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Transcript: Digging into Biofuels


Transcript from January 11, 2024 podcast

Lucy Stitzer:

Welcome back to Dirt to Dinner’s Digging In podcast.

This is Lucy Stitzer and today we’re digging into renewable fuels and the Biden Climate Initiative, which aims to be carbon neutral by 2050. This includes all petroleum that fuels motor vehicles. The standard is to replace the billions of gallons of fuel the United States uses each year with bio with biofuels. Currently, the US uses about 35 billion gallons of ethanol biodiesel, renewable diesel and in limited form sustainable aviation fuel.

Today’s guest is Colin Murphy who is the Deputy Director at the Policy Institute for Energy Environment and the economy at the University of California Davis. In this podcast, he explains the importance of biofuels and how we are going to get to net zero by 2050. Welcome, Colin Murphy.

Colin Murphy:

I am the Deputy Director for the Policy Institute for Energy Environment and Economy at UC Davis and I also co-lead the Low Carbon Fuel Policy Research Initiative. We’re big fans of excessively long wordy titles here at UC Davis, and really what that means, most of my job for the last several years has been to lead our research and engagement efforts around fuel policy.

The main thing we work on is the Low Carbon Fuel standard, which is a policy that was first adopted by California and British Columbia in 2010. Oregon implemented their own in 2016, Washington did theirs last year. So it’s a policy structure that has been very effective in the places that have had it at reducing the amount of petroleum that we consume for transportation. It’s seen as one of the gold-standard fuel policies out there. Certainly not the kind of thing where you’d want it to be the only policy you’re using a transportation, it needs to work with things like electric vehicle policies and policies to switch to renewable electricity and sort of a broad economy-wide portfolio.

But it’s an important part of that portfolio. And so we do research on it. We publish papers like any other academic, but we also spend a lot of our time working with regulators and other policymakers to help understand the topic and help guide them as they make decisions about how they want their jurisdiction to do this. So we have interest from a number of states all over the country who are thinking about, or at some step in the process of adopting a low carbon fuel standard as well as a number of other countries.

Canada just adopted essentially a low carbon fuel standard at the federal level in addition to the one in British Columbia. Brazil has one. It’s limited to liquid fuels only, but they have a very similar policy as well, and a number of other nations are considering it. So yeah, my life for most of the last 10 years has really been largely focused on low carbon fuel standards. But we’re also, we do work on the federal renewable fuel standard, which is a different kind of policy doing increasing amount of work in Europe where they have their own approach to decarbonizing fuels. And we’re really just trying to think about that and make sure we have policy that’s informed by the best science we can.

Lucy Stitzer:

So you’ve been a consultant for the renewable fuel standard for the national one for our country as well as Europe, and then you’re helping Canada and then a variety of different states who are trying to implement their own standards as well?

Colin Murphy:

Yeah, yeah. Not really a consultant so much. We’re an academic research group, so our mission is public benefit and to help also train people. We have grad students coming through and working with us. But yeah, we do research and policy engagement, working with policy makers to help them make good decisions at a wide variety of jurisdictions, mostly in California because it’s obviously where we are and university, it’s California, but we work with jurisdictions all over the world.

Lucy Stitzer:

Well, that’s pretty exciting.

Colin Murphy:

It certainly doesn’t give me a lot of opportunities to be bored.

Lucy Stitzer:

No, I would think not. Well, let’s just talk about the renewable fuel standard and just talk about the United States as a whole in the 2050 green energy, I guess, mandate by Biden indicated that we needed carbon-free electricity by 2035 and carbon free overall by 2050. And so I’m curious about what part biofuels will play in this, and when we think about fuel, I just want to clarify that when I think of fuel, I think we’re talking mostly about cars, trucks, airplanes, and not necessarily to go back on the grid. I think that’s a different subject, but we could certainly talk about what goes back on the grid. But just as far as most of this conversation goes is mostly about, I’ll call it motor fuel, and the UX today uses, yeah, vehicles uses about, I’m thinking, yeah, 135 billion gallons of fuel. And the renewable fuel today is about 37 billion gallons. So am I correct in thinking that there’s just a huge ramp up for the next 25 or so years and to do that?

Colin Murphy:

So there’s definitely going to need to be a huge ramp up, but for most vehicles, so most of that fuel that the US uses is used to fuel on-road vehicles, cars, trucks, buses, stuff like that. And most of it, about 50 or 60%, I’d have to go back and look at the numbers to be sure, is light duty vehicles, passenger cars, cars, trucks, SUVs, things like that.

For the light duty vehicles, battery electric vehicles are almost certainly going to be the main technology that we are using in a world where we have successfully reduced emissions. They have the best combination of low cost, high performance flexibility and everything you need to do that. Very large parts of the medium heavy duty vehicle sector, so these are commercial vehicles, trucks, vans, buses, stuff like that. Most of them can also go onto batteries as well. And in most cases, batteries, because they’re much more efficient at converting energy into motion than an internal combustion engine.

And because they don’t have as many moving parts of an internal combustion engine, their operational costs are a lot lower. So in most cases, it’s actually cheaper. Even today for some vehicle classes, it’s actually cheaper to own and operate an electric vehicle over its full lifespan than it’s internal combustion engine. And batteries are still going to keep getting cheaper over the next 10 years. So most of that 135 billion gallons of fuel is going to be replaced by electricity.

And so we definitely do not have to figure out where we’re going to get 135 billion gallons a year of liquid fuel, which is great because we don’t have the slightest clue where we get 135 billion gallons a year of liquid fuel. So even as important as EVs are, they can’t do everything by themselves. And there’s two real limitations. One is that they’re just some parts of the transportation system where batteries do not have the characteristics to really be a good fit.

The big one is aviation, especially long haul aviation, anything near going more than 500 miles, maybe a thousand miles, batteries just don’t look like they have a trajectory to get to enough energy density where they can satisfy that need. There are also a few specialized applications. Some of the very long haul freight trucks, maybe batteries are not a great fit there. Places people live in really remote areas or really mountainous areas, maybe batteries aren’t the best fit there. So there’s a few other niches of the transportation system besides aircraft that are likely to need something else, probably a liquid fuel for a long time.

Lucy Stitzer:

What about anything on the waterways, barges? They transport a lot of food.

Colin Murphy:

You’re absolutely right. That’s another one where we currently think liquid fuels are likely to be the issue. It’s possible in those hydrogen or renewable natural gas could end up being the fuel there. But for those, yes, liquid fuels may be switching to ammonia or methanol instead of the current kind of heavy oils, or you can make synthetic oils. The thing is waterways, they’re relatively small fraction of the total fuel pool. So even though we definitely have to find a solution for them, it’s not as pressing or scary a problem as is with aviation.

The other thing is with most boats, they have more space and they have looser technical requirements. So with an aircraft, because of the need to be extremely safe with an aircraft and be able to handle a wide range of temperature fluctuations because they fly up very high where it’s pretty cold, the number of potential technical solutions that work in aircraft is a lot more limited than it is in shipping. So while shipping is absolutely something that we have to think of and liquid fuels look like they’re probably going to be the solution there, it’s not, at least to me, not quite as scary or challenging a problem as aircraft.

Lucy Stitzer:

Well, definitely. I mean, your air, you’re in the air and if something goes wrong, there’s

Colin Murphy:

Pull over and wait for someone to bring you another can of gas.

