Out here on the edge of the grain belt, my local newspaper's editorial board today bravely stood up for biofuels. They argue, in part, that corn supply is not fixed:
In 1995, before the ethanol boom began, American farmers produced 162 million metric tons of corn for food and export.Corn for everybody! Almost makes you wonder why the price is so high.
By 2007, ethanol production was taking 62 million metric tons of corn. So the corn left for food and export was — 308 million metric tons.
That's right, 308 million metric tons — 82 percent more than before the ethanol boom, thanks to higher yields and more land in cornfields.
While I don't quite match their numbers with data from the USDA's Foreign Agriculture Service, corn production and supply have in fact increased since 1995 — though they managed to pick a relatively low-production year for their comparison:
(Source: USDA Foreign Agriculture Service. Click to embiggen.)
However, their characterization of ~300 million tons available for (human) consumption is misleading, and increased ethanol demand isn't exactly a blip in the U.S. corn market. Here's a coarse breakdown of the corn crop's uses:
Traditionally, the major use of corn has been for animal feed. That's been in a roughly 20 million metric ton range for the last ten years. (Before the mid-90s, corn production was relatively volatile and a lot of the variation was reflected in animal feeding modes.) Other food and industrial uses have usually taken second place, and exports have mostly fallen in the range of 40-60 million MT annually.
Since the USDA began breaking out ethanol as a source of corn demand in 2002/2003, it's taken up an additional 50 megatons of corn. Should the 2008/2009 ethanol forecast comes true, that'll be more like 75 megatons. Were that corn not indirectly pumped into American gas tanks, it could nearly triple U.S. corn exports; or, from another perspective, we're set to use a bit more than an eighth of the world crop for fuel. A couple more years of billion-bushel (~25 megaton) growth in corn directed to ethanol production and ethanol could take over from animal feed as corn's primary use in the U.S. This also goes to show that converting the entire current corn crop into ethanol wouldn't make much of a dent in U.S. gasoline demand.
A curious (and worse) argument is that corn ethanol is a gateway to better future biofuel-production processes. It strikes me that a lot of the current ethanol production capital in the U.S. is one way or another ill-suited either to currently more efficient sources of carbohydrates like sugar cane or to hypothetical cellulosic properties. The big unit trains of ethanol tankers are mobile enough, but otherwise all these giant distilleries are in the middle of corn country for a reason, which is to say subsidy-farming.
Added: See also Menzie Chinn at Econbrowser.
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