Debate over corn use estimates shows need for solid ethanol data

By Kris Bevill | July 14, 2011

The latest USDA World Agriculture Supply and Demand Estimates marked a milestone of sorts for the ethanol industry. For the first time, the USDA predicts that more corn will be used for ethanol production than for feed - suggesting that 5 billion bushels of the 2010 - ’11 corn crop will be used for feed while 5.05 billion bushels are destined for ethanol plants. The agency expects the spread to widen next year with 5.15 billion bushels of corn being used for ethanol compared to 5.05 billion bushels for feed.

Poultry and livestock producers say the WASDE report demonstrates the nation’s distorted priorities of using corn for fuel rather than feed and are grasping the opportunity to rally consumers against ethanol and federal support for biofuels. “Raising poultry and livestock as food for people is taking second place to putting ethanol derived from corn into America’s gasoline tanks,” Rill Roenick, senior vice president and chief economist for the National Chicken Council, said.

The Renewable Fuels Association said it doesn’t agree with the USDA’s prediction that more corn will be used for ethanol than feed. The USDA’s expectations assume that at least 14.1 billion gallons of ethanol will be produced from 5.05 billion bushels of corn in 2011, based on an average of 2.8 gallons of ethanol produced per bushel of corn. However, the U.S. DOE’s Energy Information Administration data shows the industry is more likely to produce about 13.7 billion gallons of ethanol this year. “USDA is either finding ethanol production EIA is unaware of, or they are using out-of-date ethanol yields,” the group stated.

Jerry Gidel, an associate at North America Risk Management Services Inc., said ethanol was bound to overtake feed as the largest consumer of corn eventually. As far as whether that will occur this year or next year, he believes the burden of proof for gallons of ethanol produced per bushel lies with the ethanol industry. If the industry disputes the USDA’s conversion ratio it should produce data to back up its claims, he said. “The biggest problem is that there just is not a good set of information,” he said. “There’s not a set of data out there that people can utilize and say, ‘Yes, we’re creating this much DDGS [distillers dried grains with solubles] and our conversion ratio is this.’ We have no statistics.”

The RFA said the USDA’s WASDE prediction does not properly account for the one-third bushel of corn that is returned to feed markets in the form of distillers grains. The NCC, on the other hand, said the report does take that into consideration, but livestock and poultry producers are dissatisfied with distillers grains as a feed choice due to its lesser nutritional value and wouldn’t use the product if they had a choice. “Producers would rather have corn, but since sufficient quantities are not available at reasonable prices, they will use some DDGS to try to stay in business,” Roenick said. Gidel agrees with the ethanol industry that distillers grains should be considered as a contribution to feed markets, but again, without adequate statistics to back up the industry’s claims, it is hard to prove the actual contribution, he said. The ethanol industry “needs to be a champion of getting this data together so you can utilize it to explain your point,” he said. “The USDA does as good as they can. The EIA gives only gallons [of ethanol produced], they don’t figure out how many bushels it takes. That’s not their job.”

Meanwhile, a coalition of livestock producers including the NCC, the American Meat Institute, the National Meat Association and the National Turkey Federation has launched a new “consumer awareness” campaign focused on explaining how corn ethanol has contributed to rising meat prices. The website, www.cornforfoodnotfuel.com, claims that more than 40 percent of the nation’s corn crop is used for ethanol production and encourages visitors to sign a petition to ask legislators to oppose corn ethanol policies in order to reduce the cost of meat and poultry.