“Given the recent declines in commodity prices and farm income forecasts, farmers are likely to face several financial challenges in the coming years. One of the primary issues is the combination of falling grain prices and sticky input costs, which is expected to squeeze many farms’ finances in 2024 and into 2025. This situation creates a challenging environment for grain producers, as their revenue decreases while their costs remain high.” –Jackson Takach, Farmer MAC Chief Economist, VP of Strategy, Research, & Analytics
The U.S. agricultural industry is teetering on the edge of a crisis, and it’s time we paid attention. Corn farmers are facing oversupply, with prices hitting 17-year lows when adjusted for inflation. Meanwhile, bioethanol, the single largest market for U.S. corn, has stagnated, and foreign competition is reducing export opportunities.
We’ve seen this story before; in the early 1980s, a similar collapse drove hundreds of thousands of farmers off their land, crippled rural economies, and left a scar on the heart of American agriculture. Today, we’re once again staring down the barrel of an agricultural crisis — and if we don’t act fast, the fallout could be catastrophic.
There is a solution that has been right in front of us all along: E15. More than just a cleaner, low-cost biofuel option for consumers, E15 holds the key to reviving demand for corn, stabilizing prices, and saving countless farms from financial ruin.
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The looming agricultural crisis
To understand the gravity of today’s agricultural predicament, we must look back to the early 1980s. During this period, corn prices dropped by more than $2 per bushel, a staggering decline that sent ripple effects across rural America. Hundreds of thousands of farmers lost their farms, while land and equipment values plummeted by up to 70%. The root cause of this crisis was simple: supply far exceeded demand, driving prices below the cost of production for many years.
“I’ll never forget the devastation and uncertainty brought on by the farm crisis in the eighties,” said Jeff Broin, POET Founder and CEO. “We watched as several of our neighbors lost their land, their livelihoods, and their financial security. Farm bankruptcy auctions became all too common. It was a painful time for agriculture.”
Unfortunately, history is now on the verge of repeating itself. Corn prices are again dangerously low, and while the economic landscape has evolved, the fundamentals remain the same: when supply outpaces demand, prices fall, and the burden will land squarely on the shoulders of ag producers.
The role of bioethanol in stabilizing agriculture
In the midst of the last ag crisis, bioethanol emerged as the lifeline the agriculture industry so desperately needed. POET, now the largest bioethanol producer in the world, played a key role in this transformation.
In 1987, the Broin family purchased the first POET bioprocessing facility in Scotland, S.D. Over the next two decades, bioethanol production increased exponentially, providing a vital new market for corn that stabilized prices and revitalized rural economies.
As bioethanol production ramped up, so did ag land values, restoring prosperity in regions that had been ravaged by oversupply in the years prior. Today bioethanol purchases and processes 5.5 billion bushels of corn annually, more than two and a half times the amount the U.S. exports. Biofuels, particularly bioethanol, became the key driver for agricultural demand, and for decades, this new market helped farmers remain profitable.
Today’s challenges
However, in the last decade, the bioethanol market has not grown at the pace necessary to keep up with the continuous rise in corn yields. Compounding this issue is the stagnation in U.S. corn exports over the last 20 years. Competing ag nations, such as Brazil and China, have ramped up their corn production and exports.
Rural communities are the first to feel the burden of economic downturn.
“In many rural areas, the farming economy is the backbone of the local economy,” said Takach. “Directly through on-farm employment or indirectly through jobs supporting agricultural, food, fiber, and fuel production, the agricultural economy significantly impacts rural communities.”
According to the USDA’s Farm Sector Income Forecast Study, published in September, net farm income is projected to drop 23 percent from 2022, driven largely by decreases in cash receipts from major crops like corn and soybeans. Coupled with these financial pressures, farmer sentiment has reached its lowest levels since 2016, according to Purdue University’s Center for Commercial Agriculture Producer Survey.
“When farm profitability declines, investments in new machinery, automobiles, buildings, and other capital expenses decrease,” said Takach. “Families supported by these operations tighten their belts, reducing spending at local stores, businesses, and dining establishments. Consequently, businesses reliant on this spending cut employee hours and potentially jobs. Fortunately, many rural communities have diverse industries and micro-economies to help weather bad years. However, the agricultural economic cycle can significantly influence the overall economic health of rural areas.”
Without new markets or increased demand for corn, American farmers may again see their profits evaporate, along with the prosperity of rural communities that depend on farming. This situation could affect every farmer in the U.S. and beyond, impacting economies around the world.
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January 1985, Chicago, Illinois: Some of the several hundred farmers picket in near zero temperatures outside the Chicago Board of Trade in a protest over low commodity prices.
E15: The immediate solution
Transitioning to E15 nationwide would increase corn demand significantly — by up to 2.5 billion bushels each year. This boost would be enough to rebalance supply with demand, bringing corn prices back to profitable levels for farmers.
“E15 is a long-term answer to the near-term challenges facing the agricultural and energy sectors,” said Doug Berven, POET’s Vice President of Corporate Affairs. “We can create a reliable, growth-oriented market for crops — just like biofuels have done since the 1980s. Not only is E15 an affordable, readily available, lower-emission fuel solution, but it’s also home-grown and supports American farmers and rural economies.”
The time for action is now
Biofuel producers have been leading the way in promoting nationwide E15 for more than a decade, but the time has come for the entire agricultural sector, including commodity groups and farmers, to join the fight. Expanding E15 is not just a matter of supporting biofuels — it’s about safeguarding the future of American agriculture.
“E15 is the single most effective way to boost demand for corn and ensure the future of agriculture in this country.” Doug Berven, POET Vice President of Corporate Affairs
“E15 is the single most effective way to boost demand for corn and ensure the future of agriculture in this country,” said Berven. “We’ve seen what happens when supply outspaces demand — farmers suffer, rural communities decline, and the entire economy takes a hit. But we have the solution in our hands. Now is the time to make E15 the standard fuel for our country and secure a prosperous future for agriculture and our nation.”
