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Economist says too much corn to ethanol Earth Policy Institute says distilleries online or in works will pull 5.5 billion bushels of corn from the 2008 harvest to produce fuel David Pitt Associated Press Business Writer
An agricultural economist and founder of a Washington-based environmental think tank said Jan. 4 that ethanol production will consume much more corn than the government has estimated and could result in shortages of corn for livestock feed, driving up production costs and causing higher food prices.
Lester Brown, founder of the Earth Policy Institute, said rapid ethanol industry expansion has caused data to fall behind developments in the field. He warned that nearly twice as much corn as the government has estimated will be needed from the 2008 harvest to feed the ethanol plants that will be online by then.
He blamed the lag on the failure of industry trade groups to keep up with development of ethanol plants.
Many industry observers rely on estimates by the Washington-based Renewable Fuels Association for figuring ethanol production capacity and corn demand.
Association President Bob Dinnen said the ethanol industry is moving rapidly, but his organization’s estimates are as accurate as possible.
He questioned the criteria used by Earth Policy Institute, saying some plants in planning stages included in the group’s estimates may never be built.
Ethanol plants: 116 online; 79 under construction According to the Earth Policy Institute’s data, U.S. ethanol distilleries now online or in the works will pull an estimated 139 million tons — or 5.5 billion bushels — of corn from the 2008 corn harvest to produce fuel for automobiles.
That’s based on 116 existing ethanol plants, 79 under construction, 11 undergoing expansion and 200 plants in the planning stages expected to be running by corn harvest time in September 2008.
The government in a February report estimated ethanol plants would use about 60 million tons — or 2.4 billion bushels of corn.
Keith Collins, chief economist at the U.S. Department of Agriculture, acknowledged that industry estimates of ethanol production have lagged, but he was skeptical of the Earth Policy Institute’s estimates.
“That strikes me as high,” he said. “The point that they’re making is a valid point. The expansion in the industry has been outstripping everybody’s expectations. My experience over the last 18 months has been to be continually updating, increasing our own estimates of the production and corn use for ethanol.”
Concern that food prices will rise In a telephone conference call with reporters, Brown said the demand for corn by ethanol plants will result in higher prices for food staples such as milk, eggs, meat and cheese.
“In a sense, your refrigerator is stuffed with corn that has been converted into livestock products in one way or another,” he said. “What happens to corn prices will very much affect the prices at the supermarket checkout counter.”
That could create a backlash and strong vocal opposition to ethanol when consumers realize the cause for higher food prices is the massive use of corn for fuel, he said.
Dinnen said Brown’s estimates fail to consider that as much as 10 million more acres of farmland may be put into production next year.
“It ignores the reality of the marketplace,” he said. “We can’t drive grain prices to the point that we can’t produce ethanol economically. There are limitations to what we’re going to be able to do. There are limitations to how much ethanol you can produce from grain.”
He said that’s why nearly all ethanol producers are looking at making ethanol from other feedstocks including switchgrass, wood chips and corn stalks.
Corn exports also a concern Brown said increasing corn use for ethanol also reduces exports to low-income grain importing countries, which could cause political instability and result in urban food riots in many low- and middle-income countries.
“If the current scenario continues to unfold as we’ve projected here, it could create chaos in world grain markets and we should think through whether we want to do that or not,” he said.
Brown was pushing for the U.S. government to declare a moratorium on the construction of new ethanol plants until the impact of increased corn usage can be determined.
He said another solution is for the government to require a 20 percent increase in the fuel efficiency standard for cars to cut fuel demand.
A longer term solution would be increased reliance on gas-electric hybrid cars and development of car engines that run in part on electric cells that can be recharged by plugging them in, he said.
That combined with increased wind energy to make clean renewable electricity would help reduce the need for foreign oil for gasoline and for corn-based ethanol, Brown said.
For more information: Earth Policy Institute: http://www.earth-policy.org; Renewable Fuels Association: http://www.ethanolrfa.org.
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