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Agrimarketing : November December 2007
30 AgriMarketing November/December 2007 When first told that ethanol was named AgriMarketing maga- zine's 2007 Product of the Year, a representative of one of the runners up (see page 40) said, "Who can argue with that!" Indeed. Here's an agri-marketer 's review of the cascade of events on how the prod- uct that is leading the biofuel revolu- tion has impacted the agricultural and rural economies: • Production of ethanol doubles from 2002 to 2006 and is expected to increase an additional 50% this year. It currently is utilizing 2.15 billion bushels of corn --- nearly 18% of the nation's production. • In September 2006, corn prices shoot up by nearly 75% while other crops prices' keep pace with the increase. • Responding to the market's demand, corn producers increase planted acres to a near record 93 million --- a 14 million acre increase over 2006 plantings. • Much of the increase comes at the expense of soybean (-10 million A) and cotton (-5 million A). • To assure top yields, corn producers utilize the latest technology, including planting hybrids with stacked traits, optimizing soil nutrition, use of fungicides, weed control, and upgrading their equipment lines. • Increased purchases by corn producers in 2007: Seed and traits: $805 million Plant nutrients: $1,050 million Crop protection: $414 million Fuel: $577 million Interest: $92 million • Through September, sales of 40+ hp tractors are up 6%, a $517 million increase; combine sales are up 15%, a $125 million increase. • Demand for grain bins and handling equipment is at an all time high. • Rail lines, highways and other infrastructure are being re-built. The construction of vehicles to haul grain, ethanol and its byproducts are booming. • Businesses with a significant interest in agriculture (farm equipment, crop inputs, etc.) stock prices have nearly doubled over the past two years. • Harvesting near record 2007 crops, net returns (before land costs) for corn, soybean and wheat producers will increase a staggering $29 billion this year. • Land rents jump by 30% to 50%, providing an addi- tional $13.5 billion to the one million landowners who own, but don't operate, farmland. • In the 130 communities with ethanol plants, the average economic impact in each community is more than $46 million during the construction phase and well over $10 million thereafter. Nationwide, the ethanol industry has directly created more than 160,000 jobs in rural America. • Ethanol has provided the stimulus to car manufacturers to expand the marketing of Flex-Fuel vehicles. All this from a product that dates back to the 1800s when fuel sources were being developed for mechanical transportation. In fact, Henry Ford's first automobile in the late 1880s was designed to run on either pure ethanol or gasoline, according to the Ethanol Promotion and Information Council's (EPIC) Executive Director, Tom Slunecka. "His vision was to 'build a vehicle affordable to the working family and powered by a fuel that would boost the rural farm economy,'" Slunecka says. EPIC, headquartered in Omaha, NE, is the trade asso- ciation that is charged with building a consumer brand for what had been considered a commodity (see sidebar) and submitted ethanol for consideration as Product of the Year. PRODUCT OF THE YEAR ETHANOL: FUELING AGRICULTURE AND RURAL COMMUNITIES' RENAISSANCE by Lynn Henderson, Editorial Director EPIC films one of its TV commercials which were broadcast on ESPN during the IndyCar Series races. The commercial's message is that ethanol is safe for the consumer's car, it is good for the environment, and reduces U.S. reliance on imported fuel.
2008 Marketing Services Guide