Iowa Public Television


Ethanol Fuels Demand for Increased Corn Acreage

posted on September 8, 2006

Hello, I'm Mark Pearson. As the fifth anniversary of the terrorist attacks on New York and Washington approaches, it is apparent that America hasn't completely healed. Nearly 3,000 people lost their lives in the attacks and the death toll from the subsequent war on terror is approaching the same tally. While plans are in the works to rebuild "ground zero," delays and disputes over designs of the new site, have put construction on hold. Wall Street closed its doors for six days after the attacks -- its longest shutdown since the Depression. When trading resumed, the Dow plummeted more than 684 points in its worst-ever one-day decline. While both the market and the U.S. economy now appear to be on the mend, questions remain on the economic impact of another attack. America's dependence on foreign oil now is viewed by many as a threat to both national security and economic vitality. Those concerns are fueling an unprecedented boom in renewable domestic fuels. And this week, USDA officials were bullish on ethanol's impact on corn prices.

Ethanol Fuels Demand for Increased Corn Acreage

USDA Economist Keith Collins: "Ethanol's economic importance for agriculture is very significant…"

USDA Chief Economist Keith Collins spoke before the Senate Environment and Public Works Committee this week, stating that the boom in ethanol production might result in record corn prices. Collins added that ethanol plants could pay relatively high corn prices and still remain profitable.

USDA Economist Keith Collins: "For example, with ethanol prices at $2.25 a gallon…. a dry mill plant could pay up to $5 a bushel for corn and still cover operating costs. That's well above the all-time record high corn price of $3.25 a bushel set in 1995."

Any concern over high corn prices has not slowed ethanol plant construction. According to Collins, the boom in ethanol production is exceeding USDA projections and could reach in excess of 10 billion gallons by 2010.

But to meet the increased corn demand for ethanol production and other uses including livestock and exports, Collins says U.S. farmers will need to plant 90 million acres by 2010. That's 10 million acres more than sown this year.

Sen. Barack Obama (D - Illinois) "Our dependence on foreign oil is not only an economic issue but a national security issue."

Planting more corn, according to committee member and Illinois Senator Barack Obama, is a crucial component of lowering our dependence on foreign oil.

But Collins cautioned that ethanol from corn alone would not reach America's energy goals.

USDA Chief Economist Keith Collins: "It seems clear that corn ethanol alone cannot greatly reduce U.S. dependence on crude oil imports. Cellulosic ethanol production appears to be the best renewable alternative for achieving sizeable reduction in oil imports and its successful commercialization would allow many other feedstocks besides corn to be used for ethanol."


Tags: agriculture biofuels corn crops ethanol news renewable fuels USDA