Strong corn crop key to maintaining support for RFS: Novozymes CEO

Source: by Christopher Doering, Des Moines Register • Posted: Tuesday, June 4, 2013

The new head of enzyme and microorganism giant Novozymes said a strong 2013 U.S. corn crop will provide support for ethanol backers in their ongoing battle with oil giants over the future of the country’s renewable fuel policy.

The oil industry, lead by the American Petroleum Institute and other opponents of the controversial Renewable Fuel Standard, used last year’s widespread drought to build momentum in their efforts to change or end the 8-year old law that requires refiners to use alternative fuels from corn, soybeans and other products in the country’s gasoline supply.

“A good corn crop in the U.S., they are not likely to be successful” in overturning the Renewable Fuel Standard, Peder Holk Nielsen, who became chief executive of the Denmark-based company in April, said during an interview.

“But if we get into a situation like last year with corn where corn crop estimates start to decline because of drought in the Midwest. That can be, I think, a difficult, dangerous cocktail that could actually produce a situation where Capital Hill would waive the RFS.”

The U.S. Agriculture Department forecast a record corn crop last month of 14.14 billion bushels this fall, pushing corn stockpiles just above 2 billion bushels, the largest in nine years. But a wet spring has slowed corn plantings in much of the Corn Belt, and the delay could end up curtailing acreage and final production.

Novozymes has an active stake in the bioenergy sector in the United States as the world’s largest producer of enzymes with a 47 percent share of the global market. The company, whose products are used for everything from speeding up the ethanol production process to squeezing more yield out of a bushel of corn, has a small office in Ames.

Lawmakers in Washington have proposed legislation that would make significant changes to the mandate such as by capping the amount of the renewable fuel allowed in gasoline at 10 percent. The Environmental Protection Agency has approved E15, a fuel blend with 15 percent ethanol and 85 percent gasoline, in newer vehicles but it has yet to gain traction.

It remains uncertain how much support the bills will gain on Capitol Hill, especially among lawmakers not representing rural districts or states. But higher corn prices this summer, followed by more expensive prices for beef, chicken and other meats at the grocery store, could be enough to convince skeptical lawmakers.

During the interview, Nielsen said Novozymes has identified sustainable agriculture as a source of future growth for the company. He said as global populations soar and the need for food increases, microorganisms will play an important role in boosting yields for crops such as corn and soybeans without increasing the use of land, fertilizers or pesticides.

In the future, he said the right organisms could be found that work best with yellow corn grown in Iowa or soybeans being raised in Brazil. Microbes work, for example, by improving the amount of nutrients the plant absorbs from the soil. The bioagriculture market is about $1 billion today, Nielsen said, compared to about $150 billion for fertilizer, pesticides and other chemicals.

“It’s very, very early in the process,” he said. “We don’t believe this is going to be the only solution but we believe this can improve yields and replace some of the stuff that is used today.”