The projection that U.S. farmers will grow less corn this year is bad news for ethanol producers.
Wednesday, April 02, 2008
By David Rotman
That strong wind you might have felt earlier this week was just more air rushing out of the biofuel bubble. Monday's statistics from the U.S. Department of Agriculture--that farmers expect to plant 8 percent fewer acres of corn in 2008, compared with 2007--is very bad news for the already struggling ethanol industry. It takes a lot of corn to make ethanol, and the feedstock is a major cost of creating the biofuel. U.S. farmers' plan to plant less corn this year means that record-high corn prices, which are already above $5 a bushel, will likely stay high. It doesn't take an economist to figure out what the grim numbers portend for ethanol manufacturers. Higher feedstock costs, at the same time that yet more ethanol production capacity is coming online, could mean another very tough year for the ethanol market.
Beyond being a pain for ethanol producers, the high corn prices will further exasperate the tensions between using the crop for fuel rather than for food. In a New York Times article, one expert issues a frightening warning:
"We're hoping for good yields," said David Orden, a senior research fellow at the International Food Policy Research Institute in Washington. "If we get bad yields and tight commodity markets are pushed even tighter, we'll get food prices skyrocketing, inflationary pressures and food riots in developing countries, and countries cutting off their exports."
No one knows, of course, whether it will be a good year or not for growing corn in the United States. If it is a bad year, look for even more criticism of ethanol biofuel and, in particular, the Renewable Fuel Standards that mandate that petroleum suppliers use nine billion gallons of ethanol this year. But even if it's a good year for growing corn, expect the poor profit margins for ethanol producers to continue and more grumbling about the economics of biofuels.
Massachusetts Institute of Technology
Comments
mkogrady on 04/03/2008 at 1:48 PM
127
Farmers Response -
Geez! Look at my skinny pigs and cows
Homemakers Response -
Geez! Look at the price of my bread and milk
Parental Response -
Geez! Look at my skinny kids and spouse!
Doctors Resonse -
Thank you Corn Farmers - we need skinny kids and spouses!
Tem on 04/04/2008 at 6:01 AM
1
However, many of the farmers in the US know how to
grow corn very well, so they did what they know.
Switchgrass and several other sources of cellulose are
just comming available, but efficient processes and
Reliable fuel making machines are still in the development
stages. In time, several types of biofuels will be available
in regional markets at different price points because each region
will be more efficient at growing crops that grow well where they live, naturaly.
kkakyle on 04/05/2008 at 9:48 AM
1
Elroch on 04/11/2008 at 12:25 PM
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energymv on 05/30/2008 at 6:28 PM
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MakeSense on 04/08/2008 at 12:44 PM
79
energymv on 05/30/2008 at 6:41 PM
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McMillan968 on 04/15/2008 at 10:44 PM
38
I pray that these FAT CATS and ALL their money goes down the drain.THEY DESERVE WORSE!!
The Prez along with them. Afterall isnt it HIS BUDDIES??
They KNEW it would RAISE the price of FOOD AND FUEL !!!!!
NOT JUST for the poor but for EVERYBODY.Pushing more people into poverty.MORE over the edge.
BUT HEY the FAT CATS are making TONS OF MONEY NOW!! More than even they thought possable!!
SOMEBODY FORGOT to check how this would trickle down.Forgot its raises the cost of a CHILDS MILK, a DOGS FOOD,a bowl of CEREAL.Driving the old closer to the edge.Medicine? FOOD?? or HEAT?? or maybe NOT being able to afford to GET TO THE DOCTOR??
What a FINE COUNTRY WE ARE IN!!
WHAT A NICE JOB WE ARE DOING TAKING CARE OF OUR PEOPLE!!
MickeyFouse on 11/25/2008 at 2:27 AM
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