Field flooding: Water from the Iowa River submerges
farmland south of Iowa City on Tuesday.
Press-citizen / Dan Williamson
Rain and floods in the corn-growing Midwest could drive up the costs of producing the biofuel.
Heavy rains, flooding, and cool weather in the Midwest will likely lead to much lower corn yields this year, especially in comparison with the bumper crops seen last year. This week, the United States Department of Agriculture lowered its predictions for this year's corn crop by 390 million bushels, from 12.1 billion to 11.7 billion. If its predictions are right, corn supplies for next year will be the lowest since crop shortfalls in the mid-1990s, likely driving already record-high prices for corn even higher.
In recent months, demand for corn used to make increasing amounts of ethanol has driven up corn prices, and to some extent food prices. But now bad weather in the Midwest, which has delayed corn crops, could further drive up corn prices and lead to significantly more expensive food, particularly meats. The weather problems could also cause some ethanol plants to shut down.
Corn futures prices have risen in the past week to record prices of more than $7 a bushel. As recently as January, corn was selling for less than $4 a bushel, and two years ago it was selling for just over $2. The current high corn prices could cut into the profit margins of ethanol producers, who rely on corn as a feedstock. At today's prices, corn represents roughly 76 percent of the cost of producing ethanol.
If corn prices rise further--and some predict that they could reach $8 a bushel or more--this could force some ethanol plants to shut down, says Wallace Tyner, a professor of agricultural economics at Purdue University. Ethanol producers in the United States made 6.5 billion gallons of the biofuel last year, and almost all of it is made from corn. If crop shortages are bad enough, ethanol production could fall by a billion gallons compared with predictions for this year, Tyner says, and that could lead to higher fuel prices in areas that use a lot of ethanol.
Still, the higher corn prices have been somewhat offset for ethanol producers by the skyrocketing price of petroleum, which has, in turn, kept biofuel demand high. Douglas Tiffany, a research fellow at the University of Minnesota, estimates that with oil prices above $130 a gallon, at least some ethanol producers could afford to pay as much as $9.50 a bushel for corn.
Indeed, agricultural experts say that rising corn prices could hit the livestock industry, which depends on corn for feed, even harder than they could hit ethanol producers, who can afford to pay higher prices for corn than livestock producers can. And that could further exacerbate complaints that increased use of ethanol is damaging the agricultural economy.
High corn prices, even without the recent weather problems, have the livestock industry struggling, losing hundreds of dollars on every head of cattle, says David Anderson, a professor of agricultural economics at Texas A&M University. A spike in corn prices due to the weather will exacerbate the problem, he says. He expects that feedlots will shut down and ranchers will need to cut down the size of their herds. Ultimately, that means that the price of meat will rise considerably, likely by 10 percent, Anderson says.
The Midwest's weather problems are underscoring another shortcoming of biofuels: their susceptibility to crop failures.
At this point, there is only a small chance that this year's crops will recover, Tiffany says. For that to happen, "things would have to go perfect from here." Because of the bad weather in the Midwest, he says, "the stage is set for what may be punishing times."
Ethanol from corn consumes three times more water than previously thought.
Demand for corn-derived fuel is driving up food prices, but new technologies could help.
Food first. Using food sources for fuel is just wrong on many levels.
they dont use the corn they use whats leftover from the production process like the stalk and leaves.
If only you were right. Corn ethanol DOES use the corn - which is why manufacturers worry about the corn price and hungry people worry about ethanol. Cellulosic ethanol will use the leftovers but it is not here yet.
Afraid of looking weak during an election year, our politicians BLINDLY push on with increasing ethanol mandates and subsidies. Time to VOTE OUT all the politicians pushing these idiotic food-to-fuel policies.
One can only wish that the debate here would be a little more sophisticated than the name calling going on in political forums and the popular media. While there seems little doubt that corn ethanol and soy diesel are NOT permanent solutions, it is also not helpful to simply attack the use of feed grains as fuel. The energy mess we are is complex and the way out of it, if there is one, is going to take time and is going to have false starts. It seems especially ironic to attack farmers in the face of the sorts of (mostly indirect) subsidies enjoyed by oil producers.