Lucy Stitzer:

Yeah, exactly. And what about trains?

Colin Murphy:

Trains, again, in terms of total magnitude, they’re relatively small. For a lot of trains, you can use electricity and just have a cable overhead or running next to the track. That’s the way a lot of the rail in Europe works is they’re electric and there’s cables running along the track and they get their electricity that way. For trains, hydrogen is a potentially good idea. Hydrogen has a great energy density by mass. So energy for every kilogram of weight is pretty high, but has a lousy energy density by volume.

But with trains, you can put a car full of hydrogen going right behind the train to fuel it to go for thousands of miles, and that doesn’t really affect the train’s functioning all that much. So hydrogen’s one of the ones where I think it’s uniquely well-suited to work in rail applications, possibly maritime, but there’s a little bit more space constraint on the water. So yeah, there’s certainly options there. But again, because the technical requirements are a lot looser than they are for per aircraft, we’re not quite as certain that it has to be a liquid fuel, whereas with aircraft, it’s probably going to have to be a liquid. Right.

Lucy Stitzer:

Yes, I would agree. And then you have the weight and the balance, and as you said, the temperature fluctuation. So there’s a lot with aircraft. So you’ve run through all the different vehicles. So that would bring the 135 billion gallons of fuel that we use today. Would you anticipate that it would come down to fewer, all that? Yeah.

Colin Murphy:

So aircraft, the US consumes about 40 to I think 42, 45, somewhere in their billion gallons a year of jet fuel, excluding military applications. We don’t have great data on that for obvious reasons. With some of the aircraft, like short range lights, 500 miles, maybe a thousand miles probably could go to battery electrics or hydrogen fuel cells. So some of that 40 billion gallons probably could get switched out for or something other than liquid fuel.

But then the needs of shipping, so back of the envelope, probably 40 or 50 billion gallons a year of total demand for liquid fuels over the long run is probably what we’re looking at. And that’s still a lot, but at the very least, it’s not so far out of the realm of what we’ve produced from things other than petroleum that we can at least put together a coherent story about how we might piece together a portfolio that works.

Lucy Stitzer:

So you’re saying we could take out about a hundred or 90 billion out of the petroleum business and we can replace most of that with actually what we’re doing today, our renewable fuel usage is about 37 billion today. And you’re saying we only need about 40? So

Colin Murphy:

Yeah, now from

Lucy Stitzer:

Going to be a big ramp up,

Colin Murphy:

I mean, so of the 37 billion that we’re, yeah, of the 37 billion we’re producing, a lot of that is ethanol, which has a lower energy density. So you have to go and take a few billion gallons off that number to reflect the fact that ethanol is not as energy dense. But yeah, we’re looking at an order of assuming we can take all this fuel and push it to the sectors that need it, that don’t have any other options, doubling the amount may be tripling at most.

There’s a lot of uncertainty here with how quickly is air travel going to keep growing? It’s been the fastest growing form of transportation over the last several decades. So are we going to try to reign in the amount of growth in fuel consumption for air travel or are we going to say no air travel has value. Let’s give people this opportunity to experience the world in a really meaningful and important way.

So we’re going to find a way to make enough fuel to keep supporting, giving more people access to it. And that’s a values question as much as it’s an analytics question. But yeah, we’re looking at something where doubling, probably tripling at most, should be able to give us enough fuel to have a transportation system that provides equal or more total access to mobility than it does today. And the other thing to point out is that there are a number of options for producing liquid fuels that aren’t biofuels.

They’re still kind of in their infancy, but there’s been a lot of interest in a process called electrically derived fuels. And in these, you take electricity, you use the power to break apart carbon dioxide, which you can either capture from the air or capture from an industrial source. We’re going to need a lot of carbon capture under any climate plan that’s going to work, use electricity to break the CO2 apart into carbon monoxide. And then you combine the carbon monoxide with hydrogen, which again you make with electricity using electricity to split water apart into hydrogen and oxygen, combine those together and you can assemble them into liquid fuels using a process called Fischer–Tropsch synthesis. And this is something that’s been done for many decades. It’s not terribly efficient.

Lucy Stitzer:

You can use Fischer–Tropsch for everything. It seems like you could use it for biofuels, you can use it for biodiesel, renewable diesel. I mean, it seems like Fischer–Tropsch is the gold standard for converting any type of matter into a fuel.

Colin Murphy:

Yeah, yeah. I mean the process with biomass is you basically break the biomass down into carbon monoxide and hydrogen and then catalytic assemble those into whatever you want. So as long as you have the carbon and the hydrogen coming from somewhere, you can make a liquid fuel. And in this case, we’re using carbon out of CO2 and hydrogen from water. Previously we’d gotten them out of biomass. The thing is, it’s not terribly efficient.

So right now, if you’re trying to do a fisher to synthesis using this process, you’re losing at least half, sometimes more, like even 60% of the energy you put in to things like waste heat and making unwanted chemicals. The chemical process to synthesize this stuff is not perfectly specific. It makes a lot of different things, only some of which are the molecules you actually want. So we’re pretty confident that we can improve that efficiency somewhat.

We can get the energy losses below 50%, definitely maybe down into the 40% level. And so that at least makes it a lot more tractable for us to be able to make several billion gallons, maybe even 10 or 20 billion gallons a year of liquid fuels out of this  Fischer–Tropsch synthesis process. Now, the problem with it is it requires a whole lot of electricity at a time when we are trying to rapidly retire the fossil fuel plants off of our grid because they are what is emitting most of the carbon from the US and from most industrialized economies.

So while we’re trying to go in and retire fossil plants and build enough renewable or other non emitting energy to replace them, if you add on this very large demand to also make a whole bunch of transportation fuel, that really increases the degree of difficulty in terms of getting the electrical grid in turned over. So eels are one of the things where they have the best argument for being a large scale supply of very low carbon fuels in the 2040s probably.

But for the next 10 years, while we’re still getting so much of our electricity off of fossil fuels, it doesn’t really make any sense to burn fossil fuels and then use it to make an EFU when you’re losing half the energy to waste or useless byproducts. So there’s sort of a technology where we need to deploy a few of these facilities at commercial scale in order to start letting the technology mature to get experience with it and to figure out how we’re going to make it more efficient, but it’s not going to be able to provide us a lot of really significant volume at the carbon tendencies. We need until probably at least 10 more like 15 years from now.

Lucy Stitzer:

So like the Fischer–Tropsch technology, we have 2.0.

Colin Murphy:

Yeah, exactly. Yeah. I mean, it has been used in many cases for many decades, but the problem has always been it hasn’t been very efficient. And part of the low efficiency is that lack of selectivity that it makes a lot of different chemicals and not always the ones that you’re looking for or ones that are particularly useful. It’s the kind of problem that humans are usually reasonably good at solving. We’re good at optimizing technological systems, but you have to go and build it to full scale and give people years of experience running these things to figure out, oh, if I tweak this thing here and add a little heat exchanger there or change the chemical composition in this other place, then I can keep incrementally improving the efficiency. So it’s this weird spot where we need to build a few of these facilities at full commercial scale to have that opportunity, but we also need to be careful not to sort of too much of it in the short term because it’s not going to have a very good carbon intensity for a number of years until the grid is much, much cleaner.

