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Much of the ethanol produced from the corn was exported overseas

When it comes to removing our dependence on foreign oil there are other options than using electricity or hydrogen to power cars. One of the options is using ethanol and other biofuels to replace some of the petroleum used in our gasoline. The big downside is that most of the ethanol produced in the U.S. today is made from corn.
 
Corn is an important food crop that is consumed by humans and used as feed for livestock and other animals. Scientific America reports that for every ten ears of corn grown in the U.S. today, only two are consumed by humans as food. The other ears are used for animal feed and ethanol production.
 
The numbers show that for the year spanning August 2010 to August 2011 the biofuel industry used more corn than farmers used for animal feed and residual demand. This is the first time more corn has been used for ethanol and shows a shifting balance that could spell trouble in the future. Over that year span, farmers used 5 billion bushels of corn and ethanol production used 5.05 billion bushels. Some of that corn did return to the food supply as animal feed and corn oil.
 
The fear is that the shift from food being the largest use for corn and fuel taking the top spot is a concern that could have significant impact on the world grain market. One of the reasons for the shift to ethanol use for corn is the government subsidies and the import tariffs on foreign ethanol. 
 
Steven Rattner said in a piece written for the NYT, “Because of the subsidy, ethanol became cheaper than gasoline, and so we sent 397 million gallons of ethanol overseas last year. America is simultaneously importing costly foreign oil and subsidizing the export of its equivalent.” 
 
That means much of the corn being used for fuel isn't making it into American fuel tanks so we still have to import more foreign oil to meet our fuel needs. Some in Congress are working hard to get the subsidies repealed and to lift the import tariff so that cheaper biofuels made from sugarcane can be imported from Brazil. There is also a lot of research going into making ethanol from other crops like switchgrass.
 
Rattner also wrote, "Even farm advocates like former Agriculture Secretary Dan Glickman agree that the [ethanol] situation must be fixed. Reports filtering out of the budget talks currently under way suggest that agriculture subsidies sit prominently on the chopping block. The time is ripe."

Source: Scientific American



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Not all bad
By titanmiller on 10/13/2011 8:31:51 PM , Rating: 2
The good thing is that should there be a famine we can quickly shut down ethanol production and there will suddenly be a huge surplus of corn to be used as food. I see it as an emergency reserve.




RE: Not all bad
By iowafarmer on 10/14/2011 12:44:28 AM , Rating: 2
An excellent observation. At the end of a crop year the supply of corn, soybeans and wheat can be measured in days. The USA has no grain reserve. The corn used for ethanol might some year be more valuable as food than fuel!

The article quotes sources on subsides. I'd like to see you spell out the subsidies I receive as a corn producer to produce corn. I am in the middle of harvesting this years corn and soybean crops and I don't have time to lookup the subsidies I should be receiving to raise corn. I feel I must be missing out and would like to make claim to the subsidies for raising corn that I'm not collecting.

My private crop insurance is federally subsidized and I receive a "subsidie" payment based on past practices just for being a farmer that isn't coupled to production. I can also take out low interest government loans on a current years crop in storage for a period of 9 months. You can look up how much corn is under loan at any given moment.

You are trying to oversimplify a complex issue.

The US is currently the least cost producer of ethanol.

https://www.fas.usda.gov/info/IATR/072011_Ethanol_...

It's curious that we are exporting cheap US ethanol to brazil and california is importing expensive brazilian ethanol. BTW ethanol that is exported doesn't receive the blenders credit. Ethanol that is imported is assessed the blenders credit when imported as all ethanol receives the blenders credit at the fuel pump. Whoever the blender is receives the ethanol blenders credit "subsidy."

http://www.argusmedia.com/pages/NewsBody.aspx?id=7...

Ten minute delayed futures prices:

http://farmfutures.com/ffQuotesElectronic.aspx


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