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USDA: Booming US Ethanol Production Could Require Additional 1 Billion Bushels of Corn in 2007-08
11 January 2007
Feeding the boom in ethanol production may require as much as an additional 1 billion bushels of the 2007 US corn crop, said Dr. Keith Collins, Chief Economist for the US Department of Agriculture, in testimony this week before the US Senate Committee on Agriculture, Nutrition and Forestry.
About 2.15 billion bushels of the 2006 corn crop are being used for ethanol production; an additional 1 billion bushels thus would represent an increase of 46.5%. At a current yield trend of 152 bushels of corn per acre, use of an extra 1 billion bushels would require an additional 6.5 million acres of corn, if other uses remain unchanged at current levels, according to Dr. Collins.
In 2000, about 1.6 billion gallons of ethanol were produced in the United States, with ethanol utilizing about 6 percent of the 2000 corn harvest. In 2006, an estimated 5 billion gallons of ethanol were produced, and ethanol accounted for 20 percent of the 2006 corn harvest.
Renewable Fuels Association data indicate there are now 110 ethanol plants with total capacity of 5.4 billion gallons and another 73 ethanol plants under construction and another 8 facilities expanding. When construction and expansion are completed, ethanol capacity in the United States will be 11.4 billion gallons per year, which is likely to occur during 2008-09.
To provide an indication of how rapidly this expansion is occurring, in August 2006, just 6 months ago, the capacity of known plants and those under construction and expansion was 7.4 billion gallons, some 4 billion less than current estimates.
Dr. Collins attributed the skyrocketing production to a number of factors, including:
- High oil prices;
- The 51 cent per gallon tax credit provided to blenders;
- Low corn prices until this fall;
- The ethanol import duty of 54 cents per gallon;
- Improving production economics;
- The Renewable Fuels Standard (RFS); and
- The elimination of ethanol’s main oxygenate competitor, methyl tertiary butyl ether (MTBE).
With more corn moving to more ethanol plants, rising corn prices are signaling a market need for more corn acreage and production.
For 2006/07, USDA forecasts the total use of US corn will be equivalent to the production on 85.6 million acres. Yet, only 78.6 million acres were planted in 2006.
Corn supplies are expected to meet demand because of large carrying stocks of corn, which are expected to be reduced by more than half. During August 2006, prior to the start of the 2006/07 crop year, the average price received by farmers for corn was $2.09 per bushel. By December 2006, after a corn harvest that was slightly below summer expectations and a growing awareness that ethanol production capacity is coming on line at a very rapid rate, US farm-level corn prices averaged $3.01 per bushel, an increase of 44 percent from the August level.
With corn stock levels already being reduced this year, another large drawdown in stocks for the 2007-crop marketing year will not be available to meet the rising demand, thus the higher corn prices that are signaling more planting. Beyond 2007, to achieve steady increases in ethanol production from corn will require ever more acreage or higher corn yields per acre, or both.
The rising prices will encourage planting corn at the expense of soy beans and other crops, with concomitant increases in the prices of the crops facing decreased planting, according to Dr. Collins.
Related issues resulting from the increase in corn acreage include the possible environmental consequences of more nitrogen fertilizer use, and the potential that more marginal lands may come into production having greater vulnerability to erosion, nutrient runoff, and leaching.
Dr. Collins pointed to research as potentially providing productivity gains that could solve some of the acreage challenge.
In fact, virtually all the growth in US agricultural output over the last 50 years is explained by growth in productivity. Growth in inputs used, such as land, has been quite modest.
Since 1948, corn yields have increased four-fold, from 40 bushels per acre to 160 bushels in 2004 due to fertilizers, better management, technology, and improved crop genetics. It appears corn yields in the past couple of years have moved above the long-term trend and may continue to do so in coming years as well, helping to meet biofuel demand and reduce pressure on corn prices and acreage.
Acreage planted to genetically engineered corn varieties has increased from 25 percent of corn acres in 2000 to 61 percent this year. Over the past few years, new generation root worm resistant corn has been introduced and is showing strong yield increases in many areas. Over the next couple of years, drought-tolerant varieties of corn are expected to become commercially available.
