Can U.S. homegrown sorghum help the ag industry get through Covid-19?

May 10, 2020 |

It’s been only two years since the Environmental Protection Agency approved sorghum oil as an eligible feedstock under the Renewable Fuel Standard, but a lot has happened since then. The EPA’s announcement marked a significant step toward leveling the playing field for ethanol plants extracting oil from sorghum and provides new market access for the crop, but there’s more to the story.

In today’s Digest, how sorghum is becoming a growing feedstock for a rapidly changing world, how we aren’t in Kansas anymore and how a global bioeconomy is what will help this crop get us through Covid-19 pandemic, the latest on sorghum export news that U.S. ag industry folks should know about, recent sorghum for biofuel research developments and improvements on efficiency, and more.

The background on sorghum

Sorghum produces the same amount of ethanol per bushel as comparable feedstocks and uses one-third less water, according to the National Sorghum Producers. Sorghum exports have represented a large portion of the U.S. sorghum marketplace over the last few years. International sorghum customers have included Mexico, China, Japan and many other countries. Sorghum is typically used for animal feed within these countries, but other opportunities in the consumer food industries as well as ethanol production are arising.

A growing feedstock for a changing world

The latest planting report from the USDA this March also indicates an 11 percent increase in sorghum acres for 2020. National Sorghum Producers CEO Tim Lust said, “While we are pleased to see a projected year-over-year increase in acres, a lot has changed in our world since the surveys used to help formulate this report were taken in February, and we feel there is greater opportunity for increased sorghum acres in the United States for the 2020-2021 marketing year.”

“When the analysis was conducted in February, sorghum prices did not reflect basis appreciation from export sales that occurred since that time. Significant purchase activity by China, approaching 1 mmt over the course of the last 7 weeks, has driven basis improvements, and these purchases account for roughly 10 percent of the sorghum produced last year,” according to the National Sorghum Producers. “Sorghum for export traded at near-parity to corn during the entire month of February. Today, sorghum for export commands a 13 percent premium. These sales and basis improvements are encouraging, and, if this pace continues, will lead to potential for significant farm profitability gains.”

“With these factors in mind, both domestic and international demand will continue to drive sorghum acres, and we want to assure our customers there will be a productive, high-quality sorghum crop in the United States for the 2020-2021 marketing year,” according to the the National Sorghum Producers statement. “We are committed to providing our growers with information they need to produce a high-quality sorghum crop and our buyers with the most updated information about the availability of U.S. sorghum.”

Finally, a bit of good news for some in the ag industry.

Toto, I’ve a feeling we’re not in Kansas anymore

So are we over the rainbow, like Dorothy in Wizard of Oz? Not quite. Let’s go back to Kansas for a moment, because as the #1 sorghum producer in the U.S., Kansas is a key state to look at in terms of sorghum production for biofuels. And as we’ll see, it’s not just about the U.S. in this global bioeconomy.

Ethanol in Kansas is facing super difficult times with Covid-19 right now, but the sorghum market, which follows a similar pattern to corn sales, is affected as well, but because of exports to China, not as badly, according to a local Kansas newspaper, Leavenworth Times. “According to Kansas Sorghum, about one-third of the grain goes to ethanol plants, one-third to feed and one-third to exports.”

“It’s a dynamic market dependent on the price of oil and export demand,” said Jesse McCurry, executive director of Kansas Sorghum. “Kansas and Texas accounts for 74% of sorghum production.”

As to where the farmer sells, it’s dependent upon price. “Livestock producers have seen a decrease in distiller’s grains, a product produced at the ethanol plants,” Roe said. “So they’ve had to seek alternatives.”

So domestic demand for sorghum is still an issue – thanks to ‘Rona Cyclona.

Path cleared for U.S. sorghum exports to Vietnam

The good news? Exports.

In Washington, D.C., a new pest risk assessment has been approved by both the U.S. Department of Agriculture and Vietnam’s Ministry of Agriculture and Rural Development, opening the door for U.S. sorghum to flow into Vietnam for high-value uses including pet food and liquor as well as a feed product for the aquaculture, poultry and swine industries.

This opening follows nearly five years of collaborative efforts by the U.S. Grains Council (USGC), the United Sorghum Checkoff Program (USCP) and the National Sorghum Producers (NSP) and work with the U.S. Department of Agriculture’s Foreign Agricultural Service (USDA-FAS) and Animal and Plant Health Inspection Service (USDA-APHIS), as well as regulators and industry in Vietnam.

It also highlights the importance of addressing a wide range of constraints to new demand opportunities for U.S. ag products and collaboration among U.S. agriculture groups with access to specialized knowledge about the many details of commodity exports.

Work on the pest risk assessment – which outlines how U.S. sorghum must be handled to meet regulations in Vietnam – became even more critical after a vessel of sorghum originally destined for China in April 2018 was diverted to Vietnam but couldn’t be delivered because there was no pest risk assessment protocol in place.

“From an initial visit in 2015 by USCP and the USGC to discover the potential for sorghum in various marketplaces, to the development of a fish feeding trial followed by the release of very positive trial results, our organizations have worked to create opportunity for U.S. sorghum in Vietnam,” said Sorghum Checkoff Executive Director Florentino Lopez. “Of course, all this work would fall short without organizations like NSP that came in along the way to help steward the approvals needed to make it official. Our persistence has paid off, creating additional market opportunity for U.S. sorghum farmers.”

