  — double last year’s production.

Don Reynolds

Two years ago, at this conference, Economist Don Reynolds predicted unemployment would go over 10 percent and that housing would decline by 25 percent. This year, he said our “new normal” business environment will include higher inflation, higher interest rates, lower consumer spending and a declining American dollar. He noted that the United States is no longer the economic power in the world.  In 2000, the U.S. accounted for 28 percent of global economic output. Today, it accounts for just 20 percent, about the same as China, India and Brazil combined.

On the positive side, he noted that we’re close to reaching a bottom in the residential real estate market, that banks are raising their own capital and that inflation is near zero. These things make Reynolds bullish for the short term. “The recovery is coming and I’m looking for upside surprises like greater than 2 percent real economic growth,” he said.

His optimism is countered in the long term by the huge burden of our twin deficits—the federal budget deficit and the U.S. trade deficit. Those make Reynolds more nervous about the economy’s performance three to five years out. “That’s when we’ll see inflation and higher interest rates,” he said.

Overall, Reynolds said he is very positive about biodiesel’s outlook.  “Biodiesel can help reduce our trade deficit and improve the economic well being of Americans,” he said.  “Other positives for biodiesel are that it benefits the environment, the economy and improves national security.”

During lunch, speakers from the National Biodiesel Board (NBB) shared information on the industry. The NBB’s mission is to increase demand of commercially produced biodiesel in the U.S. The Minnesota soybean check-off provides $225,000 in funding for the NBB.

Luncheon speakers Larry Schafer, Brian Greenslit, Tom Verry and Ed Hegland.

Tom Verry, director of outreach and development for the NBB, noted that in the last four years, biodiesel has provided U.S. soybean producers an additional $2.5 billion in revenues. Locally, biodiesel has added $63 million to Minnesota soybean revenues, or $5,125 for every 500 acres of soybean production. Long term, biodiesel consistently adds 25 cents to the value of a bushel of soybeans.

We also learned that production of biodiesel has grown from a half million gallons in 1999 to a peak of 700 million gallons in 2008.  Production in 2009, dropped to 475 million gallons as economic factors forced some biodiesel plants to reduce or suspend production.

A recently released EPA Renewable Fuels Standard (RFS2) rule should help revitalize the industry. “Essentially, the RFS2 rule does for the whole U.S. what the B2 mandate did for Minnesota,” said Chuck Neece, director of manufacturing for Farmers Union Industries, which operates FUMPA, Minnesota’s first biodiesel plant.  Based on the new rule, Neece believes shuttered plants will come back online. For the larger plants, it may take 30 days to staff up and become operational, he said.

Checkoff Dollars Demonstrate Biodiesel’s Greenhouse Gas Reductions to EPA

The biodiesel industry got a boost on Feb. 4, when the Environmental Protection Agency issued its final rule on the Renewable Fuels Standard (RFS2), which provides for a renewable component in U.S. diesel fuel. RFS2 requires the use of 500 million gallons of biomass-based diesel in 2009, increasing gradually to 1 billion gallons in 2012.  The rules require that 1.15 billion gallons of biodiesel be used domestically in 2009 and 2010 combined.

To qualify as a biomass-based diesel, the fuel must reduce greenhouse gas emissions by 50 percent compared to petroleum diesel.  “Biodiesel is the only fuel available in commercial quantities in the U.S. that meets the EPA definition of Biomass-based Diesel,” said Larry Schafer who works with NBB on policy issues. “Biodiesel is the best green fuel in the world today.”

Schafer told us that the NBB, funded by checkoff dollars, was instrumental in getting biodiesel to qualify under the (RFS2) rules. Incorrect assumptions and calculations by EPA in the proposed rule, had biodiesel’s greenhouse gas (GHG) emissions exceeding those of petroleum-based diesel. NBB noted significant shortcomings with EPA’s initial lifecycle methodology, including inaccuracies pertaining to nitrogen fixing with soybeans, co-product allocation, energy balance and ag efficiencies.  NBB also noted flaws with EPA’s international land use assumptions.

