World Grain - July 2007 - 51

BIOFUELS QUARTERLY: STUDY: MORE ETHANOL MEANS HIGHER FOOD, CROP PRICES

(Continued from page 52)
National Cattlemen's Beef Association,
National Chicken Council, National
Pork Producers Council, National Oilseed Processors Association, National
Turkey Federation and the North American Millers' Association.
Researchers said with current federal
ethanol policy and projections of crude
oil prices, U.S. ethanol production from
maize could reach 14.8 billion gallons
(56 billion liters) by 2011. This could
increase to 30 billion gallons under a
scenario examined in the study in which
crude oil prices increase U.S.$10 to a
range of $65 to $70 per barrel.
Such an expansion would increase
maize prices to $4.40 per bushel and
push food prices to more than 1.1% higher than baseline levels, the study said.
Two additional scenarios were examined: A drought combined with an
ethanol mandate; and removal of land
from the Conservation Reserve Program (CRP). Researchers also said that
cellulosic ethanol was not economically
viable under any of the scenarios examined in the study.
RISING FOOD COSTS
Ethanol production of 14.8 billion
gallons would require maize acreage of

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94 million acres. Average maize prices
are projected to reach $3.40 per bushel.
Most of the increased maize acreage
will come from soybean acres, which are
projected to decline 69 million acres.
In response to higher feed prices, livestock producers are assumed to reduce

Researchers said with current
federal ethanol policy and
projections of crude oil prices,
U.S. ethanol production from
maize could reach 14.8 billion
gallons (56 billion liters) by
2011.

production to allow their higher production costs to be passed onto consumers.
Researchers said retail food prices have
increased $47 per person as a result of
maize prices increasing by $1.50 per
bushel since mid-2006.
The baseline projections have several
key assumptions including:
* no impact on trend yields from
changes in planted acreage;
* no impact on meat quality from the
feeding of distillers grains at less than
maximum inclusion rates;

*

* all potential bottlenecks involved
in transporting ethanol, distillers grains,
maize and fertilizer are solved;
* cellulosic ethanol is not competitive under current policy incentives;
* livestock feeders respond to permanent feed cost increases to a greater degree than temporary feed cost increases;
* only direct food price increases
caused by increased feed costs are accounted for.
With higher crude oil prices and consequently increased ethanol production,
U.S. maize acreage would increase to
more than 110 million acres at the expense of soybean and wheat acreage.
Maize prices would increase to more
than $4.40 per bushel. Higher feed costs
would cause food prices to increase
1.1%. Beef, pork and poultry prices
would increase more than 4%, and egg
prices would increase by about 8%.
There is uncertainty over how high
maize prices would have to go to sustain the 110 million acres needed. The
uncertainty is due to the fact prices of
competing crops would be expected to
increase dramatically to vie for acreage.
Additionally, the U.S. has never experienced the market impacts of such a
large, permanent maize price increase.
If maize prices increase greater than an-

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For more information, see Page 78.

54

July 2007 / World Grain / www.World-Grain.com


http://www.World-Grain.com

World Grain - July 2007

Table of Contents for the Digital Edition of World Grain - July 2007

Contents
World Grain - July 2007 - 1
World Grain - July 2007 - 2
World Grain - July 2007 - 3
World Grain - July 2007 - Contents
World Grain - July 2007 - 5
World Grain - July 2007 - 6
World Grain - July 2007 - 7
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https://digital.world-grain.com/sosland/wg/2019_12_01
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https://digital.world-grain.com/sosland/wg/2019_10_01
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https://digital.world-grain.com/sosland/wg/2019_02_01
https://digital.world-grain.com/sosland/wg/2019_01_01
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http://digital.world-grain.com/sosland/wg/2018_08_01
http://digital.world-grain.com/sosland/wg/2018_07_01
http://digital.world-grain.com/sosland/wg/2018_06_01
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http://digital.world-grain.com/sosland/wg/2018_03_01
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https://www.nxtbook.com/sosland/wg/2018_01_01
https://www.nxtbook.com/sosland/wg/2017_12_01
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