Truth about Trade and Technology, IA
10-09-06
1,000 uses for corn
by: Bill Hord
LINCOLN - In spite of widespread drought, Nebraska corn farmers are expected
to harvest an average of 157 bushels per acre this fall. That would be the
second-highest yield the state has ever had.
That's a good thing, because corn has a lot of work to do.
Corn feeds cattle, hogs and chickens. It is used in plastic, cardboard and shoe
polish. It sweetens soft drinks. It might even someday be used to grow
pharmaceuticals. Indeed, only 5 percent of the corn grown in the United States is
for human food.
Corn had more than 1,000 uses even before ethanol developed a big appetite in
the past year. Now the ethanol industry's demand for corn is so great there is a
question of whether there will be enough to go around.
This year's U.S. corn harvest, which last week reached full throttle in the
Midlands, will be 800 million bushels short of demand.
About 2.2 billion bushels - 20 percent of the crop - will be turned into ethanol, an
amount equal to all of the corn grown in Iowa. That demand is expected to
double in the next five or six years.
The ethanol boom has been driven by developments that some analysts have
called the perfect storm - high crude oil prices, low corn prices, a federal
standard that mandates the use of renewable fuels, a 51-cent-per-gallon tax
credit to
blenders and the demise of ethanol's chief additive competitor, methyl tertiary
butyl ether (MTBE).
As a result, more than 100 ethanol plants are operating in corn country and 49
more are under construction or expanding, according to the Renewable Fuels
Association.
Those plants alone could produce 7.7 billion gallons of ethanol, slightly more
than the 7.5 billion gallons mandated by 2012 by the federal Renewable Fuels
Standard.
Other plants in planning stages could bring total U.S. ethanol production to more
than 10 billion gallons by 2010, according to the U.S. Department of Agriculture.
This year, for the first time, more corn will go to ethanol than to export markets.
Still, crop specialists and the USDA say the ethanol demand can be met without
significantly limiting the corn available for other uses. (The projected deficit of
800 million bushels will be covered by corn remaining from previous harvests, but
experts say the surplus soon will be depleted.)
So how can farmers produce an average of 157 bushels an acre during a
drought year, and expect to produce even more in the future?
Part of the answer lies in science.
Corn geneticists have created consistently better varieties over the years. During
a drought 50 years ago, Nebraska farmers averaged 23 bushels an acre, less
than a sixth of the yield expected this year.
The nation's average corn yield has increased 2.3 bushels a year since 1975.
Monsanto is in the fourth year of testing a new drought-tolerant corn variety. Over
the last three seasons, the new variety has produced 9 percent to 14 percent
better yields than previous varieties, according to John Headrick, development
leader.
The new variety awaits more tests, and Monsanto must obtain USDA approval
before bringing it to the market.
"We're still five or six years away," Headrick said.
In the next 10 years, a combination of drought-tolerant improvements and other
new genetics could improve yields on non-irrigated corn acres by 40 percent,
according to Robb Fraley, chief technical officer at Monsanto.
Monsanto analyzed the yield potential for dryland acres in five states where
rainfall is often short of what is needed to grow corn - Texas, Oklahoma, Kansas,
Nebraska and South Dakota.
The yield gains on those dryland acres alone, under Monsanto's projections,
would produce enough corn to supply three 100-million-gallon-a-year ethanol
plants.
Ray Riley, head of product development for Syngenta Global, said researchers
are developing corn that will have more starch and will be more useful to making
ethanol. The net result, he said, could be corn that produces 2 percent better
yield in the field and 4 percent better yield when making ethanol.
"It's an extremely exciting time," Riley said.
Increasing average yields, however, is only part of the equation in satisfying the
future demand for corn. An increase in acres planted to corn also is necessary.
"Right now, most analysts expect that within five years we will see 15 percent
more corn acres in this country," said Matthew Roberts, an Ohio State University
Extension economist. "Corn will take acres from soybeans, and soybeans will
take acres from wheat."
Farmers will be drawn by higher prices to plant more corn, Roberts said.
The USDA predicts that the record season-average corn price of $3.24 per
bushel, set in 1995-96, may be surpassed as corn demand increases. Cash
prices last week were about $2.25 a bushel.
"The USDA analysis depicts a farm sector that adjusts fairly readily to higher corn
demand, as crop prices are generally bid up with acreage shifts to corn," USDA
Chief Economist Keith Collins told a Senate committee last month.
Those new corn acres could come, as well as from soybean and wheat acreage,
from hay, pastureland and land currently enrolled in the Conservation Reserve
Program, said Bob Wisner, a grain markets specialist at Iowa State
University.
The National Corn Growers Association predicts that the nation's farmers are
likely to produce 14 billion to 15 billion bushels of corn by 2015 with about 5.5
billion bushels available for ethanol production.
That would triple the nation's ethanol production and replace about 10 percent of
the nation's gasoline demand.
Corn surpluses would still be tight, keeping prices up, ISU's Wisner said.
Soybean prices are likely to rise as less is planted.
"This is a very positive development for crop farmers," Wisner said.