NBB  assembled a technical team that prepared a 400-page technical response. This resulted in the EPA determining that biodiesel produced from domestic soybean oil reduces GHG emissions by 57 percent compared to petroleum-based diesel fuel. Furthermore, EPA acknowledged soybean-based biodiesel could reduce emissions by as much as 85 percent. Though NBB continues to object to the use of international Indirect Land Use Charges in EPA’s GHG methodology, the methodology employed in the final rule represents a significant improvement over the proposed rule change.

This was an important victory. “How well we defend soybean-based biodiesel carbon reduction benefits will determine how big a role soybean-based biodiesel will play in the Renewable Fuel Standards and in state Low Carbon Fuels Standards,” said Tom Verry of NBB.

The stakes are high. California, Connecticut and Oregon all have passed low carbon fuel standards (LCFS). California’s low carbon fuel standards, alone, create a 1 billion gallon potential biodiesel market by 2020. Eleven Northeast and mid Atlantic states are considering LCFSs that could create a market for 1.8 billion gallons of biodiesel by 2020.

Our day culminated with a Super Bowl party for 500 conference attendees at the Glass Cactus. We donned our favorite team’s jerseys and enthusiastically cheered them on while watching the big game on a huge 9 ft. X 16 ft. big screen TV.

Fledgling Biodiesel Industry in Chile focuses on non-crop feedstock sources

See For Yourself delegates received updates on Chile's growing meat industry from a representative of Fundación Chile.

On Friday morning  the See for Yourself mission delegates heard a presentation from Biocomsa, a consortium of the University of Chili’s Forestry, Agronomy and Physics Sciences schools. The organization, which partners with Chile’s state-owned energy company, was formed to examine, support and develop the biodiesel industry in Chile.

In Chile, where there is heavy competition for arable cropland, the primary focus of the Biocomsa consortium is to explore ways to use existing resources such as forestry waste products and other non-crop feedstock sources to supply the country’s growing demand for renewable energy.

Growth in Chilean meat industry signals potential for soybean market

See for Yourself delegates also met with the agriculture programs manager for Fundación Chile, a private, non-profit institution created by the Chilean government and the American company ITT Corporation. The foundation’s mission is to introduce innovations and develop human capital in key clusters of the Chilean economy, including agriculture, through technology management.

Growth in pork, poultry and salmon production in Chile suggest a growing demand for high-quality protein.

The Fundación Chile presentation offered some insights into the possible direction of the soy market in Chile. In general, the demand for soybean meal and soy oil in Chile is likely to grow as Chile’s domestic meat production grows. According to the Fundación Chile presentation, pork, poultry and salmon production grew at an average annual rate of 6-10% from 1996 to 2006. The value of Chilean meat exports over that time grew from $544 million to $2.7 billion (US$). However, based on the presentation the See for Yourself delegates heard from AgroSuper’s management on Wednesday, the numbers for production growth and export values are likely much higher from 2006 into 2010.

The significant growth of the Chilean meat production sector, especially in salmon production, suggests there is potential for significant growth in the demand for soybean feed products as well. In fact, the Fundación Chile presentation showed data in which they project the demand for livestock and fish feed in 2010 to reach 4.5 million metric tons. The Fundación Chile presenter noted that in Chile there are currently no domestic oil extraction facilities, which means soy oil is imported, often from Argentina, and then refined in Chile. (Exception: we do know that AgroSuper has its own crushing plant for its swine feed program). The Fundación Chile presenter also reported that there is much interest in finding alternative high-quality protein sources to replace the use of fish meal in salmon production.

Bottom line: The Chilean market for high-quality protein sources for swine, poultry and salmon feed rations will grow as the Chilean meet production sector continues grow.

Minnesota growers enjoy a visit to one of Chile’s preeminent wineries

The historic and legendary Chilean winery of Concha y Toro

Our final stop before concluding our See for Yourself mission to Chile was the internationally renowned winery, Concha y Toro. We enjoyed a tour of new vineyards, explored the winery’s legendary cellars, and concluded our visit with a fine lunch featuring traditional Chilean dishes, and of course a glass of Concha Toro wine.

