FarmersWeekly, UK
10-23-07
High grain prices puts break on US bioethanol
Rapid expansion in the US bioethanol industry will slow – at least in the shortterm – partly because of high world commodity prices, according to Robert
Wisner from Iowa State University.
The other important factor was the lack of sufficient infrastructure, he told
delegates at the British Crop Production Council’s International Plant Protection
Congress.
He calculated that if the 329 planned ethanol plants were to come to fruition, the
US would need 159% of the total 2006 corn (maize) crop to supply them.
“Cost of feedstock and price of crude oil are key factors in the growth of the
industry and corn prices are 80% higher than 18 months ago. Not all planned
ethanol plants will be built, but it shows the pressure that is there.”
High corn prices were a knock-on effect of buoyant wheat markets – largely due
to poor weather in key production areas such as Australia - and he did not think it
would be a long-term feature of markets. “This is not the time to be heavily
investing in ethanol plants, but I think the situation will change significantly over
the next year.”
While US bioethanol production had grown rapidly, the infrastructure – such as
blending facilities and rail transport and handling systems – still had to catch up,
which could limit further rapid production expansion, Prof Wisner added.
“There’s still a 50-60% price differential between ethanol and gasoline, so there
is strong incentive to invest in infrastructure.”
He also highlighted the pressure biofuel demand was putting on land across the
US. There were seven million acres of conservation land in the heart of the Corn
Belt and 50-60% of that could be brought back into production, he suggested.
“This raises a lot of environmental issues, such as the effect on wildlife,
groundwater supplies, water quality and the impact of monoculture corn."