Ethanol and the Impact on Corn - 1/19/07

The report out of Washington, D.C., think tanks are often dead on arrival in the Midwest, but we would be wise to at least consider what the Earth Policy Institute is saying about ethanol.

Environmentalist think tank issued a report late last week that warned about the impacts of soaring demand for ethanol made from corn. Everything from higher food prices in the U.S. to food riots in low-income countries are among the possible impacts cited in the report released Thursday.

The report says that by next year, U.S. ethanol production will consume 139 million metric tons of corn, about half of the nation's crop, severely straining supplies and leading to disruptions around the world. The report calls for a moratorium on construction of new ethanol plants until the marketplace balances out.

Corn prices are running higher than they've been in years, and ethanol plants are breathing new life into rural communities. Then along comes this bad news out of D.C., of all places.  This is not the news that your average grain farmer wants to hear.

The report recognizes that, it understates the current need to build the infrastructure to be able to produce, handle and distribute the new technology. We need to do that now, and to make it happen, we need a product to move. In this case, it's corn-based ethanol. Hopefully, other less energy-demanding and more environmentally benign crops like switchgrass will emerge as major fuel sources, but not until technology edges forward a few more steps.

Ethanol plants are more efficient today than ever before and will continue getting better.  A combination of better fuel standards for our cars, conversion to vehicles that run on electricity part of the time and more reliance on wind power for electricity would reduce gasoline consumption more than all the ethanol plants on line now or planned in the next few years.

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