For years, the Council and USCP have been working in country to assess potential markets for U.S. sorghum, including feeding trials to test the viability of replacing cassava with sorghum in Pangasius, a large catfish species native to Southeast Asian diets. Annual catfish production in Vietnam alone is 2.4 million tons.

Official approval from USDA-APHIS coupled with Vietnam’s pest risk assessment approval opens the door for Vietnam’s PPD to issue import licenses when Vietnamese importers request one for sorghum.

Sorghum is attractive to Vietnamese buyers seeking to diversify their sources of energy in feed and find feed sources that store better in local climates. Sorghum is gluten-free and non-biotech, which is also attractive to niche sectors in Vietnam, including the pet food industry.

The groundwork the Council, USCP and NSP built in Southeast Asia’s aquaculture sector was a critical step in seeing this opportunity to diversify U.S. sorghum’s export markets and create a pathway for U.S. sorghum into one of the fastest growing food-producing sectors in the world.

“This victory is a clear example of how working together–both in industry and in governments–can lead to winners on all sides,” said Tim Lust, NSP and USCP CEO. “Vietnam will be able to meet its country’s grain and feed demands, and U.S. sorghum farmers will have access to a market that has several different sectors as potential end users for their product.”

Exports to Japan and Mexico too

Back in January, the USGC and Kansas sorghum farmers traveled to Japan (pre-covid19 travel restrictions) to meet with Japanese food industry representatives on sorghum.

“As a sorghum farmer, it excites me to see existing and future market opportunities,” said Shayne Suppes, a Kansas farmer who represented the United Sorghum Checkoff Program on the mission. “I was impressed with how thorough and deliberate the Japanese people are. The mission was very educational and the meetings and people were informative and honest.”

Suppes and Clark Bibb, representing the Kansas Grain Sorghum Commission, joined a larger GEM delegation for the rollout of the 2019/2020 Corn Harvest Quality Report, follow-up meetings with Japanese end-users, importers and government officials and visits to a wagyu beef farm and port facilities.

This year’s GEM missions to Japan and South Korea included both these newly engaged farmers and experienced leaders – providing the opportunity for the GEM participants to learn from one another about the importance of trade and their individual farming operations.

The Council and the Sorghum Checkoff have promoted white food sorghum and white sorghum flour in the Japanese market since the early 2000s, including displaying and sampling products at food shows and showcasing events. As a result of these educational programs, the Japanese snack and food industry has increased interest in and commercialization of sorghum for their products. The Japanese market now includes more than 50 food products in Japan with sorghum as an ingredient.

“Food sorghum in Japan represents a small, niche market; however, this specialized, health-conscious market provides another value-added opportunity for U.S. sorghum farmers,” Sifferath said. “The Council will continue to promote food sorghum as a healthy and environmentally-friendly grain, while, at the same time, maintaining a close relationship with feed sorghum customers.”

Latest biofuel research can help sorghum’s efficiency as biofuel

In April, researchers at the Department of Energy’s Lawrence Berkeley National Laboratory and the Department of Energy’s Joint BioEnergy Institute, which is managed by Berkeley Lab, designed simulations to determine how much biofuel is needed for the whole bioproduct extraction process to be labeled as cost-efficient. Their results showed that the amount plants need to make is actually quite feasible.

For example, they calculated that when accumulated at 0.6% of the biomass dry weight, a compound such as limonene — used in flavor and fragrance — would offer net economic benefits to biorefineries. In other words, if they can harvest 10 dry metric tons of sorghum biomass from an acre of land, they need to recover only around 130 pounds of limonene from that biomass. For example, it means harvesting 10 dry metric tons of sorghum mass from one acre will only need 130 pounds of recovered limonene from that biomass to say that the whole production process is efficient.

The biggest impact of the paper is that it offers the first quantitative basis to actually implement this cost-saving strategy, providing a starting point for scientists who are attempting to engineer or breed plants that create bioproducts on their own and offset the cost of making biofuels as a result.

Other recent sorghum developments

Funding has been going into sorghum research showing there is a way forward for the biofuel feedstock. For example, Oklahoma State University’s $3.1 million grant to study the GHG emissions of sorghum as reported to The Digest in February. Or Cold Spring Harbor Lab and USDA’s Agricultural Research Service’s research that doubled the amount of grains a sorghum plant can yield, making it even more efficient as a biofuels feedstock.

The USDA also funded a program to help document the life cycle analysis of sorghum, and Michigan State University scored a $2.7 million DOE grant to study sorghum genetics and crop modeling as did University of Nebraska-Lincoln, also with a $2.7 million DOE grant for sorghum genetics and a $1.5 million award for sorghum pest research.

Bottom Line

While world food commodity prices declined for the third month in a row in April, world trade in cereals in 2019/20 is forecast to increase by 2.8 percent to 422 million tons, led by sorghum and wheat. Sorghum production is not being affected as much as corn in terms of biofuels and feed thanks to exports to Asia and Mexico, so this indicates that sorghum may be just the feedstock needed to get through the next year or so with Covid-19’s volatility.

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