USDA: Global ethanol production to grow 40 percent through 2022

By Erin Voegele | February 11, 2013

On Feb. 11 the USDA released a report detailing its agricultural projections for the next 10-year period. According to the paper, titled “USDA Agricultural Projections to 2022,” long-run developments for global agriculture reflect steady world economic growth and continued global demand for biofuels. Combined, the report said these factors support longer-run increases in consumption, trade and the price of agricultural products.

Regarding biofuels, the report notes that demand for ethanol and biodiesel feedstocks is projected to continue growing, but at a slower pace than in recent years. The USDA also specified that expansion will continue to depend on biofuel policies.

The dominance of the U.S., Brazil, EU member countries, Argentina, Canada, China and Indonesia in biofuel markets is expected to continue over the next 10 years. According to the USDA, these countries accounted for 90 percent of world biofuel production, consumption and trade in 2012. Over the next decade, aggregate ethanol production in these countries is expected to increase by 40 percent. Biodiesel production is expected to rise 30 percent.

In the EU, corn and wheat feedstocks are expected to account for more than 80 percent of the expansion of corn ethanol. Ethanol production in Brazil is also expected to increase substantially. The USDA projects that sugarcane ethanol production within the country will increase by 90 percent, primarily to meet increasing domestic demand for transportation fuel with higher ethanol blends. However, exports to the EU and U.S. are also expected to increase. Corn-based ethanol production is expected to double in Argentina by 2022. In Canada, ethanol production is expected to increase by 35 percent, with corn imports accounting for an increasing share of the feedstock. According to the USDA, China used 4.6 million tons of corn and 1 million tons of wheat to produce ethanol in 2012. Due to policies to limit the expansion of grain- and oilseed-based biofuel production, no significant expansion is expected.

Regarding U.S. corn production, the USDA projects corn acreage will remain high in the near term, with normal yields leading to an increase in production and recovery of corn use. According to the USDA after several years of adjusting markets, increasing producer returns are expected to lead to gradually increasing corn acreage in a range of 88 million to 92 million after 2015. While projected increases in corn-based ethanol production are expected to be much smaller over the next decade, ethanol will remain a strong presence in the sector.  The report notes that approximately 35 percent of total corn use is expected to go to ethanol production through 2022.

A full copy of the report can be downloaded from the USDA Office of the Chief Economist website.