Minnesota soybean growers inspect new grape vines at Concha y Toro.

Minnesota delegates enjoy a lunch of traditional Chilean dishes.

“The poultry expo has been so informative. I wasn’t aware that poultry is our biggest consumer of soybean meal,” notes soybean grower Jade Estling of Roosevelt, Minn.  In fact, more than half of U.S. soybeans processed for livestock feed are fed to poultry.

See For Yourself participants worked a shift in the USSEC booth at the International Poultry Expo.

We not only attended the show, we worked a shift in the USSEC (U.S Soybean Export Council) booth. USSEC conducts marketing activities and provides technical assistance in key markets throughout the world to increase demand and consumption of U.S. soybeans. It is funded by producer checkoff dollars.

“I was really impressed with how many people stopped by the USSEC booth when I was working my shift.  I talked with people from Mexico, Egypt, China and many other places,” says Lawrence Sukalski, a soybean grower from Fairmont, Minn. who serves on the Minnesota Soybean Growers Association board.  “There are so many opportunities to expand our exports as these countries’ economies improve.”

Soybean grower Bruce Peterson from Northfield, Minn. agrees, “Every country we talked to said they wanted to build their livestock industry and they wanted to eat more meat—that means more demand for our grains and meat in the future.”

Participant Barbara Frank, a member of the Minnesota Broiler Board who raises laying hens in Danube, Minn., says, “The absolute highlight for me was meeting with the Mideast trade delegation. I talked extensively with a Turkish poultry laying complex manager. Through an interpreter, we learned we were doing a lot of the same things in our businesses. It was a ‘jazzing’ situation to learn how much we have in common with other people in the world. When you meet with people one-on-one, like we did, you realize we are all citizens of the world first before we are Americans or Turks.  Before this trip,  I didn’t know the soybean growers did so much to build international markets for both soybeans and poultry.”

While sharing dinner with the representatives of the Minnesota Turkey Board and poultry industry, we learned that Minnesota is the top state for turkey production with 45 million birds produced annually by 250 producers on 600 turkey farms. The state is home to three turkey processors: Jenni-O Turkey Store, Turkey Valley Farms and Northern Pride. While the industry has had a couple of tough years, outlook for 2010 is brighter. The U.S. poultry industry exports 15 percent of its broiler production, 10 percent of its turkey production and 8 percent of its egg production

“Minnesota Turkey has a strong partnership with Minnesota Soybean. Soybean checkoff-funded export activities have allowed new markets to take off faster,” said Steve Olson, executive director, Minnesota Turkey. “There is huge growth potential for turkey consumption around the world. Currently, the Chinese do not eat turkey, but that could change with chef training and other education.” China, Taiwan and Hong Kong have 20 percent of the world’s population with 104 cities with at least one million people! If just five percent eat turkey, we’ll see huge increases in soybean meal usage and exports. Currently, Mexico is the largest importer of turkey.

Animal Agriculture under Attack

While at the Expo, a large number of us attended a session titled, “Animal Agriculture under Attack.”  Blake Hurst, a Missouri farmer, author and vice president of the Missouri Farm Bureau Federation, provided a farmer’s perspective and refuted false statements that have been made in the media concerning commercial agriculture. “Agriculture has made decisions that we can be proud of. We can win this argument on their battlefield, if we but tell our story,” Hurst told the audience. He also said, “We can’t let others define us. We must read, open up our farms, open up our pocketbooks… and we must learn to stick together as an industry.” For more details view his article, “The Omnivore’s Delusion,” that appeared in the Journal of the American Enterprise Institute. Here’s the link: http://www.american.com/archive/2009/july/the-omnivore2019s-delusion-against-the-agri-intellectuals.

