In this year’s round of feed-versus fuel, is fuel winning? The question came to the forefront last week when USDA’s Feed Outlook report and World Agricultural Supply and Demand Estimates projected that this year, for the first time, corn used for ethanol production in the United States will exceed that used for feed.
The agency projects that corn processed for ethanol production during the 2010-2011 marketing year will reach 5.05 billion bushels, compared with 5 billion for feed use. For the 2011-2012 marketing year, USDA projects ethanol producers will use 5.15 billion bushels while feed use will account for 5.05 billion.
Some livestock groups immediately held the figures up as further evidence of the negative impact of U.S. ethanol policy on animal agriculture.
"Raising poultry and livestock as food for people is taking second place to putting ethanol derived from corn into America's gasoline tanks," said Bill Roenigk, senior vice president and chief economist for NCC. "Because of an arbitrary federal mandate, larger and larger amounts of ethanol will be produced from the corn crop, and less will be used to feed the animals needed for America's dinner plates."
Roenigk adds that some analysts expect this year’s corn crop could shrink below current USDA projections. “If that is correct,” he says, “then even less corn will be available for poultry and livestock feed because the ethanol sector will always get enough to fulfill the mandate. Ethanol producers will always be able to outbid livestock and poultry producers because the fuel industry is required by law to buy ethanol."
Not everyone agrees, of course. Shortly after the USDA reports appeared, the Renewable Fuels Association issued a release questioning the numbers. The group says USDA is assuming more than 14.1 billion gallons of ethanol production for the 2010-2011 marketing year, based upon the industry average of 2.8 gallons per bushel and the USDA estimate of 5.05 billion bushels of corn. RFA estimates that U.S. ethanol production for the 2011 calendar year will total 13.7 billion gallons. “Based upon RFA calculations of corn use (RFA assumes a conservative 2.77 gallon per bushel yield), total gross corn use in ethanol production will be less than 5 billion bushels in 2011.”
The RFA release also claims the USDA estimate does not properly account for the one-third of each bushel entering an ethanol biorefinery that is returned to the livestock feed market in the form of distillers’ grains and other byproducts. “Even if USDA's estimates are correct, which they likely are not, the total net corn use for ethanol is 3.3 billion bushels.”
Any way you slice it, the fuel industry is claiming a large and growing share of the nation’s corn crop. Export demand for corn, as well as demand for other uses, continues to grow. We’re going to need every bushel of USDA’s projected 13.47-billion bushel 2011 harvest to satisfy the appetites of all these competing corn users.