Banner Graphic, Volume 12, Number 91, Greencastle, Putnam County, 23 December 1981 — Page 4

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The Putnam County Banner-Graphic, December 23,1981

Gasohol'sfade: Enthusiasm has dwindled, production cut in wake of oil glut

c. 1981 N.Y. Times DES MOINES, lowa - Interest in gasohol, which has attracted more government encouragement in recent years than any other energy source, has been fading the result of an oversupply of crude oil and the administration's efforts to curb federal spending. Enthusiasm for gasohol, a mixture of gasoline and alcohol, was born amid farmers’ anger over the restrictions on grain sales to the Soviet Union and consumers' concern about the shutdown of Iran’s oil fields. The fuel seemed a way for United States to cultivate its way out of the energy crisis, drawing on its unrivaled agricultural strength. Most commercial gasohol is a 90-10 mixture of refined gasoline and ethanol derived from corn. The Carter administration and Congress responded to the apparent groundswell by pledging subsidies for gasohol exceeding S3O billion by 1992, making it. gallon for gallon, by far the most heavily subsidized fuel. But over the past few months,

Market reports INDIANAPOLIS (AP) Hogs: 700; Barrows and gilts moderately active, 1.50 to 2.00 lower, later sales 2.50 lower. 12 210-245 lb 40.75-41.00, late sales 40.00-40.50; lot 275 lb 39.00; 13 215-250 lb 40.00-40.50. Sows moderately active, steady to 1.00 higher, instances 1.75 higher, most advance on weights over 500 lb; 1-3 350-425 lb 31.75-32.00,440-510 lb 34.00-35.50, 530-630 lb 38.00-39.00. Cattle: 200. Slaughter steers and heifers not well tested, few sales about steady; slaughter cows not fully tested; bulls scarce. Slaughter steers: Choice mostly 3 1085-1100 lb 60.00-61.00; package mixed good and choice 3 1000 lb 58.00; lot standard and good 1-2 1100 lb 54.50; Holsteins couple lots good 2-3 10001025 lb 49.00-50.00. Slaughter heifers: Couple lots choice 3-4 950-980 lb 56.5057.00. Slaughter cows: Few utility and commercial 2-3 36.50-43.50, few cutter 1-2 30.00-36.00. Slaughter bulls: Yield grade 1-21300-1570 lb 44.00-46.00. Sheep: 25, not tested. CHICAGO (AP) Wheat No. 2 hard red winter 3.66* 2 n Tuesday; No. 2 soft red winter 3.66'/2n. Corn No. 2 yellow 2.44 3 4n (hopper) unquoted for (box). Oats No. 2 heavy I.97Vfen. Soybeans No. 1 yellow 6.01 n. No 2 yellow corn Monday was quoted at 2.44 3 /4n (hopper) unquoted for (box).

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the White House has slashed funding for gasohol plants, large projects have stalled and major oil companies are drastically curtailing gasohol operations. “It’s a very risky, dicey area right now,” said James Stearns, director of the Energy Department’s office of alcohol fuels. “It made a lot more sense when you were having gas lines than it does in a glut,” said Robert Harner, a spokesman for the Ford Motor Co. “I don’t know what the gimmick is that would make people buy it.” There have always been doubts about gasohol’s energy efficiency, the pressures it might place on the nation’s croplands and its inflationary effect on food prices. But the question today is primarily one of practical economics: What is the justification for gasohol when oil supplies are relatively plentiful and prices stagnant? “There’s not really an incentive on the part of the oil companies to use alcohol when their refineries are only running at 65 percent of capacity,” noted N. Edward Clark, of the

NEW YORK (AP) - A major medical group cautions against applying grease, butter, sprays, ointments or home remedies to burns. For minor and serious burns, the first step is to put the burned area in cold water or apply clean, cold-water compresses. Get medical attention for serious burns, the first-aid handbook suggests.

lowa Corn Promotion Board. This conclusion is buttressed by a number of recent developments: Texaco Inc., the nation’s third-largest oil company and the biggest gasohol marketer, has withdrawn the product from 14 states in the Northeast and East because it was “uneconomic” to ship ethanol from the Middle West to mix with the gasoline. It continues to sell gasohol in Indiana, Illinois, Missouri and Kentucky. After test marketing in four states, Standard Oil (Ind.) has limited gasohol sales to lowa and Omaha, Neb. Phillips Petroleum has announced that it is replacing

Reagan signs farm bill, eyes exports

WASHINGTON (AP) - A four-year, sll billion farm bill which was approved by the House last week by only two votes after a nine-month battle is now law. President Reagan, saying the legislation “recognizes the importance of the marketplace” and paves the way for a surge in exports, signed the bill in a private ceremony Tuesday. It seeks to curtail government’s influence in farm economics, but supporters called it inadequate and critics labeled it disastrous for some farmers and too generous for others. The bill passed the House, 205-203, last Wednesday with 59 Republicans voting no. The measure makes it vir-

