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U.N. Report Casts Shadow On Future Of Biofuels

posted on May 11, 2007

U.S. ethanol production is projected to consume 3.4 billion bushels of the next corn crop, marking the first time demand from the ethanol industry exceeds that of exports. The trend reflects continued expansion in plant capacity and profitability for ethanol producers. The season-average price received by farmers is projected at $3.10 to $3.70 per bushel compared with $3.00 to $3.20 per bushel for the current year. But while corn producers are enjoying favorable prices, other sectors of American agriculture aren't exactly thrilled with $3.00 corn... or ethanol for that matter. This week, the United Nations sounded the alarm on the pitfalls of biofuels.

U.N. Report Casts Shadow On Future Of Biofuels

The United Nations this week released a report that said that while biofuels could help reduce global warming and create jobs, the benefits could be offset by serious environmental problems and higher food prices for the poor. The report also pointed out that while bio-energy crops can create jobs in impoverished areas, the creation of biofuels favors large-scale production, which in turn could force small-scale farmers off their land.

In the U.S., skyrocketing corn prices have already cut into profits for ethanol producers. On Tuesday of this week, ethanol producer VeraSun Energy Corporation, announce a quarterly loss of 312,000 dollars. According to company officials, VeraSun recently paid $4.05 per bushel of corn compared with $1.87 a bushel a year ago.

Cattlemen are concerned over the impact increased ethanol production could have on animal feed. The National Cattlemen's Beef Association has been working to halt a Senate bill that calls for an increase in renewable fuels from feed grain to 15 billion gallons by 2015. The NCBA says that to meet that goal would require 43 percent of all U.S. corn production, which would be a serious blow to cattle producers.

Tags: agriculture biofuels future global warming news renewable fuels United Nations