In fact, Becker Underwood is forecasting its own global revenues will double within four years as mainstream farmers start buying more of the products they’ve been staying away from in droves for the past decade because of their perceived inconsistency and weak science.

That will drive the Ames, Iowa company’s annual sales well over $400 million, and a big chunk of that growth will come from Canada, the company predicts.

So far, farmers have known Becker Underwood — when they’ve known it at all — as an inoculant maker. The company’s Hi-Stick and Nodulator brands are market leaders in soybeans, and its pea and lentil business in Western Canada is expected to climb quickly from its current 25 per cent market share following the introduction of its Nodulator XL this year.

That’s just a start, predicts company CEO Peter Innes. Almost overnight, he says, farmers will be using more biologicals for a lot more reasons, from stronger crop emergence through to in-season disease and insect control.

"We measure these things in a lot of ways, but it all comes down to yield," Innes says. "We’re finding ways to make more yield."

Innes says the breakthrough is encapsulated in the new "bio-stacked" approach. It’s a term deliberately borrowed from the GMO seed industry. "They stack things in the seed," Innes says. "We stack things on the seed."

In the 1990s, the industry was based on applying a single fungus or bacterial agent against a specific target. "That’s unrealistic," says Innes, who says he has stopped believing in biological silver bullets. "We’re never going to get these things to work consistently as single strains."

Instead, new products combine a range of ingredients so they will work in a variety of conditions, and they’ll also be used in combination with chemical crop protection. Indeed, Innes says, Becker Underwood is in talks with the big pesticide makers who are looking to biologicals to help broaden the spectrum and reduce resistance risks with their chemicals.

With facilities in eight countries, Becker Underwood is spending $12 million a year on research and is rapidly growing that number. The company has 58 employees in Canada, with 11 dedicated to research and development.

Better, faster

Innes, whose background is in plant breeding, is a big believer in biologicals. "Nature has a solution for every problem that it creates," Innes says. "That’s how it works."

Becker Underwood now has collaborations with 110 university and government research programs to identify which natural solutions have the best potential fit for agriculture, and then it is pushing those actives into field research.

Innes says it’s no wonder it has taken time to master the technology. "There are five billion organisms in a gram of healthy soil," he says. Scientists have had to figure out which organisms help, which hurt, and which might have no impact this year, but could have huge impact when the weather is different.

Becker Underwood’s Padma Somasegaran only wishes the science could get even better, even faster. He believes science has the power to produce inoculants for corn and cereals so farmers could stop applying nitrogen.

International work on grass inoculants has ground to a virtual halt, however, because government funding has dried up. Still, Somasegaran thinks the world’s need for food will be so great, scientists will eventually solve the puzzle.

"It’s the holy grail," Somasegaran says. "It will happen."

— Tom Button is the editor of Country Guide at Ridgetown, Ont.

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Starting this year, the industry will plateau at an annual output of 15 billion gallons (56.8 billion litres), marking the end of a seven-year growth spurt that saw its corn purchases grow by an average 500 million bushels a year.

Speaking to ag economists in Ottawa last Thursday, USDA’s Joseph Glauber predicted the corn ethanol industry will hold onto its gains, but further growth is against the odds.

The main reason, Glauber said, is that corn isn’t anywhere near as efficient as feedstocks such as sugar at reducing greenhouse gas emissions.

Indeed, while a combination of U.S. subsidies and regulations have the U.S. transportation fuel sector on track to use a total 36 billion gallons (136.3 billion litres) of biofuels by 2022, corn ethanol will only qualify for the bottom 15 billion gallons of the market, Glauber said.

In fact, corn ethanol sales might be even smaller than that. Lawmakers based their targets on a 150-billion gallon transportation fuel market. Because of the 2008 recession and the purchase of more fuel-efficient cars, the fuel market has actually shrunk at 132 billion gallons.

With the bulk of corn gasohol usage capped at a 10 per cent ethanol blend, that puts a 13.2 billion gallon limit on the domestic market, Glauber said.

Current U.S. Environmental Protection Agency (EPA) standards say corn ethanol could technically be used in blends of up to 15 per cent in cars made in 2001 and later, but older cars still account for 25 per cent of U.S. gasoline sales, so gas stations are reluctant to switch their pumps.

More sophisticated blender pumps could let car drivers dial up the right blend for their cars, but installing those pumps would cost up to $1 million per station.

Washington’s 2007 Energy Independence and Security Act was passed with the assumption that new cellulosic sources would come onstream that would generate much higher greenhouse gas savings than grain-based corn ethanol.

Five years later, Glauber says, those sources are still nowhere in sight.

Ironically, that means the U.S. corn ethanol industry might lock in more exports to Brazil, since U.S. refiners may be forced to import large amounts of Brazilian ethanol made from sugarcane in order to meet new greenhouse gas standards.