Lucy Stitzer:

Really, the biofield market is going to continue to ramp up until 2035, maybe 2040 until we get and solve some of these issues and then also Fischer–Tropsch. And so we really still need corn and soybeans for the next foreseeable future.

Colin Murphy:

So I think that’s the most likely outcome as well. So most of the volume of biofuels used in the US has been determined and driven by the federal policy, the renewable fuel standard, certainly all the corn ethanol, the amount of corn ethanol that the US makes is essentially the amount of corn ethanol that the RFS incentivizes. They don’t go much beyond that level. And the same thing has largely happened with the soybean based diesel substitutes that are growing pretty rapidly right now. And the industry is asking the government to keep expanding the size of the RFS to let them continue growing.

And if you look at the targets that the EPA put out earlier this year, it looks like they’re starting to say it might be time to tap the brakes and not continue this level of growth because they recognize the potential problems that you get into, particularly with land competition as you get to two larger and larger amounts of biofuels.

But the issue is that for both corn and soybeans, biofuels are only part of what they make. So you have about 15 billion gallons a year right now of corn ethanol that’s being produced, and the corn that goes into an ethanol refinery, what the ethanol refinery does, it takes the starch out and makes ethanol out of the starch. But all of the protein, the fiber, most of the other nutrients, and even some of the starch doesn’t convert. Everything gets left behind and gets sold as annual feed called distiller greens.

Most of what would happen, what would’ve happened to that corn if it hadn’t been used for ethanol is it would’ve gone to the animal feed market anyway. So you lose the starch part of the ethanol and that no longer goes to feed the animals. But all of the yeast that ferment the ethanol and grow in the starch, the sort of spend yeast gets added into this diller grain. So you take this corn that would’ve gone a hundred percent annual feed, and instead you have kind of a slightly smaller volume of a higher protein version of animal feed.

All this is to say, at least in the case of corn, we make 15 billion gallons of ethanol. I think it uses about 30% of our corn crop, but it’s not like that 30% of the corn crop goes away, that 30% of the corn crop is still going into annual feed and not having a terribly large impact on the net acreage not a zero impact. It absolutely does have zero impact, and it does cause some land exchange, but it’s not like that 30% is gone and completely out of the food system just comes into the food system in a different way.

Lucy Stitzer:

So I think if you could just explain the four different types just so people can understand what we’re talking about a little bit.

Colin Murphy:

So like you said, ethanol’s kind of the simple one. The way we predominantly make it now is we pull starch out of something in the US it’s pretty much all corn in Brazil or other countries that have a sugar cane industry. The sugar cane is another great way to make ethanol. And then you ferment, you break starch down into sugars, and then you ferment the sugars into alcohols. Essentially the same process you make used for making beer, wine, or spirits just done on an industrial scale. And it wouldn’t taste very good if you tried to drink it directly. And ethanol is currently in the US blended into all gasoline at about a 10% level. That’s what we’ve been doing since the mid two thousands. The having some ethanol gasoline helps the gasoline burn cleaner. You need about six or 7% to really get that clean burning, the oxygen effect.

Beyond that, you’re just trying to reduce the amount of petroleum you use and replace with something that’s lower carbon than petroleum. And there has been a lot of controversy over corn ethanol, whether it is actually lower carbon. There was a very famous study that came out last year, guy named Tyler Lark was the lead author on it, and he made the argument that the RFS was actually ultimately worse, made the corn ethanol worse than petroleum. So I don’t think his methods were quite right. Part of it. The problem with biofuels is a lot of the impact and a lot of greenhouse stuff comes from what we call indirect land use change. And this is where because you have fuel producers now starting to consume agricultural products that historically has only gone into feeding people or animals or a really small number of other industrial uses.

Now the demand for these industrial, these agricultural commodities goes up and somewhere someone in the world is going to have to make more of the stuff to replace what went into fuels. And some of that replacement comes from plowing more land and bringing more land into cultivation. And there’s a big carbon impact from plowing more land. So the LARC paper said because of I luck, the renewable fuel standard and the corn ethanol was worse than the petroleum, there has been a lot of back and forth, there’s several back and forth in terms of open comment letters published by various groups of researchers on that topic. So a lot of methodological uncertainty over that. Beyond that, even if you believe the LARC paper, I think the appropriate take home message from it is maybe we shouldn’t have gone from 15 billion gallons of ethanol we did. And you can’t really unring that bell, even if you sort of stopped and said, well, any land that was cleared, we’ll return to natural form, the carbon’s lost and takes many decades to recover.

And we don’t have that sort of time. So the question I think now is what’s most useful? What’s the way to get the best use out of it? So the other thing with ethanol is there’s a process that some companies have been developed and are looking to commercialize right now where you can convert ethanol into aviation fuel. It’s not entirely unlike the Fischer–Tropsch synthesis we discussed earlier. And it’s small molecule, I’m sorry, it’s a small molecule that you can catalytic assemble into other bigger molecules like the ones that we used to fly planes on. So that might be one of the ways eventually as more EVs take over the on-road space, there’s not going to enough gasoline to blend the ethanol into, and there is some opportunity for us to increase the amount of ethanol we use. Most cars are on road, they can handle 15% ethanol without any problem.

And that would be a way to, again, push petroleum out of the system quicker, or you could turn the ethanol into jet fuel and use it to push petroleum out system that way. And that’s some of the stuff that we’re researching right now for the diesel substitutes. There’s biodiesel and renewable diesel. So biodiesel is made by a process called fatty acid methyl ester, or it’s a relatively simple low energy process to convert. Vegetable oils could be used cooking oil, could be soybean oil or any vegetable oil. You sort of heat it to a medium temperature, add some chemicals, and you can convert it to this biodiesel biodiesel. You can run it into written into most existing diesel engines up to about 20%. If you go over that, you have to start modifying the engine a bit to handle it. Plus, in cold weather, biodiesel starts to, just like most vegetable oils will start to get kind of thick and sludgy and gel up.

So most of the time, biodiesel is blended into regular diesel at a 5% or 7% level, and it’s fine. Doesn’t really cause a lot of problems that way. But because of these infrastructure issues, because of the cold weather performance and the need to only blend to a certain level, it’s not really what people are focused on right now. There’s not a lot of growth in the biodiesel space. Most producers have turned to renewable diesel. They can add some more hydrogen, and if they add a bit more hydrogen, you get a bit more of a coming out like SAF or jet fuel. So you can sort of choose whether you’re going to emphasize the production of renewable diesel or emphasize the production of SAF of renewable jet fuel. To date, most of the policies in the US have made it more beneficial for them to make renewable diesel. So that’s what they do. But with the SAF tax credit under the IRA, it’s likely we’re going to see a lot of the producers starting to tweak their process a bit to push more of their total product out through the SaaS pathways and a little bit less through the diesel pathways. Right.

Lucy Stitzer:

Well, plus the airlines have committed to a higher SAAF percentage.

Colin Murphy:

In the US it’s mostly voluntary commitments and incentives. The Saban challenge, which was the target that was put forth by the Biden administration but didn’t have a whole lot of regulatory teeth behind it, at least not yet, but there’s the SAAF tax credit that’s actually going to make a pretty big difference. Now, there’s a lot of controversy, surprisingly enough in this space controversy around the SAF tax credit and how exactly you’re going to define it. Most of that, again, comes down to this indirect land use change issue. So the way that the tax credit was set forth by Congress was if you’ll have to be at least 50% cleaner than petroleum and you get an additional bonus for every percentage point below 50, they’re able to get. So if you make it even cleaner, you get a larger and larger per gallon incentive.

