How do you keep farmers farming?
The key will be finding new markets — and nothing matches the size and scalability of the biofuel market, according to experts who spoke at this week’s Great Lakes Sustainable Fuels Symposium.
Hosted by the Corn Marketing Program of Michigan and partners, the event in Dearborn brought together ag and industry leaders to focus on positioning Michigan as a leader in sustainable fuel production, including sustainable aviation fuel (SAF).
For farmers, the importance of sustainable fuel production boils down to demand.
“Nearly 100 years ago, we produced about 2 billion bushels of corn across 106 million acres,” said Matt Frostic, a Sanilac County Farm Bureau member who will take over as president of the National Corn Growers Association (NCGA) in less than a month.
“Today, we produce about 17 billion bushels on about 90 million acres, give or take.”
It’s a lot of bushels that came with a lot of financial losses. NCGA estimated a loss of $0.93 per bushel for corn growers across the U.S. last year.
While there used to be talk of how farmers would have to meet demand to feed the world decades from now, that’s not the story anymore, S&P Global Head of Agribusiness Accounting Juan Sacoto said during the symposium.
The story now, he said, is how to keep farmers going.
“I think the U.S. is the epicenter of this, but it is a global problem,” Sacoto said.
“If we do nothing, if we let the world go just as it is now, there’s great probability that essentially we have to let some acreage go down,” he later added. Sacoto painted a bleak picture of how falling prices drag down profitability, then investment and innovation, before acreage declines with it.
The case for SAF
So, how can Michigan help keep that decline from happening? The answer could be found in the skies.
As a new report commissioned by Michigan Corn states, “Michigan’s existing corn and ethanol economy is well-positioned” to develop an ethanol-to-jet hub, presenting a sustainable aviation fuel (SAF) market opportunity for the state’s growers and transportation industry.
The report makes the case for an SAF production hub and supporting campus in Southeast Michigan, where Detroit Metropolitan Wayne County Airport and the Port of Detroit sit within a single logistics footprint.
“No other location combines feedstock access, an international air gateway with an onsite refueling market, and deepwater export capacity within a 30-mile radius,” the report adds.
As the report also notes, Michigan already has systems to verify the implementation of on-farm conservation practices, with models available to estimate carbon-intensity scores for farms with verified practices. It cites thousands of farms that have already been verified under the Michigan Agriculture Environmental Assurance Program (MAEAP).
While adding incentives to SAF and biofuel production at the state level has been used in hopes of bolstering production in places like Minnesota, Delta Airlines Senior Manager of SAF Commercial Strategy Yvonne Domeier said airlines look at SAF from an economic perspective.
“It’s supply and ultimately cost, and it’s important to understand that SAF today is anywhere from two to five times more expensive than conventional jet fuel,” Domeier said before joining representatives from Growth Energy, the nation’ largest biofuels trade organization, and the executive director of the Detroit Port Authority for a panel discussion.
“From an airline perspective, how we would continue to take delivery of more staff is really going to be financially driven,” she continued, noting that incentives at the state level need to be supportive of the entire value chain — including farmers.
Domeier’s advice for farmers and renewable fuel advocates is to make their voices heard.
“Make sure that our legislators know how important the ag community is to biofuels, to sustainable aviation fuel, and that all parties need to see the value in that from a financial perspective in order for us to unlock those new markets and drive the biofuel industry,” she said.
State incentives proposed
While Michigan isn’t currently producing SAF right now, Michigan House bills 4424 and 4425 aim to change that by creating tax incentives to jumpstart production.
The bills would provide a $1.50 per gallon tax credit for SAF purchasers, producers, or blenders, while capping incentives at $4.5 million in year one and $9 million annually thereafter.
It all adds up to supporting the production of ethanol-derived aviation fuels, said Michigan Farm Bureau Associate Legislative Counsel Josh Scramlin, who noted that the bills put an emphasis on Michigan-grown feedstocks.
“Michigan is the ideal place to produce SAF, because not only are we a large corn producing state, but we have DTW, which is one of the busiest airports in the country,” Scramlin added.
“We have the crops, and we have the air traffic.”