It also means Washington may subsidize U.S. fuel makers to import Brazilian cane ethanol in order to meet the provisions of the U.S. law.

In Canada, Laval University economist Bruno Larue says the ethanol plateau in the U.S. should have little impact on grain prices. Based on a series of studies, Larue says price hikes over the past three years have been driven by international food demand, not North American ethanol use.

Yet Larue says it makes sense for governments to insist the ethanol industry move beyond corn. Corn ethanol produces just 1.3 to 1.6 times the energy required to grow and refine the corn, he says. By contrast, the ratio for sugar cane ethanol is 8.3 to 10.2 times.

In fact, says Larue, if Canada’s objective is to reduce greenhouse gases, governments would be wiser to stop spending the estimated $250 million a year they spend on ethanol support, and focus instead on taxing greenhouse gas emitters.

Glauber meanwhile sees some good news coming out of the U.S. ethanol plateau. "Hopefully we can start rebuilding corn stocks, which are the lowest they have been since 1973," Glauber said. "It would be good to begin to moderate feedgrain prices."

— Tom Button is editor of Country Guide at Ridgetown, Ont.

Related stories:
Corn prices: The unfortunate kernels of truth, March 20, 2012
Corn to rule at Husky ethanol plant this spring, Feb. 29, 2012
Higher ethanol blends would hit livestock sector: study, Feb. 1, 2012
Ethanol industry blamed for skyrocketing corn prices, Feb. 10, 2011

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The U.S. Department of Agriculture’s chief economist Joseph Glauber says he will be pouncing on those leaks, and he’s already betting they’ll show that despite the budget hawks in Congress, Washington won’t cut its farm spending by nearly as much as the US$3.2 billion a year that the Obama administration has recommended.

In fact, if global commodity prices start going south, the 2012 Farm Bill could be among the most generous in history.
Glauber was in Ottawa late last week meeting senior Agriculture and Agri-Food Canada and U.S. Embassy officials, and making a presentation to the new Institute for the Advanced Study of Food and Agricultural Policy on the likely shape of the new Farm Bill.

Glauber’s job is to cost out farm proposals, make predictions about how effective different options will be for getting money into the hands of farmers, and then analyze how they will impact market prices.

Glauber expects to see smaller numbers in the 2012 law, but not by much. More dramatic, he says, will be a new generation of so-called "shallow loss" crop and revenue insurance programs that will essentially guarantee many American farmers 87 per cent of their historic margins.

Early indications from Senate ag committee chairwoman Debbie Stabenow (D-Michigan) are that her committee will push for US$23 billion in savings over the next 10 years, or roughly 10 per cent on an annual basis. Glauber’s reading is that Frank Lucas (R-Oklahoma), chair of the House of Representatives’ ag committee, is on the same path.

That’s a surprise, given the power of Tea Party budget hawks in the House, and also because of the pounding that farm spending is getting in the popular press, Glauber said.

He pointed, for instance, to a media campaign by Environmental Working Group (EWG) to paint farm programs as subsidies for rich non-farmers. "The national media have been having a field day," Glauber said.

Farmers are facing a tough PR battle because of high commodity prices too. Because of those prices, Glauber said he had been on side with most pundits in thinking farmers would likely lose the $5.9 billion they get in direct payments from the Farm Bill every year. With three years of record net cash income, he said, it was difficult to see how Washington could justify continuing to send cheques of $25 to $50 to every corn grower for every acre they plant.

Technically, it still looks like farmers will lose those direct payments, but half the savings will likely be put into an enriched crop insurance program, which Glauber says will be the foundation of U.S. ag support for the next five years.

Glauber, a former U.S. negotiator at the World Trade Organization (2007-09), says the shallow-loss insurance program will be safe under international trade rules.

Price supports

Livestock sectors will get strong support too. For instance, he expects dairy farmers to get a margin insurance program that will make payouts when the margin between fluid milk prices and a basket of feed grains drops below pre-set levels, a program designed by the National Milk Producers Federation.

Yet Glauber also expects the Farm Bill to retain the system of grain and oilseed price supports that attracted the ire of Canadian and other farmers over the past decade.

Because commodity prices are trading so high, Glauber said, many politicians believe they can leave the price supports in the Farm Bill — thereby escaping a battle with farm lobby groups — without any real risk that there will ever be any payouts.

"The real issue is what happens if prices really fall," Glauber said. Early drafts call for a wheat support price of $5.50 per bushel, and $3.64 for corn.

Will prices fall that low? "Our estimates are that 94 million acres will take corn prices to $5 or below," Glauber told Country Guide. "In the end, it’s the market that makes the decision."

If prices do fall, however, the U.S. could once again turn interventionist in a big way. The initial numbers that Glauber has run convince him the numbers could get very big very fast, he said. "There’s is a potential for payouts of $10 to $11 billion."

— Tom Button is editor of Country Guide at Ridgetown, Ont.

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