20 September 2011

USDA: Ethanol will use 200 million more bushels of corn than animals in 2011

For the first time in U.S. history, more corn is expected to be converted into ethanol this year than that which will be used for livestock production.

The information, released in a footnote by the USDA, is startling to some.

"That's a first-time-ever type of change," University of Missouri Extension economist Ron Plain said. "For forever, feed was the largest single use of corn."

Plain believes high corn prices have pushed farmers to reduce their stocks in an effort to get the best profit. He also said hot weather is to blame. The USDA's estimate of corn yields declined by 4 percent, or 556 million bushels, from 13.47 billion bushels forecast in July.

However, not everyone is convinced that this information is relevant, especially those who might be in a position to benefit from increased corn production.

"People get a little hysterical about the food vs. fuel," said Rick Tolman, CEO of the National Corn Growers Association (NCGA). "They believe that we are taking corn away from livestock producers. The big difference is the pie is growing. Those pieces that have been going for feed and food are still there—they are not any smaller—it’s just that the pie got bigger."

Tolman believes the U.S. corn supply will continue growing with demand. Ron Plain seems to agree.

"The very, very tight carryover is why corn prices are going to be record-high this year," Plain said. "We really need to plant more acres to corn next year than this year, and this was the second most acres planted in 67 years. To rebuild stocks, the market will ask for a record corn crop in 2012."

One of the biggest uses of corn for food is high-fructose corn syrup, an ingredient organizations such as the NCGA have advocated for the use of, despite reported health dangers. The NCGA estimated in its 2010 World of Corn report that 3.7 billion bushels of corn was processed into ethanol that year, compared with 515 million bushels of corn processed into high-fructose corn syrup. Corn for cereal and food rose from 185 million bushels of corn in 2000 to 197 million bushels in 2010.

American gas stations use around 10-15% ethanol in their fuel.

Jonathan Reynolds
Jonathan is a freelance writer and blogger residing in upstate New York.

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