Despite record income, farmers are looking at hard times ahead. Just finding a place to market rural America's bounty is becoming an issue. After being hit by high commodity prices and low meat prices Pilgrim's Pride, the nation's number one poultry processor, declared bankruptcy this week. This came on the heels of the nation's number one ethanol producer, Vera Sun, declaring bankruptcy at the end of October.
For grain farmers, losing both venues was bad enough but producers growing corn for ethanol received an additional slap in the face. The high profile Indy Racing League, which uses ethanol to power their multi-million dollar race cars, made a deal with Brazilian ethanol producers for fuel. Andrew Batt explains.
The Indy Racing League's multi-year arrangement with domestic ethanol producers has digressed in recent weeks to a series of accusations and finger-pointing. Anger and resentment among American agricultural circles was stoked when the Indy Racing League, or IRL, reached a corporate underwriting agreement with Brazilian ethanol producers. The move comes after three years of full-throated support for domestic corn-based ethanol. A 100% blend of home-grown ethanol fueled the 2007-2008 racing seasons at tracks such as the Iowa Speedway in Newton, Iowa.
Craig Flosse, President Iowa Corn Growers: "We were dissapointed. I think some farmers feel betrayed."
Craig Flosse, President of the Iowa Corn Growers Association, was surprised to discover IRL was severing its relationship with domestic ethanol and embracing foreign sources of the alternative fuel.
Craig Flosse, President Iowa Corn Growers: "It just doesn't seem right for an American racing league to support foreign energy…."
But the sentiments of Midwestern farm groups were not echoed by IRL President Terry Angstadt.
Angstadt says the former chief ethanol sponsor of the IRL pulled its underwriting support earlier this year. The Ethanol Promotion and Information Council, or EPIC, had sponsored multiple facets of the Indy Racing League. A promotional arm of the U.S. ethanol industry, EPIC has recently merged with a similar advocacy group known as Growth Energy.
Terry Angstadt, IRL President: "They supplied our fuel and sponsored one of our teams. We were told mid-year that they would not be able to consider future support."
Angstadt's comments that it was EPIC – not IRL – that terminated the arrangement, were reaffirmed by an EPIC spokesperson. EPIC Executive Director Toni Nuernberg told Market to Market:
"The EPIC Board of Directors made a strategic decision to apply the same efforts to the success realized with our work in motorsports to new priorities impacting the industry…In difficult financial times, all industry sectors have setbacks but the ethanol industry continues to have a bright future as part of America's sustainable, renewable energy portfolio and very importantly, is currently the only reliable alternative to gasoline."
EPIC and Growth Energy also informed Market to Market the organization would not seek future corporate sponsorship of the IRL. The dust-up over foreign ethanol in a domestic racing league has caused a public relations firestorm for IRL President Terry Angstadt.
Terry Angstadt, IRL President: "Our "back-turning" has ranged from the American farmer to all veterans because the Indy 500 runs on Memorial Day. It is frankly ridiculous with the position being taken. But we understand the challenges facing the ethanol industry. We will continue to support the ethanol industry and the only thing changing is the source of the fuel."
The symbolic corporate support of Brazilian ethanol comes at a critical time for U.S. producers. Recent headlines concerning bankruptcy for Midwest ethanol producer VeraSun and looming consolidation rumors have sent shockwaves through the burgeoning industry.
But at least two high-profile IRL events will use domestic ethanol as a fuel source next season. Angstadt claims the top-rated Indy 500 and the Iowa Corn 250 both will use American ethanol.
Terry Angstadt, IRL President: "It is interesting to see the reaction as the Indy Series continues to run a renewable and green fuel that leaves no carbon footprint especially when contrasted to other motor sports that use a petroleum based fuel. It is frustrating but we are confident in the direction we are going and we are staying consistent in supporting the ethanol industry."
But for some farm groups, that endorsement does not go far enough. The President of the Iowa Corn Growers Association says the group has received multiple complaints from farmers and is directing their concerns towards the Indy Racing League.
Craig Flosse, President Iowa Corn Growers: Closing comment on issue….and future involvement