The Illinois Corn Growers Association excitedly looks forward to pursuing the following federal legislative goals in 2019:
- Support ratification of the U.S. Mexico Canada Agreement (USMCA) for trade
- Support multiple pathways that improve market access for higher ethanol blends
- Support a federal infrastructure bill that includes funding to upgrade locks and dams on the Upper Mississippi River system
Why ratification of the USMCA matters
In Illinois, 41 percent of our corn leaves the state for other markets. Including ethanol and dried distillers grain with solubles (DDGS) exports, well over half of your corn is leaving the state. That means that all international markets matter to Illinois corn farmers.
Mexico and Canada are now our top markets because of the extreme success of the North American Free Trade Agreement (NAFTA), markets that corn farmers absolutely cannot afford to lose.
Exports of grains in all forms (GAIF) – including U.S. corn, barley, sorghum, DDGS, ethanol and certain meat products – have increased 279 percent to Mexico and 431 percent to Canada since the NAFTA went into effect.
Mexico has recently topped all other markets in GIAF imports, with total marketing year shipments growing 6.3 percent year-over-year to a new record of 25.2 million metric tons (almost 1 billion bushels in corn equivalent) between 2016/2017 and 2017/2018. Mexico is the top international buyer of U.S. corn, barley and DDGS as of the last full marketing year’s data, with sales in each category increasing from the prior year.
Canada set a new record for imports of grains in all forms in 2017/2018 and is the second largest buyer of U.S. ethanol and barley, in addition to the eighth largest market for both U.S. corn gluten feed/meal and DDGS and the ninth largest U.S. corn market.
The impact of improving market access for higher ethanol blends
Higher blends of ethanol at pumps all over the nation means additional ethanol demand and corn demand for Illinois farmers.
Establishing a higher octane minimum standard fuel for all vehicles using E-15 and E-20 blends would conservatively create an additional domestic ethanol demand of 3.4 billion gallons by 2030. This is equivalent to an increased demand for corn of 1.11 billion bushels by 2030.
This increase in demand for corn represents approximately half of the expected increase in corn supply by 2030 due to yield increases based on a 1.9 bushel per acre trend yield that we are seeing now.
Why Illinois farmers need upgraded locks and dams
The lock and dam system on the Mississippi, Ohio and Illinois Rivers was built in the 1930s for a 50-year life-span and a significantly less barge traffic. Now, 80-90 years later, the system is well past its useful life with several dams seeing critical infrastructure simply crumbling and falling into the river.
The performance we expect of these locks and dams has changed as well. The world has changed, offering an international marketplace of which Illinois farmers are well poised to take advantage. As volumes of grain, ethanol, and by-product exports increase, the efficiency of the locks continues to decrease. Larger barge tows now have to split into two because the lock chambers aren’t large enough. Efficiency lags cost money – money that is critical to the farm economy in a time when every penny counts.