US maize fuel production hits crossroads

Maize-based ethanol ­production in the US has reached a critical point, according to a major study.
Issue Date 8 June 2007

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Conducted by the Centre for Agricultural and Rural Development at Iowa State University, the study revealed that US retail prices have already increased $14 billion annually as a result of the nation’s energy woes, and may soar if crude oil and maize prices reach $65 to $70 per barrel and $4,42 per bushel, respectively. Given crude oil prices, the US could produce as many as 30 million gallons of ethanol by 2012, but at the expense of more than half the country’s maize, wheat and coarse grains, said industry experts.

“This study clearly shows that we are reaching a tipping point, and that over-reliance on corn [maize]-based ethanol to meet mandates would further drive up retail food prices, reduce domestic meat and poultry production and erode our meat and grain export markets,” said J Patrick Boyle, president and CEO of the American Meat Institute, one of the study’s sponsors.

Assuming season-average maize prices over a 10-year period increased to $4,42 per bushel, as compared with $2 per bushel, the study made the following projections: Beef: retail prices increase 4%; production down 1,6%; and prices for distillers grains with solubles will closely track maize, meaning price increases are nearly as significant for beef and dairy as for pigs and poultry. Pork: production declines 9,2%; production costs increase 6,8%; retail prices increase 8,4%; and exports decline 21%, reversing 15 consecutive years of pork export growth. Poultry: broiler exports down 15%; turkey exports fall 6%; wholesale broiler prices increase 15%; retail prices increase 5%; and domestic consumption falls 4%. Maize: US-planted area increases 44% to 46 million hectares, and corn exports decline 63%. Soya: planted area decreases from 30 million hectares in 2006 to 23 ­million hectares, and exports drop 33%. Wheat: plantings decline significantly to 17 million hectares, and exports decline to 483 million bushels –

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