Friday, December 16, 2011

An Update on the Percent of Corn Crop Being Converted into Ethanol and Other Repercussions of the Corn Ethanol Program


Above, is a photo that I took of a rural corn ethanol plant near the Kansas-Nebraska border.

Remember the flooding along the Missouri and Red Rivers, the derecho winds in Iowa and Nebraska which flattened corn fields for miles, the high night time temperatures in Iowa during tasseling time, the hundred-year drought in Texas, rain, rain, and more rain in Ohio, and all of the other headlines suggesting corn yields could end up low this year? Everyone was nervous with corn carryover stocks at dangerously low levels. Despite all of that doom and gloom during the 2011 corn growing season, the USDA summed the season up like this in their December World Agricultural Supply and Demand Estimates (WASDE) report:
"Weather was generally favorable for this year’s crop."
If there is one thing that this country knows how to do, through hell and high water, it's grow corn.

Since we are near the end of the year, I decided to get out my calculator and look at the amount of corn being burned in our gas tanks, to see if it has changed much from last year.

It hasn't.

Here are the latest percentages of corn being turned into ethanol domestically and globally, based upon the last WASDE report data:
  • U.S. corn crop being turned into ethanol: 40.6%
  • Percent of the global corn crop being turned into ethanol here in the U.S.: 14.6% (Note that this doesn't include corn ethanol being made outside of the U.S.)
Incidentally, I saw this twitter tweet by a corn farmer a few days ago:
"About 3% of the world #corn supply is used in producing #USA #ethanol. #renewable."
This 15% statistic isn't widely known, and no doubt a 3% figure from a number of year's ago is still being thrown around.

The interesting thing that has changed significantly are our corn export numbers. They are down 20% in two years! We previously boasted that we provided half of the world's corn for the global export market. As other nations ramp up production, our corn is no longer the cheapest corn available to the world. We are using twice as much corn to produce ethanol as we are exporting.

Plus, we are also exporting corn ethanol and Distiller's Dried Grains with Solubles (DDGS). This year's corn ethanol exports are set to double over last year's record setting amounts.

The dollar's valuation always plays a part in our export market competitiveness but over these past two years this has not been a factor as it has held a low to average valuation during this time period.

So, then, what is contributing to our lower corn exports?

First of all, other nations have responded to higher prices by increasing their own corn production. China set a new corn production record this year. There were gains in Russia and the Ukraine regions as well.

A reason that the ethanol folks would rather ignore, however, is the fact that we are creating high domestic prices for our own corn, which makes us less competitive on the global market, a market on which we also face growing competition.

What each of us can relate to is our higher cost of food at the supermarket. Using 41% of our corn crop for ethanol makes our domestic food costs go up. More farmers are dedicating their acres to planting corn instead of wheat, barley, dry beans, oats, cotton, peanuts, and other crops. Wheat and soybeans are being substituted as feed world-wide due to high corn prices. Corn is used in feed, and high corn prices cause hardships for livestock producers. Cattle herds have been culled, turkey and poultry facilities have closed, and dairy producers are struggling while we all pay more for peanut butter.

Meats, dairy, eggs, fats and oils are all up more than 10% this year, far exceeding the core price inflation. That is not what our struggling middle class needs in this 2011 economic hard time. Talk about the ethanol industry biting the hand that feeds it. We taxpayers subsidize ethanol production, and then we pay higher food prices for what we eat.

Corn is the monoculture crop most responsible for environmental destruction across the Midwest due to high nutrient requirements and as a cause of soil erosion. Yet, since more than half of the ethanol production is owned by big agribusiness, because of the Iowa caucus, and because of the structure of our Senate, this program is loved by the many of its vested interests and has very powerful lobbyists behind it. According to Irwin and Good at the University of Illinois, it has been profitable to blend ethanol in gasoline about 70% of the time in recent years, even without the added incentive of the blenders' tax credit, so with the tax credit a great deal of profit has been made by this industry.

In the meantime, the farms are getting bigger and the younger generation continues to leave these monoculture wastelands in flyover country for regions which offer more environmental appeal and social opportunities. This policy has driven farmland prices out of the reach of any younger person that would like to begin farming, which is too bad given that the average age of the American farmer is 57.

One last thing.

