A farm-supply co-op view of ethanol
They are like first cousins who are often
mistaken for each other. Both are farmerowned
co-ops with headquarters offices
practically next door to each other in
Columbia, Mo. Both provide vital supplies
and services to their members.
But MFA Inc. and MFA Oil are two separate
businesses. MFA Inc. provides members
with fertilizer, seed and livestock feed,
as well as grain-marketing services. MFA
Oil deals mainly in gasoline and diesel fuel.
Both co-ops have much at stake in the
region’s rapidly evolving renewable fuels
economy.
At MFA Inc., the reaction to ethanol
depends on which side of the building you
are on. Ron Utterback, vice president of
crop protection, farm supply and seed, is
optimistic. “We could definitely benefit
from it, depending on the speed of its development
and how fast we adapt.”
He has little doubt that the state’s corn acreage will
increase sharply as a result of ethanol development,
probably at the expense of soybeans. He also expects
that some land in the CRP conservation program will also
be put back into production. But that will likely be
acreage that “really should have never gone into the CRP
to start with,” he says.
For MFA, more corn acreage means more sales,
because corn requires more fertilizer and crop protectants
than soybeans, Utterback says. Typically, two acres
of soybeans are planted for every acre of corn in the
state. So there is room to expand corn without even
requiring that more land be put into production. Utterback
says he thinks that the planting pattern will shift closer to
a 50-50 corn/soybean split, more typical of other Corn
Belt states.
When it comes to soil types and micro-climates, Missouri
is a very complex state. Few know that better than
Utterback, who directs MFA’s efforts to tailor its seed and
fertilizer products to the state’s unique growing regions
(it also supplies producers in neighboring states). MFA
has climbed to the top of its market because its products
have been adapted over the past century to the region’s
many micro-environments and soil classifications, he
notes.
The emergence of ethanol is not the only factor
prompting more acres to shift to corn. New seed varieties
that allow corn to thrive on drier, “tighter” soils have also
been prompting some expansion of corn planting. So
Utterback sees potential for this traditionally corn-deficit
state to increase its corn crop considerably, and for MFA
to increase its business right along with its members’
corn crops.
Livestock concerns
On the other side of the MFA Inc. building, Dr. Kent
Haden, vice president of livestock operations, has some
concerns. He doesn’t want to be the rain cloud over the
ethanol parade. However, he gets paid to look at the
health of the state’s livestock industry and factors
impacting it. Ethanol is most definitely such a factor, so
he has been studying its potential impact in a state that
ranks second only to Texas in the size of its cow-calf
herd (2.1 million cows).
His main concern is that if increased corn planting
doesn’t take up the slack, competition for corn could
drive prices so high that it could force some of Missouri’s
livestock out of state – perhaps even to Argentina or
Brazil. “When livestock goes, usually it’s poultry first,
then hogs and then cattle [which corresponds to each
segment’s dependence on corn for feed],” Haden says.
Haden views dried distillers grain (DDG) as a good quality
protein ingredient for up to 20 percent of feed for
cattle. But DDG has turned the feed picture somewhat
topsy-turvy. Protein has long been the main nutrient cattle producers sought in their feeds. However, cattle on a heavy DDG ration get plenty of protein, but may not be
getting sufficient starch.
Starch, of course, is stripped from corn in making
ethanol. Without sufficient starch, beef does not marble
properly — especially not the way the Japanese and
some other Asian export markets like it, Haden says. And
there’s the rub, since corn is by far the most cost-effective
source of starch for cattle, Haden says.
Dressed carcasses of hogs fed a heavy DDG ration
also typically weigh about 6 pounds less than corn-fed
hogs, based on University of Missouri data, because
more of the growth goes to the guts, notes Haden. He is
not aware of any similar data for cattle. MFA is producing
some special mineral supplements it recommends for
producers feeding high-DDG rations.
Some have suggested that new feed yards could open
near DDG sources in Missouri. Haden says he hopes it
happens. But, he adds, it will be tough to accomplish
because 30 Missouri counties have adopted stricter environmental
regulations that make it hard to keep more
than 300 head confined in one location. “And more counties
are adopting those regulations.” The same regulations
will likely limit growth of the state’s dairy industry,
he notes.
Oil co-op sees gains
Things are more clear-cut for MFA Oil. Tom May,
director of marketing, says the co-op is bullish on ethanol
and is doing all it can to educate consumers about the
advantages of its use. MFA Oil sells a 10 percent ethanol
blend at virtually all of its 77 Break Time convenience
stores and 166 un-manned retail outlets. E85, a blend of
85 percent ethanol and 15 percent gasoline used in flexfuel
vehicles, is sold at 30 of those locations. Various
blends of biodiesel are also available at many outlets as
well.
Most of MFA Oil’s retail outlets are in rural Missouri, as
well as parts of Arkansas, Iowa and Oklahoma. “So the
health of rural towns is absolutely critical to the health of
our cooperative. We think ethanol is making a positive
economic impact on the communities we serve,” May
says. MFA Oil was recently presented with the Paul Dana
Award (named after the race car driver who got ethanol
approved for use in the Indy 500) by the American Coalition
for Ethanol, designating it as its marketer of the year.
MFA Oil has entered into a partnership with Mid-Missouri
Energy (MidMo) under which it is selling E85 for 20
percent less than regular gasoline. Flex-fuel vehicles get
5 to 20 percent less fuel mileage, so a 20-percent reduction
in price makes E85 a good value for the cooperative’s
customers.
“MFA Oil is excited to partner with another farmer
cooperative to bring more value to Missouri’s corn crop
and economy. We felt working with MidMo was a great
way of keeping more ethanol dollars at home,” says May.
MFA Oil gave away a Ford F-150, flex-fuel pickup
truck last Fourth of July as part of an ethanol-education
campaign. At that event, May says he “lost track of how
many people stopped by our booth and said they would
be filling up with E85 now that it costs 20 percent less
than unleaded gasoline.” He also sees signs that consumers
are beginning to understand that E85 is better for
the environment because it burns cleaner than fossil
fuels. (E85 emissions contain just 1 part per million of
nitrogen oxide vs. 9 parts per million for gasoline,
according to the October issue of Consumer Reports
magazine).
May says he finds it “almost mind-boggling that it took
the nation so long” to finally get a head of steam going
behind its biofuels industry. In Missouri, there are 120,000
flex-fuel vehicles, a number that should be steadily going
up as consumers get behind homegrown fuels, May says.
The state of Missouri has passed a law mandating that by
2008, all gasoline in the state be blended with 10 percent
ethanol, which will encourage further development of the
state’s ethanol industry.
“Ethanol is not the only answer to our energy needs,
but it is one thing that is working out there right now,”
May says. “Cellulosic ethanol will probably be playing a
role in the future, too. With sky-high gas costs, you know
the market will find a way to produce more alternative
fuels.”
— By Dan Campbelll, editor
“They’re the good guys!”
High oil prices, the war in Iraq and other factors
prompted a group of protestors to set up a
picket line outside a Big O Tire-Petro Mart gas
station in Columbia, Mo., in June.
But when the leader of the group, University of
Missouri librarian Rebecca Schedler, learned that
the station is owned by MFA Oil, she redirected
her troops, according to a report in the Columbia
Daily Tribune. “That’s a farmers’ cooperative.
They’re the good guys,” she said.
The picketers instead set up shop outside the
gas station of a major national oil company.
Chalk up another “cooperative advantage.”