As we look out over the next decade, USDA trend projections suggest US corn yields per acre rising to 168 bushels by 2015, however, at least one seed company projects yields that are more than 20 bushels per acre above that level.
Each 5 bushel increase in yield above the current trend level would be the equivalent of adding around 2.5 million acres to corn plantings, enough to produce an additional one billion gallons of ethanol each year.
Dr. Collins, however, expects demand growth for ethanol to slow in several years as a theoretical E10 market—roughly 14 billion gallons of ethanol—reaches its limit. E10 is the practical limit for universal blending of ethanol. Pushing to higher blends would require regulatory approval and changes in engine warranty coverages.
If ethanol is to continue its expansion beyond 10 percent of US gasoline use, higher blend levels and E85 will have to become far more pervasive than they are today, and, given corn production constraints, cellulosic ethanol will have to become economically feasible.
Despite ethanol’s small share of gasoline demand, it already claims a large share of corn production. Ethanol could account for over 25 percent of the 2007 crop of corn, compared with 20 percent for the 2006 crop.
Clearly, developing biofuels from alternative feedstocks will be necessary for long-term expansion of biofuels. Cellulosic ethanol appears to be the best biofuel alternative for reducing crude oil imports, but making it commercially feasible on a wide scale is a formidable challenge.
January 11, 2007 in Ethanol | Permalink | Comments (39) | TrackBack (0)
Comments
Posted by: Rafael Seidl | January 12, 2007 at 12:45 PM
There is an inport tax on Brazilian ethanol but not on oil from Saudi Arabia!
What's wrong with this picture.
Posted by: DS | January 12, 2007 at 01:27 PM
As the Earth warms weather becomes more extreme. Plants dry up faster between rains and the air holds more moisture. More droughts and more floods. Rainfall is up on all continents and so is drought.
Posted by: APosterFormerlyKnownAsAndy | January 12, 2007 at 07:45 PM
FormerAndy:
Take a look at:
http://www.nasa.gov/centers/goddard/news/topstory/2003/0530earthgreen.html
http://www.agu.org/pubs/crossref/2006/2006GL025711.shtml
http://www.worldclimatereport.com/index.php/2006/10/13/where-are-the-droughts/
http://www.ema.gov.au/agd/EMA/rwpattach.nsf/viewasattachmentpersonal/(85FE07930A2BB4482E194CD03685A8EB)~6freitasWEMA-6.pdf/$file/6freitasWEMA-6.pdf
And there are much more.
Posted by: Andrey | January 12, 2007 at 09:05 PM
Andrey, you said:
"Due to global warming trend, less droughts and extreme weather events are participated..."
I said:
"As the Earth warms weather becomes more extreme. Plants dry up faster between rains and the air holds more moisture. More droughts and more floods. Rainfall is up on all continents and so is drought."
Global rainfall has increased:
"We find that in much of the middle and high latitudes, precipitation has systematically increased over the 20th Century. This is consistent with changes predicted by climate models when concentrations of greenhouse gases such as carbon dioxide are assumed to increase."
http://www.giss.nasa.gov/research/briefs/delgenio_02/
"The paper, written by NASA Goddard Institute for Space Studies (GISS) scientists Inez Fung, Anthony Del Genio, and Aiguo Dai, is based on a recalibrated compilation and analysis of data from 1900-1988 and confirms previous speculation that land precipitation is increasing. The new research shows a global land trend of a 2.4 mm per decade increase in annual precipitation amounts. Multiplied by almost nine decades, this means that there is about 22 mm more rain falling now each year than there was at the turn of the century -- rainfall as a global mean has risen by slightly more than two percent."
http://science.hq.nasa.gov/education/edreports/mtpeednov97.html
"Further, climate model studies that Tselioudis and others performed in the last few years indicate that additional levels of carbon dioxide will lead to fewer but more potent storms as has been the case in the last 50 years."
http://www.sciencedaily.com/releases/2006/03/060312211757.htm
"Studies have shown that over the last 40 years, a warming climate has been accompanied by fewer rain- and snow-producing storms in mid-latitudes around the world, but the storms that are happening are a little stronger with more precipitation."
http://www.nasa.gov/centers/goddard/news/topstory/2006/strong_storms.html
I stand corrected on droughts. Still, the point was crops.