Large crop supplies also cited

Farmers' net income forecast dim as debt outraces assets

By DON KENDALL AP Farm Writer WASHINGTON (AP) - Farm debt is rising faster than the value of land and other assets, boosting the “debt-to-assets” ratio to a 10-year high, say Agriculture Department analysts. Moreover, the financial plight of farmers is not expected to improve in the near future, the department’s Economic Research Service said Friday in a preliminary report. Farm debt is expected to total a record $194.5 billion on Jan. 1, up 11.4 percent from $174.5 billion on Jan. 1,1981. Total farm assets, meanwhile, are expected to rise to sl.lß trillion, up less than 8 percent from sl.l trillion last Jan. 1. Thus, the report said, the debt-to-assets ratio would be 16.5 percent, compared to 16.0 percent last Jan. 1. That means that of every SIOO farmers have in land and other assets, they owe $16.50.

gasohol with premium unleaded gasoline at three terminals in the Southeast. It is also considering abandonment of the “gasohol” label in favor of something like “super unleaded with premium,” a step also being considered by most other big oil companies that still sell gasohol. Standard Oil Co. (Calif.) reports little enthusiasm for gasohol in test marketing and has pulled the product off the market. “Gasohol was an emotional thing,” said John R. Grey, the company’s president. “People generally revert to practical things.” Sigmor Corp., one of the

farm

tually impossible for Reagan to seek to punish the Soviet Union through a selective grain embargo such as that President Jimmy Carter imposed after the Soviet intervention in

Surplus cheese set for distribution

WASHINGTON (AP) - Stuck with a growing mountain of government-owned cheese that violates his free enterprise ideals, President Reagan is slicing off some of the surplus for free distribution to the poor. But in keeping with his principles of New Federalism, Reagan said cheese will be given to the needy only in states where officials ask for it. And he wants the states to

U.S. Stocks Will Build As This Year's Bumper Harvests Push Production Above Prospective Use 1

Feed Grains Soybeans Cotton Million metric tons Million Dusneis Million Dales 300 3.000 30 - Production irirrs ::^r- Exports - Domestic Use :::::: " ■"■ Ending stocks 80/81 81 82 30.81 81 82 80 81 81 82 Based on mid-NovemDer data. 1980.81 estimated. 1981 82 oroiecteo

Stephen Gabriel, an analyst in the Economic Research Service, said that according to records, it would be the highest

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nation’s biggest independent fuel marketers, abandoned its “White Lightning” brand of gasohol after a two-year marketing test in south Texas, citing an abundance of gasoline. Construction of the world’s largest gasohol plant has been postponed indefinitely. Archer-Daniels-Midland Co. had planned to build the plant here at a cost of $250 million. A number of smaller plants in lowa, which accounts for a third of national gasohol consumption, have also been delayed. Nevertheless, production of ethanol for use in gasohol is expected to range 150 million to 200 million gallons this year, an increase of about 50 million

Afghanistan. Any embargo would have to apply to all products. Reagan said he was pleased to sign the bill, because it recognizes “both our reliance

turn it over to non-profit organizations in observance of yet another principle letting charity do what the government used to do. In a written statement Tuesday, Reagan said 30 million pounds of the 560 million pounds in storage will be distributed through the states. The total now in warehouses around the nation amounts to more than two pounds for every

ratio since it was 16.8 percent on Jan. 1,1972. “The financial condition of the farm sector is not expected

from 1980, according to Stearns. And if currently planned processing facilities are built, output could rise to 500 million gallons by 1985. But producers and planners have depended on a system of grants, loan guarantees and subsidies the Reagan administration budget now excludes. This is especially damaging to the industry because of the size of the subsidies for gasohol, including loan guarantees for distilleries, grants and special investment tax credits. The largest subsidy is a 4-cent exemption from the excise tax on gasoline. For the ethanol portion of gasohol, this adds up to $16.80 a barrel. Further exemptions in 24 states average 5.4 cents a gallon, or $22.68 a barrel of ethanol. But not even this level of subsidies enough to make the manufacture of oil from shale, coal and perhaps even garbage more than economical has been sufficient to outweigh gasohol’s approximately 50 percent cost disadvantage, except in selected cases. Indeed, a consensus exists that gasohol

on the American farmer and the limits of government.” He said the measure’s provisions will faciliate a 42 percent increase in agricultural exports by 1984 a big boost for

man, woman and child in America. The unwanted cheese has been accumulating as a result of farm laws that assure dairy farmers a minimum price for their products. Cheese is acquired and put in storage when producers can get more by selling it to the government than selling it in the market place.