Lucy Stitzer:

So you go around $1.25. The issue with that is to determine whether you get $1.25 or $1.50 or $1.75 is don’t you have to go back to the farm to determine how they’re growing the corn and determine what type of agriculture they’re using, whether they’re using cover crops or not. And that bodes a whole other series of questions of how do you verify how much carbon they’re sequestering through their growing methods.

Colin Murphy:

That is a big part of it. So we have good tools in the field of lifecycle analysis to understand how much fertilizer and how much diesel and how much electricity is used. For every ton of corn that comes off the field, it’s a lot more complex to understand how the use of a cover crop would affect soil carbon. We know with very high confidence that you can improve the amount of solid carbon retained in the soil by using things like cover crops or compost or possibly biochar or changing the types of crops or the harvest patterns or tilling the soil less. We know there’s a lot of things that can improve it, but soil is a really complex and dynamic system. So knowing that at least pushing that certain things move the needle in the correct direction is one thing, but being able to quantify it and say how many tons per acre are actually being saved?

There is another level of complexity altogether. And then on soil carbon, you also have the issue of permanence. So a farmer can make choices to use cover crops or use compost or switch to no-till agriculture and build up a lot of solid carbon in their soil. But if in five years or 10 years they decide to switch and need to start tilling the soil again, that carbon goes away. And if they received incentives to build up carbon and then in the future they till it and they lose it, all that money is kind of wasted. What they’re being paid for is permanent sequestration of carbon, and it’s not permanent at that point. Or if they sell their land to somebody else, then whoever else has it in the future, they could do the tillage and lose it. So this permanence or reversion risk is one of the things that really makes a lot of the regenerative agriculture policies, incentives so complex on top of the fact that there’s still a lot of uncertainty, and we’re still not able to effectively quantify it without doing a lot of really expensive and time consuming measurement that is probably just too expensive to really allow the farmer to receive much of an incentive, enough incentive for them to want to change their behavior.

So it’s the kind of thing we’re working on, and I think that we’ll keep getting better at it, but there’s a lot of uncertainty around soil carbon. The other big issue is that indirect land use change. The thing with indirect land use change is there’s really no way to develop a sensor that can measure it directly. Because what happens is because somebody is using more soybean oil in the US to make renewable diesel or saf, somebody else in the world might be slashing and burning rainforest in Southeast Asia to do a palm plantation, to grow palm oil, to sell to somebody on their side of the world because the lack of soybean oil coming out of the US has now changed international commodity flows. So there’s really no way for us to very precisely know how much indirect land use change every ton of soybean oil causes.

The only way you can really try to quantify it is through a model. What our models, the uncertainty is very large, and there’s a bunch of places in the model where you have to make these assumptions that are ultimately they’re subjective. There’s no objectively right or wrong way to make it. There’s only a bunch of different subjective ways. For example, when you go soybeans, you get soybean oil and soybean meal. We know how much fertilizer it took to grow the soybeans, so we know how many tons of carbon or grams of carbon were emitted in order to produce this ton of soybeans. But how much of that carbon is the responsibility of the soybean meal versus how much of it is the responsibility of the soybean oil? There’s a lot of different ways to do that. You can look at the mass, you can look at the energy content, you can look at the economic value.

None of them are objectively right or wrong, but they’ll all give you very different answers. And so that’s one of the problems with the model and with modeling eye luck, it’s the only way to assess indirect land use change, but you’re never going to get one definitively correct answer out of it. And so what’s happening with the SAF tax credit is a lot of the producers are asking the Department of Treasury, the ones that have to make the decision because a tax credit, and they’re obviously, they’re not biofuel analysts by nature at Department of Treasury, but they’re asking treasury, okay, well, let’s use this one particular model. And the US uses this model called greet to do lifecycle analysis. It is this fantastically complex model that’s been being developed for 20 years now, and it’s dozens of papers behind it. But in the current version of Greek, they include one IUC estimate based off of a different model.

And this estimate happens to be extremely friendly towards things like corn and soybeans. And so the industry’s saying, well, look, Greek’s the gold standard. This is the thing that they’ve decided to put in for their best guess. So let’s just use that and use that model with that estimate of eye look in order to determine whether we are 50% cleaner than petroleum, and if we are how much far below to figure out the per gallon range. Whereas a lot of other environmental saying, well know you don’t want to use one model. You have to use multiple models and look at the average or look at the range of options that comes out when you make these subjective decisions in different ways. That gives you a better sense of what the actual impact is not to use one of them. And if you do that, then in more justified and reasonable and certainly risk averse way than a lot of the soybean oil fuels or the corn ethanol alcohol to jet fuels wouldn’t be eligible for these credits.

I also recently gave a talk and published a blog post, which is available through our website if you go to lowcarbonfuel.uc.edu under presentations. I gave a talk over the summer talking about this and sort of why you can’t trust any one single model and why you have to go and look at the ensemble of various approaches out there. And even looking at going through the, if we know that we’re, whatever number we pick is probably not going to be right or it’s going to be too high or too low, we need to think about the risks of whether it’s better to overshoot our IUC estimate or to undershoot our ILAC estimate. And when you start thinking through all the various risk factors, it is much, much safer for us to overestimate IUC to take conservative approach and consume maybe less biofuels than would be theoretically optimal because it keeps us away from the more scary and irreversible risks than to error on the other side. So is there a

Lucy Stitzer:

Chance then that the US farmers or any farmer won’t be able to qualify then for selling their corn into the ethanol market?

Colin Murphy:

Well, no, this wouldn’t change the RFS, so this is just whether there would be the option to get an additional credit for producing jet fuel. But yeah, the existing markets aren’t going to change. They’re going to continue the trajectory set by the RFS volume.

Lucy Stitzer:

This is just for SAF, this is, so there’s a possibility then that us farmers wouldn’t be able to sell into the a f market, the ethanol market, but they could sell into the regular ethanol market.

Colin Murphy:

Yeah, that would be it. And so I think the worry is if you adopt too lax of a policy and bring too many biofuels in the system, then you could really start getting a lot of land conversion. And I don’t think there’s necessarily a problem from the food versus fuel standpoint. I mean, that would increase food prices, but probably not a huge amount. It’s more the carbon impact that if we’re going to go and expand agriculture a lot, there’s a huge carbon impact from doing that. You have to do it to feed people. Okay. Feeding people is obviously a priority. We need to do that. So if we have to have some carbon impact and expand land to keep feeding people, that’s one thing. But if we shouldn’t be doing things that have huge carbon impact in the name of, reduce the amount of carbon in the atmosphere, which is really the goal of these biofuel policies. So that’s where we’re sort of getting hung up on, and we’re waiting for treasury to make the decision and see what they ultimately do. But if they choose to take the really lax approach on I luck and let these incentives be given out to a lot of farmers, there’s a chance you could get enough total growth here that you’ll start converting a lot of land globally and the carbon benefits could be pretty bad or they wouldn’t be a benefit at that point.

Lucy Stitzer:

Right. As it pertain to the land use.

Colin Murphy:

Yeah.

Lucy Stitzer:

Portion of the conversation. So let’s circle back to the original actually purpose of this conversation is really, as we do increase renewable fuels with all the ones that we’ve talked about, is there enough land and will there be a food versus fuel debate, putting aside the land use changes and putting aside the regulations and the great standards and all of that, just is there enough land and will there be enough food?

