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Ethanol Will Contribute To Crop Demand Under Fuels Mandate
The ethanol sector may not be the key contributor to crop demand, but the industry is not likely to go away anytime soon. Ethanol has contributed to record demand for corn, and the industry is expected to continue to grow under the US government’s renewable fuels mandate.
With high oil prices, greater environmental awareness, desire to reduce dependence on foreign oil and the implementation of mandates set forth in the US Energy Independence and Security Act of 2007, a larger percentage of crops like corn and soybeans will continue to be directed to fuel production.
In part, the act sets a mandatory Renewable Fuel Standard, requiring fuel producers to use at least 36 billion gallons of biofuel in 2022. It also mandates a national fuel economy standard of 35 miles per gallon by 2020, increasing fuel economy standards by 40 percent.
This year corn plantings in the US could decrease somewhat from the record high of 93.6 million acres in 2007. Doane predicts corn acres could fall back to 90 million in 2008, down 3.6 million from last year, but up nearly 12 million acres from 78.3 million in 2006.
In the US, ethanol production was 6.5 billion gallons in 2007, according to the Renewable Fuels Foundation. Annual capacity reached 7.2 billion gallons in December as new plants were brought onstream during the year. About 4.5 billion gallons of capacity from facilities under construction will be added to the total in the first half of 2008, and another 1.5 billion gallons are expected to be added later this year.
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