Two economists from Iowa stated Tuesday that farmers should be cautious about rising inflationary pressures on farm profits at the Iowa Renewable Fuels Summit.
Seth Meyer, chief economist at the USDA, said during a roundtable discussion focused on the economic outlook for agriculture, that inflationary pressures have boosted farm input costs which farmers won’t be able to recoup until they sell their crops in the fall.
Meyer stated that soybeans and corn are expected to remain in demand as feedstocks for renewable fuels like biodiesel and ethanol. He stated that although export demand for corn from China will be supportive of farm prices in the next months, supply chain issues and other effects from the Covid19 pandemic will have a significant impact on farm prices.
Ernie Goss (Chair of Regional Economics at Creighton University in Omaha NE) agreed with Meyer about the long-term threat of inflation.
“A little bit of inflation is good,” Goss stated, if it stays in the two- to three-percent range. An inflation rate of 7%, he warned, isn’t good for agriculture or any other segment of the economy. Goss advised those who are in need of borrowing money to do so at a fixed rate and not an adjustable rate because rates will rise in the near future.
Goss stated that farmers will be affected by supply chain issues and rising prices for fertilizer, as well as rising costs for other inputs.
READ MOREDespite skyrocketing input cost, 2022 could be profitable.
Carbon capture on the farm
Iowa State University agronomist, speaking at the renewable fuels Summit, said that his research has shown farmers can reduce greenhouse gas (GHGs), by capturing and storing carbon on their farms.
By using cover crops and reduced tillage techniques and by incorporating livestock manure as a crop nutrient, Marshall McDaniel, an assistant professor in Iowa State’s agronomy department, said farmers can utilize carbon capture techniques to help agriculture reduce its carbon footprint.
According to his Iowa State web page, McDaniel’s research team seeks to understand how soils and plants are affected by management and the environment. “They use this understanding, under the framework of soil health, to make agriculture more regenerative and sustainable,” according to the web page.
McDaniel mentioned that he conducted one research project with the help REG of Ames (IA), which examined the impact on soil fertility of crude glycerin. This biproduct of biodiesel manufacturing can be used to enhance farm sustainability.
McDaniel responded to a question by the audience after his presentation. He stated that one estimate showed that the soil could have twice the amount of carbon it has today.
McDaniel explained that cover crops, no-till technology, and manure applications can all increase the carbon sequestered in farmfields.
Bill on Biofuels Access
Kim Reynolds, Iowa Governor, opened the conference by stating that she supports efforts to increase the sequestration carbon on farms because it can be a boon for farmers.
Reynolds also praised her proposal, the 2022 Biofuels Access Bill, which was introduced in the Iowa legislature. The measure proposes making a blend of 15% ethanol in gasoline (E15) available statewide by 2026 and updates Iowa’s existing E15 promotion tax credit to nine cents a gallon year-round through 2025.
Reynold indicated that Iowa lawmakers are currently examining her proposal. She urged supporters of biofuels and Washington, DC legislators to contact them to let them know that they have widespread support for biofuels.
Reynolds told Summit attendees that renewable fuels contribute more than $4 billion to Iowa’s economy. The renewable fuel has widespread support in Iowa, Reynolds noted, citing surveys that report that 85% of Iowans think ethanol is critical to state’s economy.
“We have to fight” because the Environmental Protection Agency (EPA) has worked against biofuels, the governor said, by favoring electric vehicles over biofuels. “We need to push for an all-of-the-above fuels policy,” Reynolds stated.
Source: Successful Farming