Will the use of E85 fuel effect the availability of corn for food?

Question

If we use a lot more corn for fuel purposes, will there be less available for food, here and abroad? If so, will that increase food prices, not only for grain products but meat prices due to increases in cost of grain for feeding livestock?

Answer 1

The USDA is currently reporting that the use of corn for ethanol will reach 20% of the US corn crop this year. They also predict the price of corn may rise due to a combination of increased demand and decreases in corn crop acreage this year.
http://www.ethanolmarket.com/corngrains.html

The argument that ethanol does not use food corn and therefor will not affect food prices is bogus, because food is produced from field corn in the form of cattle, chickens, and hogs as your question points out. It is also used for production of corn syrup so the price of products like soda, and virtually all food that has sweeteners in it is likely to feel the effect if corn prices rise enough.


In the short run the use of corn for ethanol is likely to cause a rise in corn prices. Corn prices have already risen and the ethanol market is likely a significant reason. July corn is presently about $2.55 per bushel. That is higher than the price of July corn for the past 10 years. The USDA estimates that about 30 cents per bushel has currently been added to the price of corn by the increased demand from ethanol.
http://www.usda.gov/oce//newsroom/congressional_testimony/energytst7-21-05r1.doc.

It is less certain that food prices will be directly affected, since the price of corn has been around $2 a bushel for the past 30 years and the price of food from corn (meat, corn syrup, etc) has risen considerably. Many of the producers may absorb the higher costs of corn and soybeans.

It is even more likely that the rising cost of oil will cause the price of both food and corn to rise. Most of the cost of food is in transportation, and this is still done primarily with oil. Even if it is done with ethanol, the cost will probably be similar to the cost of oil since oil will continue to supply the majority of fuel. Right now the price of ethanol is significantly higher per gallon than gasoline on a wholesale basis, so utilization of ethanol is actually causing retail gasoline prices to rise where ethanol is required to be mixed. Whenever the price of gasoline gets high enough to make it more profitable to sell ethanol than corn, you can expect food prices to rise. The gasoline market is much larger than the corn market. The problem is that the entire US crop of both corn and soybeans would only make enough fuel to power the country for about 3 months, so it would be very easy to overwhelm the corn and bean market with extra demand.

The July price for ethanol is currently $3.49 wholesale per gallon:
http://www.cbot.com/cbot/pub/page1/1,3248,1330,00.html
The July price for unleaded gasoline is currently $2.19 wholesale per gallon:
http://www.bloomberg.com/markets/commodities/energyprices.html

In the long run corn-based ethanol will probably become obsolete and uncompetitive. There are much more efficient methods for making ethanol, such as the method the Brazilians use that utilizes sugar cane, and cellulose-based ethanol being developed in Canada. Even the USDA cites the need for R&D into better methods of producing ethanol. The Brazilians can already produce ethanol for at least 50 cents less per gallon than the corn-ethanol plants, and they are only kept out of the US market by a tariff on Brazilian ethanol imposed by the US Federal Government. Methanol is another possible competitor for ethanol and can probably be produced much more cheaply.
Here is a link related to methanol production:
http://www.technologyreview.com/read_article.aspx?id=16629&ch=biztech

The bottom line will be that as ethanol prices are increasingly tied to oil prices as we use more and more of it. If oil prices go high enough, the tie between oil, ethanol and corn prices will certainly cause corn prices to rise and less directly will increase costs of food.

Answer 2

A large number of grain producers receive government subsidies each year to make up for losses. These subsidies mean the grains actually cost more. Perhaps if the demand for corn did rise, we could take away these subsidies and the farmers could make a profit on their own. From what I have heard the price of corn had not risen with inflation anyways.

Everyone would suffer if the price of corn went up. A large majority of field corn is used for livestock, but there is also a great deal that are used in products for humans. sweet corn, which is the unprocessed corn we eat is not used or consumed nearly as much as field corn. '

The only ray of hope for the livestock industry is the fact that the cattle and other ruminants may be able to consume the by-products of ethanol production, but not without other supplements. Also, the ethanol plants take away water supplies that are very important for feed lot cattle.

Overall large scale ethanol production may have a horrible effect on the price of food so we definitely need to be careful.

Answer 3

All we can hope for is that big oil companies don't monopolize the production of corn for E85 as they have the production of gasoline. Right now, there are several 'coops' being started to produce Ethanol in plants that are basically not much more than modern versions of the old moonshine still.
If our government allows the giant oil companies to infringe on these "mom and pop" operations, they will without doubt create the same kind of supply-and-demand fraud that they've created with gasoline, calling it a commodity and gouging the consumer as usual. If the mom-and-pop shops run these operations, the greed and need to pay outrageous CEO salaries and satisfy shareholders' demands for higher dividends will be less likely - and the price of Ethanol should stay somewhat stable. Also, if the giant agribusinesses find a way to whine about the shortages of corn caused by the production of E85, it will have the same economic impact: prices will be raised NOT because of shortages or production expenses, but because of greed and an unregulated opportunity for price-fixing. Just watch how it all comes together. As gasoline use diminishes, these bastards will find a way to gouge the consumer with E85 pricing. Mark my words; it'll happen! -RKO- 07/11/06

Answer 4

Prices will go up. And up. and up.
Corn already takes up massive amounts of farmland, and the demands of the fuel industry could easily exceed all availabe space by an order of magnitude.

It will all depend on who pays the most - the food processors or the fule industry. Mmmmm, bidding wars.

Answer 5

It already has. The unfavourable human beings in Haiti are making "cookies" out of airborne dirt and airborne dirt and mud as a results of fact they are able to no longer take care of to pay for to purchase rice or corn. that is happening international extensive. So, what did I do? i offered 2 vehicles that run on organic gasoline (methane). that is totally inexpensive to refill, very clean for the ambience, and there is loads of it interior the USA of a, so we are able to shop the money in our own economic gadget. investigate my components and notice in case you have a organic gasoline filling station close to you so which you will have considered one of those automobiles, too! that is soooo plenty greater effective than dropping nutrition components to make gasoline once you do no longer could desire to.

Answer 6

Hopefully other sources of ethanol will catch up with corn; wood chips and switch grass are two promising possibilities

Answer 7

no, corn grown for ethanol is grown separately from corn grown for food, and different farmers farm it.