Colin Murphy:

So absolutely there’s enough land. Like we just said before, we jumped ahead a little bit. But the worry here is that we will be producing more corn and soybeans than would be good for the climate. And again, if we have to produce it to feed people, yes, that’s the choice we make, and that’s the right choice. But yeah, so we’re not worried that there’s going to be an absolute lack of land, nor really an absolute lack of food in any way. Are there risks that biofuel policy could increase the price of food? Yes, there are to date, outside of a couple of transient spikes, often around the drought we had in the early 20 teens, we haven’t seen a really massive increase in food prices as a result of fuel policy. It is definitely there, but in a lot of cases, having alternative supplies of fuel means you are less vulnerable to price fluctuations in petroleum.

So yes, there is some increase in the inflation applied to food prices, but less inflation applied to gasoline prices. I’m not enough of an economist to have a really well-informed opinion on the whole, is it better or worse than not having a biofuel policy? But nothing I’ve seen makes us seem like it’s terribly bad. Beyond that, we know that climate change is going to be incredibly bad for a lot of things, including for the food production system because many, many parts of the world that are highly fertile right now won’t be due to higher temperatures and changing rainfall patterns. So as long as the fuels that we’re making are actually lower carbon than the petroleum, they’re displacing. And that has not always been the case. There’s absolutely been several examples where we produce large amounts of fuels that are worse than the petroleum displaced, but many of them are at least lower carbon. And as long as that’s the case, then the value of reducing greenhouse gas emissions probably does more to help secure the long-term food supply from the effects of climate change than it does to hurt it.

Lucy Stitzer:

So it’s not like we’re only growing corn and soybeans only for fuel.

Colin Murphy:

Yes, absolutely. And that’s part of the reason why it’s so hard to analyze the greenhouse gas impacts of biofuels because almost every input has that dual purpose. And so one of the other things that we’ve been seeing is because we had a biofuel policy through the RFF that really until the last five years or so was almost entirely ethanol, really, renewable diesel wasn’t a big thing until five, six years ago because of this policy. We were actually starting to see more growers in the Midwest go from rotations where they do alternate corn and soy every other year, and soy helps add nitrogen because of nitrogen fixing plants. And then also by having different species of plant, you sort of provide a bit of a break in the pathogen cycles, so you need maybe a little bit less herbicide or less additives to controlled diseases for a while.

We’re starting to see more growers going from corn soil rotation to continuous corn because you had this demand for corn biofuels. Well, now with renewable diesel coming online and demanding a lot of soybean oil because that’s the cheapest oil that you can grow really in the western hemisphere, you’re now seeing people go back to corn soy rotations, and that has some additional benefits in terms of slightly reducing the amount of nitrogen fertilizer they need, and slightly reducing the amount of herbicides and other pathogen, chemical pathogen control measures that they have to use. These are, I’m sure, likely to be much smaller than just the big impacts of are these fuels, in fact clean up the petroleum? But they do make a difference. And so the fact that we’re seeing soy growth, there’s some benefits in terms of agronomy there.

Lucy Stitzer:

Well, thank you very much. This has been fascinating and certainly provides a lot of clarity around the renewable fuels conversation.

Colin Murphy:

Yeah, certainly. Happy to help. This is a really complex topic and one that’s going to become increasingly important in the next few years. So very happy to help you and your listeners start to learn more about it. And again, there’s a lot of data and resources available at our website at low carbon fuel dot uc davis.edu.

Lucy Stitzer:

Great. Well, thank you very much.

Posted on

Transcript: Digging into RMPs

Transcript from November 29, 2023 podcast

Hello, everybody. Garland West here with another Digging In episode, where we try to take a little bit deeper dive into subjects involving our food and the incredible system that produces it.

Today we have a really fun topic for you and one that I bet tells you some things you didn’t know before. We all know how important research is to our food system. We use sound science to open all sorts of doors, better plants and better animals through improved nutrition, better genetics, better production techniques. The list goes on and on and on. Scientists work every day to unlock more value in the commodities and the staples we’ve relied upon for literally hundreds of years. We get better, more nutritious food and innovative new uses that meet real market needs, and we get smarter consumers to boot. Our food system does more than ever before to provide a steady stream of the data and the information that comes from data so we can all make better, smarter food decisions.

None of that happens by chance. It doesn’t fall out of the blue like manna from heaven. It takes money and lots of it. It takes work by thousands of researchers all pointed toward finding answers to some of the toughest issues we still wrestle with in our food system. It takes a concerted effort to get the word out to people. Today we want to tell you a little about the role played by producers in making all that happen. Not the government, not fancy think tanks, not big business or big universities. All those folks play an important role, but we often overlook what hardworking, financially challenged farmers do to drive research and better consumer understanding of our food.

Today we’re going to talk to two people at the front lines of that effort. Bob Parker and Ryan Lepicier have spent years guiding what’s called a research marketing and promotion organization, or RMP, which are producer funded organizations that take farmer dollars and channel them into highly valuable research and public education. Bob and Ryan head the National Peanut Board based in Atlanta, and for more than a dozen years, have work to turn the commitment of peanut producers across the United States into something really, really important Today, we’ll ask them to tell us a bit about RMPs and especially what the peanut Board has been doing to help in peanut research and promotion.

Bob & Ryan, thank you for joining us at Dirt to Dinner. Digging in, you have a friendly audience here. Peanuts are one of my favorite stacks, and a peanut butter and jelly sandwich may be my ultimate comfort food, but in a world hungry for protein and with farmers needing every market opportunity they can find, there’s more at stake here than snacks. Let’s start with the basics. Tell us what an RMP is and why the work groups like yours is so important to the interests of consumers everywhere.

Bob Parker:

An RMP is a research marketing and promotion board. It’s an organization created by the producers of a commodity where they come together and they vote whether to establish an official research marketing and promotion organization with their producer dollars. And the goal is to increase demand through promotion and marketing. And the other goal is to improve efficiency and production through production research.

Garland West:

Well, how many of these organizations are there? I know I’m familiar with the National Peanut Board, but how many of these organizations exist across US? Agriculture?

Bob Parker:

How many stars are in the sky?

Garland West:

Good answer.

Bob Parker:

I counted up at least 25, and it ranges all over the board from beef, pork and egg fluid milk. There’s even a paper and packaging board that was created by the paper industry to generically promote the use of paper. And they do an exceptional job with saying, send a personal note, someone that’s very effective. There’s the mushroom board, there’s cotton, there’s even a honey board, there’s multiple avocado boards. Oh my goodness. Three or four avocado boards, Mexican avocados and avocados and mango board, which is mostly imported. So importers help pay an assessment. They help pay for the funding of these boards.

Garland West:

Is there some Christmas organization? How do you coordinate all of these activities? Or are they totally independent of each other?

Bob Parker:

Well, we’re all under oversight from the agricultural marketing Service of USDA. We’re all, we’re an instrument of the United States Department of Agriculture, if that makes any sense. So we were authorized by 1996 Act of Congress that allowed producers to come together and vote whether to assess themselves a certain amount per unit of sale. In our case, $3 and 55 cents a ton to fund our program. And that’s how most of these boards were created, but some were created through their own act.

