June 13, 2007

Ethanol may gobble 30 percent of US corn by 2012

A new government report issued Monday (June 11) states that animal feed costs and meat prices will be pressured to jack up as a third of US corn crop or thirty percent will be used in five years to manufacture 11.2 billion gallons of ethanol.

Corn prices are projected to average between US$3 and $3.40 a bushel, making up an estimated 74 percent of the cost of producing ethanol, according to Government Accountability Office (GAO).

To meet the target volume of corn for ethanol production as well as to meet exports, pasture and idle land will be planted to the crop, GAO said.  More lands, previously grown to wheat and other crops, will be converted to corn, the agency added.

However, GAO warns there could be harm to the environment if land set aside for water conservation or wildlife habitat is used to grow more corn for ethanol.

The Bush administration and many lawmakers in Congress are pushing for a huge increase in ethanol production over the next decade. The government is also keen on producing biofuels from other sources apart from corn such as switch grass and wood chips.

Separately, the GAO said the push to expand E85 fuel, which is made from 85 percent ethanol and 15 percent gasoline, could make the demand for corn worse as ethanol is not a gallon-for-gallon replacement for gasoline.