USDA: More corn needed for ethanol

Demand will require 10 million more acres, economist warns

By PHILIP BRASHER
REGISTER WASHINGTON BUREAU

Washington, D.C. — Farmers must grow more corn in coming years to keep up with the demand for fuel ethanol, the government's top agricultural economist says.

Farmers would need to plant 90 million acres of corn by 2010 — 10 million more than they did this year — to fill projected ethanol demand and maintain existing levels of exports and livestock-feed usage, said Keith Collins, the U.S. Agriculture Department's chief economist.

The increase almost equals the total corn acreage in Iowa, where farmers planted 12.7 million acres of corn this year.

The growth in ethanol production could have several ramifications, Collins and others said. It could push corn prices to record levels in coming years, reducing government subsidies but potentially raising food prices. The expansion of corn acreage could reduce soybean supplies and eat up land now set aside for conservation.

"There will be some costs (to rising ethanol production), there is no question about that. But it can be manageable given the objective of reducing foreign oil imports," Collins told the Senate Environment and Public Works Committee on Wednesday.

The committee's chairman, Sen. Jim Inhofe, R-Okla., expressed concern that the use of corn for ethanol could wind up raising food prices significantly.

"Several politicians, including the president, and other interest groups have stressed the security implications of importing oil from unstable parts of the world. Yet, corn cannot be the answer," Inhofe said.

The record average annual price of corn was set in 1995 at $3.24 a bushel. This year, the USDA expects corn prices to average between $2.15 and $2.55 a bushel.

The surge in ethanol production has raised concerns among livestock producers about the cost and availability of animal feed.

Hog and poultry producers are affected most directly by increased corn prices, since a byproduct of ethanol production, known as distiller's grains, readily substitutes for corn in cattle feed.

There are 101 ethanol plants now in operation that can produce 4.8 billion gallons of ethanol a year. Plants now being expanded or constructed will increase annual production by 3 billion gallons.

"The U.S. investment in biofuel production in response to runaway oil prices is spiraling out of control, threatening to draw grain away from the production of beef, pork, poultry, milk and eggs," according to writer Lester Brown, whose recent warnings about biofuels have attracted attention in Washington.

Collins said increases in corn yields will help meet demand for ethanol.

He also estimated that up to 7 million acres of land now idled under the Conservation Reserve Program could be planted to corn and soybeans. Most of that land is in Iowa and other Midwestern states.

About 36 million acres of former cropland, including nearly 2 million in Iowa, is now enrolled in the program.

"Some of that land can be farmed economically and sustainably," Collins said.

The program is widely popular because the acreage provides habitat for birds and other wildlife while helping to curb runoff that pollutes streams and rivers. It's fine to remove land from the program as long as it is replaced with more environmentally sensitive acreage, said David Nomsen, vice president of governmental affairs for Pheasants Forever.

Economists at the University of Missouri's Food and Agricultural Policy Institute recently estimated that CRP acreage would shrink by a million acres by 2010.

The economists, who analyze agricultural policy for Congress and federal agencies, estimate farmers will plant 87 million acres of corn by 2010, a 9.6 percent increase over this year.

Inhofe made clear that any legislation increasing the amount of ethanol that the nation is required to consume would have to pass through his committee.

An energy bill passed last year will require that motorists use 7.5 billion gallons of ethanol by 2012. That target is likely to be reached long before then, and farm-state legislators have proposed to increase the mandate.
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