"An increased frequency of extreme precipitation events has been observed over the last 100 years in the United States. Global climate models project that similar trends may continue and even strengthen over the coming decades, due to climate change. Now, a study using computer climate and crop model simulations predicts that U.S. agricultural production losses due to excess rainfall may double in the next 30 years, resulting in an estimated $3 billion per year in damages."
http://www.giss.nasa.gov/research/news/20021028/
Observed rainfall levels have increased. More extremes in weather are anticipated. More extreme weather is anticipated to reek havoc with crops.
Posted by: APosterFormerlyKnownAsAndy | January 13, 2007 at 11:05 PM
I should point out that on droughts, the IPCC stated that "Increased summer continental drying and associated risk of drought" is "Likely, over most mid-latitude continental interiors" during the 21st century. In terms of seeing such a pattern in the observed climate record in the 20th century, the IPCC concludes it is "Likely, in a few areas." They are apparently expecting it to be more of an issue in the coming century.
http://www.worldclimatereport.com/index.php/2006/10/13/where-are-the-droughts/
I personally misread NASA's "fewer rain- and snow-producing storms in mid-latitudes around the world" to be droughts. It may develop into that but as of now that is not the case.
Posted by: APosterFormerlyKnownAsAndy | January 13, 2007 at 11:19 PM
FormerAndy:
Global climate is in the warming trend for about a 1.5 century, and concerns that this warming could produce severe droughts is extremely important.
Disregard computer-model predictions and simplified physical explanations. Climate science, and especially extreme weather events predictions, is well beyond ability of modern science to explain, model, or predict.
The only thing we can rely on is actual observation, and unfortunately reliable data stretching over short-term weather variations is available only for places like continental US and Europe, not Africa or Asia.
All my web-links were actually to scientific articles evaluated such reliable data. And they point out that “droughts have, for the most part, become shorter, less frequent, and cover a smaller portion of the country over the last century”. Same and plentiful of other evaluations conclude that more moist atmosphere produces less extreme weather events, but to be honest, I do not care if it is not the case. The droughts are what really matter. More flooding – it is strictly problem of civil engineering, which has to build storm water and flood protection infrastructure with ample safe margin no matter global warming or global cooling.
P.S. I live in the city (150K inhabitants, suburbs of Vancouver) which has 100% of its territory below high-tide level of mighty Pacific. City relies on earthquake resistant levies two feet higher then ever recorded high water level. If necessary, it will be increased.
Posted by: Andrey | January 14, 2007 at 03:02 AM
Now, we have all forgotten the magic of industrial hemp haven't we? I dont believe for a second that the corn supply in this country for food needs to be compromised for the production of ethanol. If we contact our legislators, make them understand industrial hemp is not drugs, we can have plenty of corn to eat and ethanol for cars. I am surprised noone has brought this point up yet. Call your legislators, do the research, HEMP will undoubtedly be the answer. Just dont let Dupont, Georgia Pacific, Cotton industrial companies and the pharmaceutical corporations know what we are doing. If ADM jumped on this we would see some progress. Where is George Soros when you need him?
Posted by: christopher nichols | January 14, 2007 at 09:01 AM
Sure thing Andrey. The NASA sites I linked to aren't "scientific articles." You of course are using only "observed data." Sorry to break it you, but the guys who wrote your drought observations "Andreadis and Lettenmaier used a Variable Infiltration Capacity (VIC) modelto simulate soil moisture and runoff over the continental United States..." http://www.worldclimatereport.com/index.php/2006/10/13/where-are-the-droughts/
Regarding those NASA observations on rainfall:
"For about a century, a significant fraction of the land area of Earth has been covered by rain gauges that collect rain at individual locations and record the amount that falls over a given time period.
