March 24, 2006

ADM CEO - Biofuels to shift agriculture markets

Food crops are not the only feedstock for the fermentation of ethanol. Development of cellulosic ethanol production methods for the conversion of not just crops but also switchgrass, agricultural waste, and other forms of biomass is gaining attention as the most promising field of renewable fuels research.

The development of enzymes for breaking down cellulosic sources (such as other crops and switchgrass) and agricultural waste (like corn stover and rice straw) broadens the scope of what farmers can grow to satisfy ethanol production demand. Enzymes also provide a means for treating some forestry waste for conversion to ethanol. However, unblended sources require specific enzymes to be most effective.

Syngas fermentation is, however, the most universal biomass conversion technology because gasification allows any carbon-bearing resource to be used as feedstock. Perhaps, more importantly, the feedstock for syngas fermentation can be blended - even with coal and other fossil fuels - for maximum yield. As a result, agricultural communities can balance crop production and profitably dispose of waste (even during bad years) in concert with nearby forestry and urban waste sources of biomass. This will free agriculture to produce more food crops and use less petroleum-based fertilizer.

Below are excerpts from a marketwatch article reporting what the CEO of Archer Daniels Midland has to say about impact of demand on agriculture. ADM is the biggest U.S. producer of ethanol.


ADM CEO says biofuels to shift agriculture markets

WINNIPEG (MarketWatch) -- The growing international renewable fuels industry will cause major shifts in the global grain and oilseed markets, as many new dynamics never before faced work themselves out through the supply chains, said Allen Andreas, chairman and chief executive of Archer Daniels Midland (ADM).

Citing the increasing demand for renewable fuels, due to environmental concerns and supply issues with traditional energy supplies, Andreas said global ethanol and biodiesel production was on the rise, with the U.S., Brazil and China accounting for the most notable production increases. Andreas gave a Monday evening speech as part of the Canada Grains Council's annual meeting being held in Winnipeg through Tuesday.

At the same time, the global population is also growing and with it, food demand, said Andreas. He forecast the global demand for food and livestock feed to double within the next 25 years.
While there have been "food versus fuel" arguments put forward claiming that increased renewable fuel production would take away from food for human consumption, Andreas did not think that was the case. Rather, he thought distribution of resources was the primary issue when it comes to feeding the hungry.

As far as agriculture and the growing renewable fuels industry is concerned, Andreas said he sees the markets changing dramatically over the next few years as industry participants, such as ADM, work out how all the various byproducts relate to each other.


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