Garland West:

Sorry to interrupt, but you said something that really got my attention as a taxpayer. It sounds to me like these organizations are self-funded. This is not taxpayer money.

Bob Parker:

There’s not a penny that goes to fund our operations from taxpayers. In fact, I would argue that we benefit taxpayers by our production research and increasing awareness of the benefits of consuming peanuts, for example. And because of our support for production research, we’ve lowered the cost of production to the point that the price of a serving a peanut butter or snack peanuts today is only 19 cents per serving. So the consumer I think, benefits from our work through lower cost to buy our products.

Garland West:

Is there any kind of measure, how do you go about assessing the effectiveness of the money you spend? Is there any kind of economic projection about every dollar you spend generating X number of something?

Bob Parker:

USDA requires that we do a return on investment analysis every five years. And with that analysis as an econometric analysis, the economist looks at where we focus our efforts and spending and then looks at the impact that our efforts had on those specific areas and calculates a return. And our last return on investment analysis was performed in 2019 and showed over a $9 return to the farmer for every dollar invested by Farmers

Garland West:

Nine to one.

Bob Parker:

Yeah. Did

Garland West:

I hear you correctly on that? Yes. So if I test a buck, I get $9 in return.

Bob Parker:

That’s right.

Garland West:

That’s pretty good return. That’s better than what I get at my local bank by a long shot. Well, you talk about research and you talk about marketing and promotion. Can you give me an example or a couple of examples in each of those areas? What kind of research do you support?

Bob Parker:

We support research in several areas. So we do production research and we also support food allergy research in the production research arena. It’s bottom driven, I would say. What we do is we have so many dollars that we’re required by our charter to spend on production research, and we will allocate this money to each state based on its percentage of the production of US peanuts. We’ll ask the states to seek proposals from their research community and bring those proposals to our board for approval. So the farmers on the ground, the state organizations who know better than anyone what they need and what their issues and problems are actually submit to us how to spend their allocation of the research dollars. On top of that, we also spend money, additional research funds on areas such as genomic research. So how can we improve the genetics of conventionally farmed peanuts without having to resort to transgenic peanuts? Because right now there’s consumer resistance, manufacturer resistance, and so we’ve funded substantial amounts of research along with other industry organizations in mapping the genome of the peanut and then putting that knowledge to use through genetic markers. So breeders now, instead of making a cross by trial and error and hoping it took and actually do a DNA test and see if the trait that they were seeking to introduce into another plant actually took. And then I’ll let Ryan talk about some of our food allergy research because I’ve been doing all the talking so far.

Ryan Lepicier:

I think it’s interesting in the simplest terms, I think of research marketing and promotion programs as a self-help tax that producers impose upon themselves to help solve problems. Like in our case with peanuts in the late 1990s, we saw consumption way down. And remember the nineties were a time of low fat everything, and of course peanuts have healthy fats. So the industry got together around this idea of let’s create one of these research marketing and promotion programs so that we can help to solve some problems that the industry is facing. And one of those was the need to communicate about nutrition to the consumer, about the fact that peanuts are healthy, about the fact that peanuts contain heart healthy fats and protein and things that we need to have healthy lives. On the allergy front, I think this is one of the most interesting stories about the peanut board.

Ryan Lepicier:

How did a bunch of peanut farmers get onto this issue of peanut allergy? When the board first formed in the early two thousands, they got this giant truck that went around the country to state fairs and festivals, and it had a stage that was on the back of the truck and this giant peanut popped up and there were chef demos and performers. And as they took this truck around the country from time to time, someone would come up to them and say something like, how does it feel to grow something that kills people? And they kind of scratch their heads and they’re like, Hmm, this is happening more than once. We’re getting negative comments here and there. What’s going on with peanut allergy? We better learn about this. We better get smart about this. And so they formed a scientific advisory counsel of some of the world’s top experts to advise them, and they ended up getting connected with this guy, Dr.

Ryan Lepicier:

Gideon lack, a researcher in London who had spoken about his theory that children in western societies like uk, the United States, Australia, we’re not getting peanut in the diet early yet. He knew from his work that kids in Israel got a peanut snack called Bumba when they were teething age. And so he was looking for funding to do a study about that very issue, and the board gave him some money. And that study was published and it showed indeed that kids in Israel were fed this peanut containing food early, and the prevalence of peanut allergy was much, much lower in Israel. So fast forward, he puts together this larger study, it’s called the LEAP study. And the LEAP study took over 500 kids and put them into two different groups. One group of kids, all the kids were at high risk of peanut allergy, meaning they had eczema or egg allergy already.

Ryan Lepicier:

And half the kids got peanut between four and six months and half the kids did not get peanut. And when the study was completed after many, many years, it turned out that you could reduce the prevalence of peanut allergy in the peanut eating group by 86%. So those kids by age five. So those kids that got peanut early in the LEAP study, say that again, I want to make sure That’s really impressive set of numbers there up to the Yeah, so the LEAP study took hundreds of kids and put them into two different groups. All these kids had egg allergy or eczema. That’s a risk factor for developing peanut allergy. Half the kids got peanuts between four and six months of age. The other half the kids got no peanut food. Fast forward, the kids are five years old, the study ends and the kids that got peanut early, they had a reduction peanut allergy by 86%.

Garland West:

Wow, that’s really impressive.

Ryan Lepicier:

So when you talk about research and promotion programs and how farmers are making a difference, they’re not only helping themselves, right? They’re helping society at large by funding nutrition research by funding allergy research. In this case a landmark study that was published in the New England Journal of Medicine that has changed the way that we feed our children. The dietary guidelines for Americans now say that kids should get all foods in the first year of life including allergenic foods like peanuts.

Garland West:

You’re telling me that the peanut industry, the peanut producer in particular, has funded this kind of important research work. Are we talking about tens of thousands of dollars of research, hundreds of thousands of dollars of research or million dollars of research,

Ryan Lepicier:

Try nearly $40 million in research education funding on the food allergy front,

Garland West:

Paid by peanut producers in America,

Ryan Lepicier:

Paid by peanut farmers in America.

Bob Parker:

Absolutely.

Garland West:

That’s

Bob Parker:

Very, that many could have gone for other things, but we felt like it was important to address that issue.

Garland West:

Absolutely, absolutely. I’ve also heard rumors that you get involved in some very interesting kind of marketing promotion activities, trying to organize this little podcast. For example, the travel schedule you guys have, the people of the peanut board are on the road nonstop telling the peanut story. How much time do you spend on the road trying to tell that story?

Ryan Lepicier:

Well, we have a great team here at the National Peanut Board of both staff members and partners like from our marketing agency or consultants that we bring in to help us with the work. And we keep everyone really busy. But the good news is that we are able to cover a lot of ground with a pretty modest budget. So we’re looking at consumer marketing really in two or three big buckets. So the first bucket would be consumer marketing, talking to consumers directly about the benefits of peanuts. And then we have a whole segment of our marketing work that’s focused on business development. How do we encourage new uses for peanuts, innovative new uses for peanuts? How do we encourage food service operators to use peanuts in their operation? And then a third thrust of our consumer work is really about reputation management. How do we defend the reputation of the peanut?