Also speaking was Dr. Wes Jamison, associate professor of communication, Palm Beach Atlantic University. He explained that the Humane Society of the United States’ (HSUS) campaign to demonize agriculture uses a multi-pronged approach that includes: legislation, retail activism, direct action and proselytism. He notes that HSUS has 12 million members and a budget of $222 million. “The Society’s ‘Animals and Religion’ campaign tries to make a connection between people’s faith and food, their spirituality and their sustenance,” says Jamison. “They’re trying to make people feel that eating meat is immoral.”  He went on to say, “Agriculture cannot use science and economics to win this battle.  It needs to respond with an emotional appeal as well.” He suggests using a counterstrategy that differentiates between ‘companion animals and cuisine’ and gives consumers permission to eat meat without feeling guilty. He also believes that showing the messy, dirty parts of real agriculture and food processing can “inoculate” people against images shown by animal activists.

Soybean grower Jeff Tank of Hayfied, Minn. found the discussion thought-provoking. “We need animal agriculture in our country. If they are being attacked, we need to help them out or there will be huge fallout for all of us farmers,” he says. “We need to be activists for agriculture and educate the public on what’s really happening on our commercial farms.”

Panamax Ship at Bunge Export Terminal

A Panamax ship at the Bunge terminal.

A Panamax ship, like this one that we saw at the Bunge export terminal in Destrehan, La., will hold two million bushels of soybeans, or the production from about 50,000 acres!  Panamax ships are the largest ships that can pass through the Panama Canal. This ship had one million bushels of soybeans on it.

The barge in the background at right contains soybean hull pellets that will be loaded onto the Panamax ship.

The barge next to the ship has soybean hull pellets from the Bunge soybean crushing plant that will be loaded onto the ship for export. Bunge is the only export elevator with a soybean processing plant at the terminal. It crushes 2.5 barges of soybeans a day. All of the pellets, the oil and soybean meal from this crush plant are exported.

The Bunge terminal can unload 22 barges in 24 hours. It can load a barge with 50,000 bushels in about 50 minutes. Every day, up to one million bushels of grain is shipped in and one million bushels of grain is shipped out of the facility.

Back to Minnesota

Our team flew back to Minnesota on Friday with a much better understanding of how the soybean checkoff works to build international markets for U.S. soybean growers.  We also made a lot of great friendships and connections on the trip, among ourselves and those we met from around the world. Thanks for following our trip on this blog.

Tuesday, a trade team of 20 Chinese buyers toured the Port of New Orleans and ate lunch with our group. The trade team included representatives from feed, poultry, pork, and other agricultural companies in China.

“I really enjoyed being on the bus with the Chinese team and talking with them. I was pleasantly surprised by their strong interest in all aspects of our farms from business structure and financing to production practices and grain marketing,” says Kent Bosch, a soybean grower from Montevideo, Minn. “I felt like we really made a connection with them.”

The Chinese trade team with the See For Yourself team at the Port of New Orleans.

Every fourth row of U.S. soybean production is exported to China and the market continues to grow. China is the number one poultry producer in the world. It also produces 70 percent of the world’s aquaculture and half of the world’s pork. Twenty years ago, almost no soybean meal was imported by China.

Thursday night we met with the trade delegation from the Mideast at a reception while attending the International Poultry Expo in Atlanta, Georgia. Our group enjoyed meeting representatives from the feed and poultry industry from Turkey, Egypt, Iraq and several other countries.  The reception was a great success with everyone reluctant to see it end. There was great interaction among the buyers and the Minnesota soybean growers and livestock producers.

Several foreign buyers asked some of the Minnesota farmers if they could buy soybeans direct from them. The amounts they wanted to purchase were staggering to the growers. “Two guys from Egypt who raise chickens asked me if they could buy 500,000 tons of corn and 200,000 tons of soybeans directly from me! I was amazed,” says Bruce Schmoll a grower from Fairmont, Minn. who is also on the board of the Minnesota Soybean Growers Association.

Turkey and Egypt are the top two export markets for U.S. soybeans in the region. Together they buy two million metric tons of soybean products, annually. The region’s soybean and soybean meal purchases over the past five years have grown from less than two million metric ton to 3.5 million metric tons. Turkey produces 1.2 million metric ton of poultry meat.

The Zurns show the Egyptian team photos of their farm.