Both comments are laudable. Agree that energy availability and equity, both food and fuel, are complex problems. Also agree that our legislators have, collectively, done nothing but worsen the situation. VOTE THEM OUT makes for a wonderful campaign button for this November. Don't worry about details like Party. VOTE THEM ALL OUT.
There ARE technologies making progress with cellulosic methods that also combine trash-to-fuel solutions such as Bluefire Ethanol. And there are billions of acres of untouched (and practically inedible) shrubbery that regenerate each spring, and we have science focusing on practically ONE crop? What's wrong with that picture? Any over-planting of a single crop type is insane and every common farmer knows this. And even thinking of using one crop that is also a major food source is absolutely ludicrous and lacks foresight.
As far as the cattle situation goes, don'e even get me started there! The ratio of cattle-to-people in the US is outrageous and unsustainable in any natural way. What's out of whack is our beef dependency and over-production/consumption, not the corn situation as far as feeding them. Cattle ranchers have been spoiled by the politico that allows them to rake big profits for too, too long.
Each 56 lb bushel of corn yields 2.8 gal ethanol, 17 lb DDG for feed that is much higher in protein value than the original corn was. In the near future the DDGs will have the oil extracted (Verisun is doing it now) to use in bio-diesel production. The cost of food only needs to go up a few percentage points to make the fuel economics unfeasible. You are going to pay more for the sins of our current government that called off the regulators in the name of 'getting out of the way of big business' in some way. So we will have to pay at the pump or the market. Big business is getting your $ in the end because the farmer's expense has risen over 40% in one year and he hasn't even harvested a crop yet. Those are the facts! I am a farmer who lives near that picture in the article.
When / why will this uneconomic insanity end?
Ethanol from corn is now widely understood to be uneconomic.
Higher taxes or deficits.
Higher food prices.
Higher fuel prices.
Lower MPG.
When will this corn to ethanol idiocy end?
Why / what catalyst will finally tip the scales to ending this foolishness?
Farm state US Senators will obviously do everything than can to delay the end of this irrational exercise. So will all politicians that prefer campaign contributions from the Corn to Ethanol lobby over the nation's best interests.
How to end the Federal subsidies / mandates that worsen and perpetuate this uneconomic corn to ethanol foolish feel good policy?
With Brazil using sugar cane for their ethanol production, it seems to me we should be investigating our similar product, Sorgum. It would not impact our food source (corn) and on first glance would produce a similar ethanol to Brazil's. I wonder if anyone has investigated this product instead of corn.
Yes, it has been thought of. The trouble with sorgum is that the immense tonnage the farmer would have to haul to the ethanol plant would require many small plants to produce the same gals of alcohol as one moderate sized corn fed ethanol plant. It is too inefficient. Corn is the most concentrated form of energy that is produced per acre of farm land. Corn may be hauled over 100 miles and still be economical. Compressed Biomass such as bales of dried sorgum aren't nearly as energy dense so would be hauled only 30 miles or so.
Question on Tonnage and Shipping -
Can a small mobile ethanol distillery be setup so it can be moved to the source of supplies as opposed to moving the raw Sorgum the processing plant?
OR
Use a mobile "belt" system like those in use by coal companies to move coal over miles of terrain?
I'm quite sure I read somewhere about mobile refineries which could be transported to the site of sorghum harvesting just as you suggested. The major obstacle seemed to be that there is a very limited window of time following the harvest of sorghum during which the harvest must be processed, as I recall.
Corn used for ethanol is ANIMAL Food NOT People Food.
Glutton is the byproduct of the ethanol process and is fed to livestock. To replace the lost starches farmers mix the glutton with cobs and cornstalks.
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Monsterboy
92 Comments
I really hope farmers make use of the high grain prices.
They've been growing more and more corn for less and less real money for decades now. I really hope they use whatever profits they make now for some non-grain investment.
Sadly, I imagine that, people being the way they are, there will be a hefty percentage who assume this is just the new world order, and decide to plant yet more. The prices ain't gonna last -- or, at least, they won't extend to the farmers for much longer.
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