Ryan Lepicier:

So the allergy work would sort of fall under that bucket. How do we work to make a difference to improve the lives of people who suffer from peanut allergy? Of course, we’re working to eradicate peanut allergy, right? That’s the holy grail for us as we want to see peanut butter, I’m sorry. We want to see peanut allergy gone, right? We want it out of the picture, but there’s a lot that we can do in the interim to improve the lives of people who have peanut allergy. So for instance, we’ve funded research on oral immunotherapy that’s using the peanut or peanut protein to desensitize an individual with peanut allergies so that they have what’s called bite protection. The accidentally consume peanut. They’re not going to have a severe reaction. They’re not going to be peanut eaters eating PB and J every day, but they can consume peanut and live their lives without that nagging constant fear in the back of their heads that if I accidentally eat something with peanut, I could die.

Ryan Lepicier:

So those are really three areas of work. Of course, to me, and I’m a marketer at heart, is the consumer work is just so much fun. And that’s really because consumer marketing has changed at the speed of light and it continues to change at the speed of light. For many, many, many, many, many years, it was print, tv, radio out of home, and those marketing tools are still in the marketer toolbox, but we have so many amazing tools we can use now that provide us with data to help us improve what we’re doing on the next round. So I think our key platform now is TikTok and the National Peanut Board doesn’t even have a TikTok account. That’s not how you market on TikTok. So the fun thing about TikTok is being able to work with influencers or content creators have a following to help leverage their voices to tell the peanut story, right? We’re not telling it directly from the peanut board. We’re partnering with people who have followers who care about what they say and then using them to tell the peanut story.

Garland West:

Well, you’re dealing with somebody who has a very strong bias. I’m an old geezer who grew up on peanut butter and jelly sandwiches. One of my favorite snack foods is peanuts. We’ve got jars of peanuts all around our house, half consumed from where I leave them, wherever I wander around the house. And then as I’ve grown older, I’ve recognized that in a world that needs more and more protein, especially plant proteins, this is a wonder crop. I mean, this is an incredible product that could help the world meet its growing need for more protein, better our consumers generally understanding that. Is the awareness of this as a, I won’t call it a miracle food, but it is a super food. Is the consumer aware of that? Is there growing evidence that consumers recognize what peanuts can offer?

Bob Parker:

If you went by consumption numbers per capita? I would answer yes. They’re aware that peanuts and peanut butter are a healthy choice for plant-based protein. As we’ve seen per capita consumption rates hit all time records during the pandemic at 7.8 pounds per capita in 2021. It fell back slightly to 7.7 and 22 and held at 7.7 in 23. We do, those numbers are updated at the end of July each year. So we’re holding our,

Garland West:

But still respect,

Bob Parker:

We’re holding our ground. We would love to see an 8.08 pounds per capita consumption number one day. And that’s a difficult thing to attain because peanuts are a very, very mature market in the United States. Ryan mentioned over 90% of pantries already have at least one jar of peanut butter in them. So how do we get people to consume more peanuts?

Garland West:

How do you get food manufacturers to make more products in which peanuts are a component? I mean, how much of your time do you spend dealing with food manufacturers to try to sell the wonders of peanuts?

Bob Parker:

Well, we’re doing the best thing we can do, I think on that end is keep the cost of peanuts affordable to the manufacturer so that it is a really high powered but low cost ingredient. And when you look at the cost wholesale cost of peanuts today, even though it’s up a little bit recently, it’s still half of what it was 30 years ago when adjusted for inflation half.

Garland West:

Wow.

Ryan Lepicier:

One thing that’s encouraging to me is that in 2023, peanut butter reached a record high all time record high consumption of 4.4 pounds per capita. So here’s this staple food that’s been around forever that people still love and are continuing to buy. And the opportunity there for manufacturers is to leverage the popularity of peanut butter, of the flavor, the nostalgia into new products. And we see that all the time. Peanut butter and jelly flavored coffee creamer, for instance, was one that I saw recently. So manufacturers know that there’s something special about peanut butter. They know that there is something special to the consumer in terms of nostalgia. But I do think, to answer your earlier question, that consumers do recognize the wholesomeness and goodness of peanuts as both a food and as an agricultural crop. But at the end of the day, it’s all about they love the way the peanut butter tastes. They like the way that they feel when they eat it. They love the nostalgia of eating in shell peanuts like you get at a baseball game. These are emotional ties that people have to the food that our farmers grow.

Garland West:

Very, the very definition of comfort food,

Ryan Lepicier:

Yes, peanuts and peanut butter are the very definition of comfort food, and it’s pretty amazing to work promoting a product that so many people have an emotional connection to. It makes marketing so much easier.

Garland West:

Let me serve up a softball question to you. What could our government do to help spread the word about peanuts above and beyond what you’re doing? What could they do to help people understand the important benefits of peanuts as a source? Not just of tasty, pleasant comfort food, but something that’s really good for them? Is there something the government can do that they’re not doing? Now?

Ryan Lepicier:

I don’t know that we want to talk about what the government can do since we’re a quasi-governmental agency.

Garland West:

I wanted to give you the chance, so now I’ve done it. We can edit that out, don’t worry. One thing that I wanted to circle back on, I keep coming back to this nine to one ratio, which just boggles my mind. You say you have to have periodic assessments by your producers to sort evaluate the work that you’re doing and judge it. What’s your track record and support among peanut producers? Do they like what you’re doing? Are they supportive of it? Are there pockets of support that are stronger than others, or is it kind of a universal support across all the growing areas?

Bob Parker:

We have a referendum every five years, and since I’ve been here, we’ve had referendums in 2014 and 2019, we will have another referendum in 2024, and our support from producers has increased in each of the last two referendums to well over 90% affirmative for continuation.

Garland West:

Over 90% more than nine out of 10?

Bob Parker:

Yes.

Garland West:

Okay. How does that compare with some of these other RMP organizations now? Do you seem to have stronger grower support than some of the others, or is that pretty much a typical rating?

Bob Parker:

I think our support is stronger, frankly. One board recently got voted down by its producers and failed to get a majority vote.
So some industries have opposition from within and from external groups. Some of the animal boards have opposition from animal rights groups that have spent a lot of money targeting these boards, which is to me a vote of confidence because that means obviously that animal rights groups think that RMPs are effective in marketing and increasing demand and consumption for meat, so they wouldn’t bother to attack them.

Ryan Lepicier:

I think what we have Garland, I think what we have going for us as a peanut industry is that we’re a pretty tight-knit industry. We’re a much smaller crop than say corn or soybeans, but we’re delivering results where it matters to the producer, right? We are funding research that’s helping solve problems on the farm. We were part of the funding for the genomics initiative, which unlocked the genome of the peanut, which our scientists are now using to create varieties that help solve problems that producers face on the farm. And then we’ve already talked about food allergy, but we’re made great, great progress on peanut allergy and people can see what we’re doing and they can say the peanut board is doing some really unique work that’s really helping to solve some problems that we have, but let’s keep it going.

Garland West:

Well, between the two of you, you’ve got decades of practical frontline experience in this. So I’m going to put you on the spot here and say, I want you to apply those decades of experience, put on your Johnny Carson Carac, the magnificent hat, and tell me what’s going to happen to you, your organization and organizations like yours in the years ahead. How are you going to be called upon to do something more and different than you’re currently being asked to do? Do you have any projections in that

Bob Parker:

Area? I’m sure that, and I’m going to tee this up for Ryan, 10 years ago, the way we marketed to consumers was totally different than the way we market to consumers today. We were doing print advertisements, was our main method of promoting to consumers, and we shifted totally to online and digital. And the risk with that is that our producers may not see our ads in a magazine because we’re not advertising or we’re not promoting where maybe our producers are. But what lies ahead, I think in five years, 10 years will be totally different from the way we’re marketing and promoting today. And now I’ll hand it off to Ryan to talk

Garland West:

About, Hey Ryan, you’re on the spot there. Tell everybody about your new job.

