October 12, 2006

Cheap corn prices not part of US agricultural policy

The strong US corn prices resulting from ethanol demand have been a double-edged sword for some in agriculture, but US Department of Agriculture Secretary Mike Johanns said cheap corn cannot be US agricultural policy.

Policies should not be written to "encourage US$1.60 a bushel" corn prices, Johanns said Wednesday (Oct 11).

"I don't want to get into the business that cheap corn is good for the industry," Johanns said at the Advancing Renewable Energy Conference, a joint conference between the USDA and the US Department of Energy (DOE), held in St Louis Wednesday and Thursday.

Higher corn prices have raised input costs for livestock producers and raised concerns that they must now compete with ethanol producers for the same product. Johanns added he understands there are two sides to the higher price debate.

He also said the potential for cellulosic technology is "exciting" in ethanol production. Currently ethanol production uses mainly corn in the US. He believes there is room for both corn-based ethanol production and biomass-based output, saying it's unlikely cellulosic production will replace corn. "It will be a combination of things that works."

At the conference, USDA and DOE said the departments would fund nearly US$17.5 million for 17 biomass research, development and demonstration projects.