There is no greater threat to global food security than biofuels production throughout the world, and a big reason is the short-sighted abuse to our soil and water resources which result from its production. There is an insatiable thirst for liquid fuels in this Anthropocene Age that can't be quenched. It is a travesty that we should produce corn ethanol as a green mandate instead of promoting energy conservation and efficiency.

——Kay McDonald
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Statistics which I used to make the percentage calculations above:
  • Corn for ethanol use remains unchanged from last year at 5 billion bushels
  • Total U.S. corn production: 12,310 Million Bushels
  • Global corn production for 2011/12 is projected at a new record high of 867.5 million tons
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7 comments:

  1. First, great post. Thanks for all that number crunching !!

    I'm not quite clear though on this:

    Incidentally, I saw this twitter tweet by a corn farmer a few days ago: "About 3% of the world #corn supply is used in producing #USA #ethanol. #renewable." This 15% statistic isn't widely known, and no doubt a 3% figure from a number of year's ago is still being thrown around.

    Would a farmer really be misinformed about his 'paycheck' ?

    Or would this be intentionam misinformation ?

    ReplyDelete
  2. RBM
    Thanks.
    My impression was that he was simply misinformed. I've never seen the 15% quoted on an ethanol site.

    They are very good at exaggerating the statistics they want to, to make themselves look good, like how many people the industry employs, and also good at covering up what they don't want to have known, like that some ethanol plants burn coal to produce ethanol.

    So the corn farmer is at the mercy of what he is being told by the industry.

    ReplyDelete
  3. Great post and information Kay. Thanks for writing this!
    I'll link to this on the blog Monday, this is good information that should be shared.

    ReplyDelete
  4. I agree with you that promoting energy conservation and efficiency should be the priority. Conservation and efficiency creates a virtuous cycle of greater profits for business and more money left over to spend on other things for individuals. The trouble with promoting things as "green" is that there isn't any truly "green" anything. There are just varying degrees of pollution and waste that result from our various consumption patterns. The best we can do is moderate the pollution and waste by consuming less or consuming more efficiently.

    I appreciate the way you speak truth to power and expose the harm in the current basket of policy tradeoffs our elected officials have imposed on us.

    ReplyDelete
  5. My impression, looking at the USDA statistics is that indirect land use change for direct-to-human-food (as opposed to animal feed) was minimal, and that acreage was largely the same for corn over the last ten years. Instead, the increase in the corn crop was driven by record yields.

    The whole food v fuel deal is more than plausible, and for those fools in France who make ethanol from wheat there is no excuse. But in America, field corn at most increases the price of cornfed hogs, chickens, and cattle unless indirect land use change is a factor, which again I have not seen. I encourage you to take a look at it yourself.

    It is also worthwhile to note that the price of sweet corn has largely been unaffected by the ethanol boom, unlike the price of field corn.

    ReplyDelete
  6. jtf
    I am well aware of all of the issues you bring up and have seen the land use reports. I expected for someone to challenge me on that. However, the fact is this is purely and simply overproduction which rewards the vested interests.

    If ethanol hadn't created an artificial demand for this corn we wouldn't be growing it because it wouldn't pay for the inputs. Instead, now we have a system in place which has been funded by taxpayers every step of the way, which provides around 10% of our liquid fuel by mandated use, and rewards big businesses.

    Mining of the topsoil, aquifers, resulting pollution and loss of biodiversity are all freebies for those beneficiaries -- for now -- until future generations pay the price.

    In my opinion, unnecessary ag production should mean land restoration and the wisest preparations for liquid fuel replacement would have been to put all the taxpayer subsidies and resources that have gone into ethanol infrastructure into rail build-outs.

    Yet, the issue of corn ethanol production using 15% of the global corn crop has a ripple effect which causes higher food prices. And the biofuels expansion around the globe is leading the "land grab" movement and threatening global food security.

    ReplyDelete
  7. jtf,
    In a new Dec 2011 report from the USDA reporting on Major uses of land in the U.S., it goes up through 2007. Of course, ethanol was just beginning to get ramped up in 2007, but already RFA is touting this report to prove that ethanol is not causing land use changes.

    See this map I covered here previously: http://bigpictureagriculture.blogspot.com/2011/11/us-map-showing-increased-acres-of-crop.html

    ReplyDelete