Ryan Lepicier:

Well, I agree with Bob that, and I mentioned this earlier, that marketing changes at the speed of light As a marketer in 2024, you can’t employ the same tactics that you did every year for the last five years. You’ve got to be abreast of what’s coming down the pipeline. Where are the consumers you’re trying to reach? And you’ve got to be on those platforms. I think the exciting thing for marketers though is that we are going to see a revolution in the way that data is used to reach our audiences. And we’re just at the tip of the iceberg with generative artificial intelligence. But I’m super excited to see where that goes. But I also think, not just in marketing, but one of our challenges is that as our yields increase because of the productivity on the farm increasing, we’re growing a million more tons of peanuts today than we were 10 years ago.

Ryan Lepicier:

And the trajectory is that in 10 more years, we’ll be growing in other million tons taking us to approximately 4 million tons. So what are we going to do with all of those peanuts? We can use them in the domestic market as edible food. We can crush them for oil, we can export them. But I think we’ve got to think seriously in our industry about what are some new uses for peanuts, non-edible uses? And Bob has laid the groundwork for exploring can we produce a peanut that has a higher oil content than the peanuts that we eat that could be used to be crushed as oil. So they would basically, the path would be from the farm to the oil refinery. We’re importing peanut oil that we eat, yet we are growing more peanuts. So it seems like there’s an opportunity there to unlock a potential new use. I think it’s been well publicized that a major oil company is exploring peanuts for biofuels. So what opportunities are there for biofuels? As you mentioned earlier, that peanuts are a crop that’s sustainable to grow. It’s affordable and as a food, it’s delicious. But there are other properties of the peanut, like the oil that make them valuable to market segments that we’re just now starting to explore and tap into.

Garland West:

Wow.

Bob Parker:

There’s also been some research on using certain types of peanuts in a chicken ration for layers and for meat chickens that’s showing some real promise enhanced nutritional profiles of eggs and possibly meat, which could increase demand for peanuts if that takes hold.

Garland West:

So peanuts playing a role beyond their own, beyond them being a source of protein. They’re also potentially something that could improve the production of other forms of protein that the world needs. Really interesting stuff. How in the world do you maintain connections with the producers? I mean, peanut peanuts are produced across the entire southern tier of the United States. How do you go about making sure that you stay in touch with the producers that support you? Especially when you talk about the distance between the traditional marketing tools and the experience of producers increasingly in a modern age. How do you maintain contact with your producers?

Bob Parker:

One thing is a biweekly newsletter that goes out to the industry as a whole and then a quarterly print magazine that goes out to the industry as a whole that talks about really interesting issues around peanuts and highlight some of our work that we’re doing. We certainly have an obligation to make producers aware of our work so that they want, we have an obligation to make producers aware of the work we’re doing, so they’ll feel like they’re getting a benefit from the assessment that they’re paying in to fund our programs.

Garland West:

How much time do you spend actually walking peanut fields? How much do you go out there and get dirt between your toes?

Bob Parker:

Living in Atlanta, it’s not easy to get out into peanut fields. I try to get out as much as I can, but it’s difficult to be everywhere else. We have to be and do that. But we do try to go to every state meeting. We have 12 board members. We have 11 primary producing states that have a board seat and we have a large seat. We’ll have someone at every one of their meetings. And Ryan or I try to go to as many as we can, but if we can’t make it, one of our staff members will be there and we’ll talk about our work.

Garland West:

Well, if you’ve got over a 90% approval rating, it sounds like you’re doing something right?

Bob Parker:

Yeah, I think so. But we can’t take that for granted either.

Garland West:

Alright. Well, this is another

Ryan Lepicier:

Powerful way that we’re able to keep in touch with producers Garland, is through the relationships we have with grower leaders in the industry. So for instance, we’re members of the American Peanut Council, our trade association for the US peanut industry. And many of the states will send a delegation of peanut producers who are leaders in their state. And when those leaders know what you’re doing and they value the work that you’re doing, they’re talking about it to growers in their area. So it kind of helps us to maintain those relationships that we have.

Bob Parker:

We have 24, 25 peanut industry organizations, and I’m probably leaving some out when I try to count them up. And so trying to get alignment is extremely important. And once a year we have a marketing summit where we bring in, we cover the cost of travel for the state executives from each major peanut producing state, and their board chairs and other industry organizations are invited as well. This week we head to Chicago for that meeting and we unveil our marketing plan for the upcoming year at that meeting. And we try to get alignment. We say, here’s what we’re doing. Our resources are there for you. All you have to do is ask and we’ll share our resources so that we, hopefully we’ll get them to also focus in the same direction that we are. And that’s something that Ryan has led and hatched some years ago, and I think it’s been very effective in creating industry alignment and coercion or cohesiveness. It’s been very important in developing industry alignment and cohesion.

Garland West:

Excellent. Ryan, you want to add anything to that? Don’t have to.

Ryan Lepicier:

I don’t think so. Bob said it. Well,

Garland West:

You have been very, very generous with your time. This has been very educational. I think that the listeners to digging in will find it of interest. I’d like to thank you for your time and give you one last chance to deliver the magic message at the end of the podcast. If you want consumers to know one thing about peanuts and the National Peanut Board, what would you like them to know?

Bob Parker:

Peanuts are healthy. They’re incredibly, peanuts are healthy. They taste amazingly, start over. Peanuts are healthy. They’re good for you with any and nutrients and healthy fats. They taste great and they’re sustainable like no other nut.

Garland West:

Very

Ryan Lepicier:

Nice. Since Bob covered the functional benefits of peanuts, I’ll talk a little bit about the other thing that I love about peanuts, and that’s our peanut farmers. Our peanut farmers are amazing in many cases. In most cases, running multi-generational family businesses. And if anybody thinks being a farmer is easy, they’ve got another thing coming. Our farmers put a lot at risk every year when they grow the crops that they bring to market for the consumer. And fortunately, I think many of them take great pride in doing that work and are willing to take the risks that come their way.

And it’s very exciting to see some of the things that young farmers are bringing to the table. Their dad, their grandparents, their moms may have been farmers, but these young farmers are a new generation and they’re bringing the same but a little bit different level of excitement and approach to making sure that their business is sustainable for their children.

Garland West:

Wow, that’s very, very good. You’re telling me that they’re tasty, they’re nutritious, they’re sustainable environmentally, and they’re sustainable in terms of perpetuating the family farm that’s made our American Ag system what it’s today. That’s a pretty good summary of an industry. Bob & Ryan, that’s a great note to end on.

Thank you again for being with us on Dirt to Dinner’s, Digging In podcast. I might add a personal note of congratulations to both men, Bob, for a remarkable career in service to peanut farmers in the entire peanut industry and agriculture in general for that matter. And Ryan for his recent selection to follow Bob as the peanut board’s next president and CEO. Guys, thanks for a job very, very well done.

I’m Garland West reminding you to visit us at www dirttodinnedev.wpenginepowered.com. I’ll promise we’ll make it fun and informative.