Scientists at the Goddard Institute have compiled the available precipitation data into a form that removes these problems and used it to detect some important climatic features of 20th Century precipitation changes"
http://www.giss.nasa.gov/research/briefs/delgenio_02/
Don't worry I'm sure those guys at NASA are just climate change whackos who don't understand "the ability of modern science to explain, model, or predict" climate change as well as you do.
Posted by: APosterFormerlyKnownAsAndy | January 14, 2007 at 09:55 PM
Edit: The NASA sites I linked to aren't "scientific articles." The drought data you are pointing to only uses "observed data." Sorry to break it you, but the guys who wrote the drought observations...
I should not have personalized that data as Andrey's.
Posted by: APosterFormerlyKnownAsAndy | January 14, 2007 at 10:11 PM
Sorry, FormerAndy, for bringing to your attention researches which are not conforming with your believes. For what matters to this particular discussion, there is USDA official stats:
http://www.usda.gov/nass/aggraphs/cornyld.htm
Probably it is not good for you either…
Posted by: Andrey | January 15, 2007 at 01:44 AM
Andrey, I'm quite aware that yields have been increasing. Part of that is from the increased use of genetically modified crops. Some scientists have conjectured that it is in part due to the increased temperatures in mid-latitudes which has led to longer growing seasons. It does change the fact that rainfall has increased, storms are getting more severe, and the periods between storms is lengthening. This is observed data. It also does not remotely support your continued obfusications on where the overwhelming weight of evidence currently lies regarding climate change. As is evident in the many links I provided, NASA patently disagrees with you. They aren't a bunch of whackos. Per the articles linked above, they believe weather will get more extreme as the Earth warms.
Posted by: APosterFormerlyKnownAsAndy | January 15, 2007 at 06:38 AM
Edit: It does not change the fact...
Posted by: APosterFormerlyKnownAsAndy | January 15, 2007 at 06:39 AM
Just to make sure, the NASA models and observations tend to confirm models on human induced climate change via greenhouse gas emissions. Andrey had earlier suggested that differing readings on the polar ice sheets undermined the conclusion that they are melting:
"In Antarctica, these observations tell us that the West Antarctic ice sheet is currently shrinking substantially, and has been for the last decade. They also tell a story of a second much larger ice sheet in East Antarctica that has been growing slowly. The net result in Antarctica is that the ice sheet as a whole has been shrinking, contributing to rising sea levels, and probably much more so in recent years.
"We did not appreciate in the past how the changes in ice sheets respond so quickly to changes in climate. The story these measurement techniques are all telling is that the ice sheets are shrinking more than they were 10 years ago," said Abdalati. "The borders of the ice sheets are melting in waters that are warming."" December 11, 2006, NASA Earth Observatory: http://earthobservatory.nasa.gov/Newsroom/NasaNews/2006/2006121123869.html
Posted by: APosterFormerlyKnownAsAndy | January 15, 2007 at 07:07 AM
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The notion that Americans will suddenly suffer a famine because all the corn is going towards fuel production is ludicrous. Commodity prices for both food and fuel oxygenate would go up long, long before then, to the point where corrective action is taken - by the consumer.
The real problem here is that politicians are unwilling to pull the plug on subsidies and import tariffs that protect an industry that is obviously booming, because they want to be re-elected (again and again). Few city slickers understand that first gen bioethanol from corn is a marginal proposition at best in energy terms and, costing him (or rather, his grandchildren) and arm and a leg.
Technologically, it is far easier to produce diesel substitutes from biomass, either as biodiesel (fatty acid methyl esters) or as BTL (F-T liquids). With T2B5 diesel technology on the way, US farmers should be encourage to limit their exposure to corn by also planting some vegetable oil crops.
The easiest way to bring renewables to spark ignition engines is compressed SNG derived from biomass. With some engineering effort, it should be possible to safely integrate the necessary pressure tanks (composite materials) into the ladder frame used for large SUVs, pick-up trucks and commercial vehicles. Unfortunately, unlike certain other countries, the US has chosen instead to invest in dead-end E85-capable FFVs and the associated distribution infrastructure, largely to placate political campaign donors in the Mid-West.