If Congress mandates ethanol production for motor fuels, foreign buyers of U.S. corn will have to look elsewhere to fill their demand, Bruce Scherr, an agriculture economist at Informa Economics Inc., said in Atlanta at the first annual AgGlobalVision executive seminar.
Dr. Scherr gave an update on U.S. ethanol production during a three-day executive seminar on international agribusiness that was held at the Ritz Carlton, Buckhead June 13-15.
Chairman and CEO of Informa, a Memphis, Tenn.-based international agriculture consulting firm, Dr. Scherr has been following the United States’ corn production capacity since 1987.
During his presentation, he told about 40 agriculture executives who attended the conference from across the country and throughout the Americas, that the U.S. could handle an increase in demand for corn that an ethanol mandate would require, because there was enough access to farmland, advanced corn production technology and genetically modified seeds.
He cited an increase in demand from about 4 billion gallons of ethanol, or 1.43 billion bushels of corn in 2005, to 15-16 billion gallons or 5-6 billion bushels of corn by 2015, as being “absolutely feasible.”
But the country’s exports of corn would likely reduce, he told GlobalAtlanta.
“The whole ethanol strategy is designed to first and foremost reduce the U.S. dependency on foreign oil. It takes the biggest corn exporter in the world and focuses inward,” said Dr. Scherr.
The U.S. produced 282.3 million metric tons or 11.1 billion bushels of corn in fiscal year 2006, which accounts for about 42 percent of the world’s corn, according to the U.S. Grains Council, which builds export markets for domestically produced corn and grains.
About 20 percent of that production, or 2.2 billion bushels, was exported, making it the top corn exporter in the world in 2006, the council reported.
If U.S. exports drop and a demand for corn-based ethanol increases, countries that had previously banned the use of genetically modified corn seeds might consider developing them to increase their crop production, he said, citing China as an example.
“They haven’t adopted GMOs [genetically modified organisms], but they’re developing them,” he said, adding that the country had recently put a cap on its production of corn-based ethanol because it did not want to limit its corn production for human consumption.
China was the world’s second largest corn producer in 2006, harvesting 139.4 million metric tons, or 5.5 billion bushels, of corn last year, the council reported.
But increasing U.S. corn production for domestic ethanol consumption will require improvements to the logistics industry and access to ample water resources, he said.
“Water and water availability is looming as an equally important issue. Site location will be an important factor for ethanol refining plants,” Dr. Scherr said, noting that once the ethanol is produced it will then need to be shipped across the country.
And corn along will not be able to supply the increase in ethanol demand that the U.S. Senate mandated in an energy bill it passed on June 21, said Dr. Scherr.
“Clearly, a 36 billion gallon mandate would require significant cellulosic production,” Dr. Scherr told GlobalAtlanta of the Senate’s bill, which calls for a seven-fold increase in ethanol production to 36 billion gallons by 2022.
Cellulosic production involves deriving ethanol from sources other than corn, such as woodchips and switchgrass, he said.
The process is not yet economical, though, which means more money from both the public and private sector needs to be devoted to advancing such technologies to make the cellulose conversion process economically feasible. “It will require significant investment in research and development,” he said of the cellulosic production industry.
The Department of Energy announced June 26 that it would provide $375 million in grants to fund three cellulosic production research centers across the country. One, which will be based in Oak Ridge, Tenn., will work in collaboration with the Georgia Institute of Technology and the University of Georgia.
Dr. Scherr participated in the seminar June 13, giving the day’s keynote dinner presentation. Issues of food safety, international supply chain management and testimonials from emerging agribusinesses were also included in the conference.
Founded in 1977, Informa offers broad-based domestic and international agricultural and product market research, analysis, evaluation and consulting.
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