to improve in 1982,” the report said. “Interest rates will average about the same as in 1981. Although they are expected to

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would die without at least its current level of subsidization. “The refinery price of gasoline would have to more than double in real terms and the crude oil price more than triple before ethanol would yield a positive return,” according to an analysis by Fred H. Sanderson, an economist, prepared for Resources for the Future, a Washington research group. From the standpoint of the big oil companies, gasohol and other new fuel sources must be weighed against today’s oil surplus, which is principally the result of sharply reduced demand for petroleum products. At the same time, the costs of carrying oil inventories has skyrocketed due to high interest costs. Gasohol’s seemingly dim future, of course, could be changed rather abruptly by a major curtailment of oil supplies from the Middle East. It could also be helped by development of an industry to export the corn residue left from alcohol production, a product that is largely protein and very concentrated A large-

farmers. During congressional debate, farm state members from both parties said the measure would bankrupt or impoverish many farmers, and consumer interests condemned provisions aiding peanut and sugar farmers. The bill will cost the government at least $3 billion more than Reagan’s . original proposal, but about $5 billion less than the measure first passed by the House in October. Its approval represented a legislative victory for Reagan, even though it continues grain and cotton subsidies and peanut marketing quotas, which the administration originally opposed.

decline through the first half, they likely will rise during the second half as the economy strengthens.” As earlier reports have done, the latest analysis said farmers’ net income prospects will continue to be dim in 1982, the th.rd consecutive year that rising costs and sagging market prices have crimped overall earnings. “Crop farmers are faced with large supplies, and demand will be moderated by sluggish economic conditions,” it said. “This will keep downward pressure on crop prices and squeeze producer returns. Livestock and poultry producers will benefit from lower feed costs, but improvement in profit margins will be limited by the small size of gains in product prices.” The report said gross investments in the farm sector in 1981 is indicated at about $22.4 billion, down from $25.1 billion in 1980, but that some increase could occur next year.

scale industry of this type could add $2.3 billion to America’s gross national product, according to a recent analysis by Resource Planning Associates Inc. for the Energy Department. For now, though, gasohol is perceived more as an octane booster than a fuel stretcher, or “Hamburger Helper,” in the phrase of one oil company executive. Although this represents a sharp departure from gasohol’s originally intended role, proponents still see substantial growth for the fuel in increasing octane, effectively raising the energy efficiency of gasoline. “Within 10 years, alcohol can compete straight up with no subsidies at all,” said Lawrence Copley, who owns a farm just east of Clear Lake, and is admittedly more enthusiastic than a number of energy analysts who doubt gasohol made from corn could ever be costeffective. “It is an extremely highquality fuel,” said Clark “And it’s using an American renewable resource corn.”

The major fight in Congress was over price support levels for such commodities as milk, grains and fibers. Through loans, purchases and direct payments, the government supports those commodity prices to provide farmers with some income security that will keep them providing adequate supplies of low-cost food to consumers even during hard times. In addition, the bill authorizes a one-year extension of the foodstamp program and continues agricultural research programs and the Food for Peace program. Almost all of the sll billion appropriated in the farm bill itself, exclusive of the food stamp program, is for crop supports.

“Many farmers postponed purchasing capital items this year because of low income prospects and the high cost of borrowing,” the report said. “Investment next year may return to 1980 levels, perhaps to $25 billion, encouraged by tax cuts and by the comparative long-term attractiveness of farmland over alternative investments.” Farm real estate values may increase 7 to 12 percent in 1982 “because of the favorable longterm outlook” for farmland, the report said. According to agency figures, the value of farm real estate part of total assets is expected to be about $895 billion on Jan. 1, up from $828.7 billion a year earlier an 8 percent increase. The value last Jan. 1 billion was up nearly 10 percent from $756.2 billion on Jan. 1,1980. In the previous year, the value rose more than 15 percent from $655.1 billion on Jan. 1, 1979. Chicken in Japan's diet on increase WASHINGTON (AP) - An Agriculture Department report says “the gradual Westernization of the Japanese diet” is leading to greater consumption of chicken, both domestic and imported. Since 1960, per capital consumption of chicken in Japan has increased more than nine times, the report said. It was written by Daniel K. Berman, assistant U.S. agricultural attache in Tokyo. Most domestic chicken is sold boneless for traditional dishes, while U.S. chicken arrives frozen and is sold with the bone intact for use mostly in Westernstyle dishes. Berman said Japan imported 70,300 metric tons of chicken in 1980, compared with 9,700 tons 10 years earlier. The U.S. share of the market last year was 40,600 tons or 58 percent.