“Twenty years ago, farmers in the region didn’t know that soybeans and corn should be used in poultry diets for faster growth,” says Sinan Goker, a commercial specialist from the American Soybean Association who works in the region. “The checkoff dollars have helped us educate people.  We bring teams from the region to the U.S. to visit companies, universities and expositions like this International Poultry Expo.  We also send consultants in nutrition and marketing to the region to share their knowledge and promote the use of soybeans in diets.”

There were 20 Iraqi representatives at the event and two times that many had wanted to come, but were not able to due to heightened security just prior to the trip. We learned Iraq is eager to rebuild its poultry and food industry as the country becomes more secure. “Our aim is to increase business ties between the U.S and Iraq,” says Mohammed Ibrahim, who works for the U.S. Department of Agriculture’s Foreign Agricultural Service in Baghdad. “It’s important for the Iraqis to see American civilian faces and get to know them personally.”

“When you haven’t had the opportunity to meet people from another country your impressions are different than once you’ve met them.  Then you realize that you have a lot more in common than you thought,” says Belinda Sanders, a soybean grower from Benson, Minn. attending the Mideast trade reception. “I feel like we really accomplished a lot and the impressions we made will really make a difference to our trade relations.”

“It was impressive for our group to meet these foreign buyers and talk with them one on one. We were able to put a face on our product. Building these relationships is so important because we won’t survive if we rely on our domestic market alone,” says Schmoll.

John Zimmerman, a turkey producer and director for the Minnesota Turkey Growers Association and Minnesota Turkey Research and Promotion Council agrees, “It’s important to build trade relations. You never can have too many revenue streams for your product. The Minnesota Soybean Growers do a good job of this and I appreciate them working to understand all end users of their product.”

The U.S. Soybean Export Council, supported by the Minnesota soybean checkoff, works on market development and promotes soybeans in 80 countries with 125 representatives worldwide.

Minnesota growers talk with a soybean breeding manager with Semillas Pioneer Chile.

Farmers love nothing better than to stand in a soybean field between rows of a good-looking crop, and talk. By those criteria alone, Thursday was a perfect day for members of the Minnesota Soybean Research and Promotion Council’s “See for Yourself” mission delegation as we visited the winter nurseries of two private-sector seed companies.

Earlier in the week North Dakota Soybean Council member Monty Peterson of Valley City, North Dakota, visited the Syngenta (Green Seed) facilities where the North Dakota Soybean Council supports variety development research.

On Thursday the delegation visited the Semillas Pioneer Chile research station, as well as the Monsanto research station. Our delegates were hosted to presentations about the companies’ seed development programs then toured the sites to get a first-hand look at the operations.

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  See for Yourself delegates inspected some of the 800+ crossings at the Pioneer breeding facility

  Pioneer has a well-established breeding and commercial seed operation in Chile. On the ground here since the early 1970s, Pioneer operates three separate stations, cultivating approximately 300 hectares and producing corn, soybean, canola and sunflower seed for various markets worldwide. In 2009, Pioneer’s Chilean operations produced 1.5 million units of corn seed alone.

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  Monsanto breeders answered questions about their new soybean program in Chile

  Monsanto is a more recent arrival in Chile, beginning in 2003 with $144 million in seed produced through its nurseries and “counter-season” commercial seed growing program in Chile, and boosting that number to $330 million by 2008, with 60% of those seed sales coming from corn.

Chilean “counter-season” seed growing operations are a critical for delivering new genetic technologies to Minnesota and other US growers more quickly. Seed grown in the southern hemisphere during our winter time can be harvested and processed for planting in the US that same year. Companies may operate several counter-season operations (e.g., Monsanto has farms in Hawaii and Puerto Rico), in effect gaining 2-3 growing seasons in one year to further accelerate the breeding and trait development process.

Commercial seed producers in Chile plant in late November or early December and harvest in late March or early April. Each year, the pressure is on to grow, process and deliver the new season’s seeds in time for planting in U.S. markets. Shipping time from Chile to destinations in Minnesota can run 12-16 days, so time is extremely tight for the Chilean seed producers.

A cooperative system is in place to help the nearly 20 seed companies in Chile coordinate land use and manage the isolations required for the various crops. The Chilean seed producers work closely with Chilean officials at SAG (agriculture ministry) and U.S. officials at APHIS to insure that all seed produced in Chile is grown and exported in compliance with both Chilean and U.S. regulations.

Check-off funded research is the foundation

A Pioneer "crosser" documents her most recent attempt.

The varieties produced in the counter-season programs in Chile benefit growers once new genetics are moved out of the lab and into the seed purchased by growers. The vital work done by Dr. Orf and his colleagues at public research institutions provide the critical pathway necessary for new genetic traits to become incorporated in the germ plasm that serves as the foundation for commercialized soybean varieties.

Steve Commerford, a consulting agronomist with the Minnesota Soybean Research and Promotion Council talked about the broad influence of the genetic and agronomic research funded by Minnesota soybean checkoff dollars.

“Many people may not realize that the breeding, trait screening and agronomic testing being done by Dr. Orf and other university researchers represents the primary gateway for new genetic traits to reach the marketplace,” said Commerford.

Commerford explained that for new genetic technologies to reach soybean growers , checkoff-funded university researchers must first breed and develop the germ plasm (parent material), and then later screen commercial lines to make sure the desired traits (e.g., insect resistance, drought tolerance, IDC tolerance, white mold tolerance, etc.) are expressed and functioning in the varieties made available to growers.

“What we are seeing here in Chile, whether at the University of Minnesota’s winter nursery or at the private companies, is the end result of the foundational research funded by soybean checkoff dollars,” said Commerford.

University researchers blazed the trail in Chile

The winter nurseries are critical to moving new genetics into commercial production quickly. Minnesota researchers have been operating counter-season research and breeding programs in Chile continuously since the late 1950s. Commercial companies followed later once it became apparent that the counter-season nurseries were viable for accelerating the development of new genetics.

Bryce Nelson, a veteran crop consultant in southern Minnesota and former president of the Minnesota Independent Crop Consulting Association, said he was impressed with the foresight of University of Minnesota researchers Dr. Gene Lambert and Dr. Jim Orf.

“These researchers established the winter nursery in Chile and continued to develop the breeding programs here when no one else was doing anything like it,” said Nelson, “and it’s important that we continue to support the efforts of researchers like Dr. Orf and Dr. Naeve and others as they anticipate and explore new avenues of soybean technology.”

MSRPC research chairman Gene Stoel observed that University researchers have paved the way in Chile, not only by developing and multiplying the genetics so important to the success of our soybean growers, but also by developing the best practices and human resources that are making significant contributions to the industry.

“It was interesting to see as we toured the Pioneer facility and the Monsanto facility that the basic protocols they use to carefully manage the breeding programs are essentially the same protocols pioneered and taught by Dr. Orf and his colleagues at other public research institutions,” said Stoel, “In fact, many of the leading plant breeders working for private industry here and elsewhere are products of the university research programs funded by soybean growers.”

Minnesota delegates in downtown Santiago, Chile.

Delegates of the Minnesota Soybean Research and Promotion Council’s “See for Yourself” mission to Chile covered a lot of ground Wednesday, visiting the US Embassy’s agricultural attaché, the Trade Chile consultancy, the Chilean agricultural service (SAG) and the Chilean mega meat producer AgroSuper.

It was a big day. Here’s the big picture (as we see it):

Chile is a world player in agricultural trade

Chile is has a relatively small population (about 17 million), but boasts an economy that claims Latin America’s top ranking for market access and business development potential. In fact, Chile has the most open economy in the world, with 50 free-trade agreements and access to 85% of the of the world’s GDP (Source: TradeChile and www.investchile.com).

Agriculture is a significant segment of the Chilean economy, with $4.6 billion (US) in sales in 2009, representing about 5% of the country’s GDP. Agriculture officials at the US Embassy gave us some facts to consider:

• There are more than 330,000 farms in Chile with about 2.5 million acres under cultivation.
• Chile is the top-ranked exporter of fresh fruit in the southern hemisphere, and the number one exporter of grapes in the world. Chile is the world’s 5^th largest wine exporter.
• Chile’s salmon industry will likely soon surpass Norway’s as the world’s largest exporter of ocean-farmed salmon.

Officials from the Chilean agricultural services ministry discussed agricultural import regulations with the Minnestoa trade mission delegation.

We also visited Chile’s SAG (Agricultural Service), which has regulatory jurisdiction over border inspections and the protection of Chile’s agricultural and plant and animal resources. We did some rhetorical tap-dancing around the issue of transgenics, but the take-home message was that while genetically enhanced materials are carefully restricted to plant breeding and seed export, the incoming administration in Chile may be more open to allowing the domestic use of such products in the future. We learned that Chile’s SAG has already established a good track record of cooperation on import/export controls and inspections with their US counterparts, which has laid the foundation for growing the trade relationship.

Chile represents a significant opportunity

What does all that mean for Minnesota growers? Plenty. As we moved through the meetings of the day, we pieced together a picture of a country that is gaining ground as both a competitor and customer. The picture really began to crystallize as we toured AgroSuper, a major producer of Chilean meat and food products, and one of the country’s largest agriculture product exporters.

Bill Gordon, a crop farmer and pork producer from Worthington, Minnesota, said it was very helpful to hear first-hand what Chilean producers are doing.

“It’s challenging because it seems we often only get part of the story,” said Gordon, “But that’s why it’s so important we do trips like this. We need to meet face to face, and shake hands with the people who are actually buying our product. If we can get the real story, and see how they are managing their business, then we can make better decisions for our business, including determining how best to tailor our product to fit their needs.”

Here’s the story of AgroSuper in Chile:

• The privately-held company owns a fully integrated pork production system that includes 130,000 breeding sows, and nurseries weaning 8,000 pigs per day. They currently finish 3.3 million of their own pigs every year, and operate two dedicated feed mills with a capacity of 100,000 metric tons/month.
• 

  See For Yourself mission delegates looked sharp for their tour of AgroSuper's pork processing plant.

  They slaughter 12,000 pigs/day in state-of-the art facilities. We toured their flagship pork processing plant today (about 1 hour south of Santiago). It was truly impressive.

• Here’s the scary part (at least for competing pork producers): they will soon add a new integrated system of breeding, finishing and processing units, that will bring in another 130,000 sows and effectively double their export volume. AgroSuper already sees annual pork sales of $600+ million and exports pork to 50 countries.
• Here’s the cool part: That’s just the pork production. They also process 2.6 million chickens/week and 140,000 turkeys/week, and who knows how much salmon (a lot).
• Now this is the very cool part: Chile is a net importer of feed grains. AgroSuper, and anyone else feeding hogs, birds and fish in Chile must import most of their feed. In fact, AgroSuper imports 65% of its feed grains, and that spells significant potential for Minnesota soybean and corn growers.

The take-home message? Chile might have greater potential as a trade partner for Minnesota than was once thought.

Lance Peterson, a farmer from West central Minnesota who serves as a director for both the Minnesota Soybean Growers Association and the American Soybean Growers Association, noted that AgroSuper’s spokesman revealed some very important information about how they source and manage their feed ingredients.

“They told us they source a large majority of their feed grains from the U.S. (95% of their corn), and that they prefer to purchase from the U.S. because of the high quality of the product and reliability of the source. That’s very encouraging news,” said Peterson, “Interestingly, we were told that GMOs were not really a concern because their customers were not asking for GMO-free product anymore, and that represents a shift from what is generally reported,” said Peterson.

AgroSuper raises 3.3 million pigs a year and exports pork products to 50 countries.

The AgroSuper spokesman also told the group that they ship most of their U.S. grains from the West coast. “That is very good news for growers in the upper Midwest,” said Peterson.

“We also found out that these guys are importing whole beans, running their own crushing mills and extruding oil for use in their own rations.”

Doug Diekmann, a crop farmer and pork producer from Beardsly, Minnesota, also found the AgroSuper presentation enlightening and encouraging.

“It was interesting to see how integrated their pork production system is,” said Diekmann, “But also interesting to know that they face some of the same challenges we face in the U.S., like labor costs and environmental regulations. And though we compete on the pork production, it was good to know they see us as a reliable source of quality soybeans.”