Milling & Baking News - November 7, 2006 - 28

N E W S F E AT U R E

Ethanol plant in South Dakota.
say the government could use tax credits
and loans to encourage production of ethanol from other materials than corn.
Keith Collins, chief economist of the
U.S.D.A., shed light on the policy shift at the
Agriculture Department.
"In the past, U.S.D.A.'s research priorities
were food and fiber," he told the St. Louis
conference. "Today, they are food, fiber and
energy."
The Department of Energy (D.O.E.) earlier this year earmarked $160 million in costshared funds to build three biorefineries. At
the St. Louis conference, Energy Secretary
Samuel Bodman said the D.O.E. was putting up another $250 million over five years
to fund basic research to develop wide-scale
and cost-effective biofuels.
Further evidence of the broad government interest was the 26 Senate bills and
48 House bills introduced in the 109th Congress (2005-06) relating to renewable fuels
and energy security.

Fuel versus food debate continues
As demand for corn to make ethanol has
surged, some have sounded the alarm that it
could be at the expense of food production.
Lester Brown, executive director of the Washington-based Earth Policy Institute, recently
was quoted as saying the global rush to alternative fuels made from food crops is likely to
increase hunger in the poorest countries.
"The risk is that rising grain prices in
low-income countries that import a lot of
their grain could lead to food riots and political instability on a scale we've not seen
before," Mr. Brown said, according to The
Record Kitchener Waterloo, Ont.
Earlier this year, Cargill chief executive
officer Warren Staley referred to a "hierarchy of value for agricultural land use: food
first, then feed and last fuel." Cargill, Min-

28 / Milling & Baking News, November 7, 2006

neapolis, in partnership or joint ventures, is
a major ethanol producer in the U.S.
Patricia Woertz, president and c.e.o. of
Decatur, Ill.-based Archer Daniels Midland
Co., the country's largest ethanol producer,
cited at the St. Louis
conference forecasts
that by the middle
of the century, food
demand will double,
energy from traditional sources will be
insufficient to meet
global demand and
refining capacity will
be unable to meet
Woertz
motor fuel demand.
"We know that
some are predicting an eventual conflict between these needs and are advocating a hierarchical approach to their fulfillment," Ms.
Woertz said. "We believe a more holistic approach is more fruitful."
While acknowledging there could be price
volatility and market disruptions typical of
emerging and growing industries in the
short term, she said she believed in the long
term it was best to view "development of
this industry as an opportunity to produce
more food and more fuel and potentially at
even better prices for consumers."
The N.C.G.A. called the argument that
corn used for fuel will take away from food
markets "patently false, as U.S. producers will
continue to adequately supply all markets
with high quality corn." The N.C.G.A. noted
that only about 5% of total corn use goes for
food and that demand has been flat for 15
years. Of course the largest use of corn is as
animal feed, an indirect food use.

2015 would be sufficient to meet fuel, food,
feed and export demand. The N.C.G.A.
noted that based on historical trends, corn
yields are projected to hit 162 bus an acre
by 2010 and 173 bus an acre by 2015, and
that new hybrid technology will further accelerate the yield curve. Using the 173 bus
per acre yield by 2015, planted area would
need to be about 90 million acres, up 19 million acres, or 27%, from 71 million acres this
year. While the acreage increase appears
significant, the highest acreage on record
was 75 million acres in 1985, and there is
sufficient area available in the Conservation
Reserve Program to make up the difference,
industry sources said.
How many acres would be taken from
other crops, of course, is a question of concern for much of the industry. Farmers typically respond with planted area based on
crop prices and returns from year to year,
making such forecasts difficult.
The U.S. corn crop was forecast by the
U.S.D.A. at 10,905 million bus with a yield
of 153.5 bus an acre this year.
Robert Fraley, executive vice-president
and chief technology officer for the Monsanto Co., St. Louis, said at the St. Louis
conference corn yields have doubled every
25 to 30 years, making yields of 300 bus an
acre in 25 years a reasonable goal. Because
all corn genes have been sequenced, the
plant breeding process has become more efficient, doubling the rate of improvements,
he said. Traits influencing yields, drought
tolerance, fertilizer use and pest resistance
may be more easily isolated and improved,
he said. He cited recent tests where drought
tolerant varieties had 8% to 10% increased
production in dryland conditions.
Further, technology will allow plant
breeders to "redesign" corn to increase
starch content, the raw material for ethanol,
or other parts to improve feed or food content, Mr. Fraley said.
Such gains through technology could, by
2030, result in ethanol production of 50 billion gallons, or 25% of projected gasoline
use, based on a corn crop of 25 billion bus
from 90 million acres, Mr. Fraley said.
While ethanol is meeting the increase in
demand for gasoline, the general consensus is
that the U.S. corn crop alone will never come
close to replacing dependence on foreign oil.
With nearly 60% of U.S. crude oil imported,
2006 ethanol production on an energy basis
will equal only 1.5% of imports, Mr. Collins
said. Although the amount of gasoline ethanol has replaced since 1996 is up six-fold, it
still is projected to be only 3.5% of gasoline
demand in 2006, he said, and energy demand
is expected to increase by 30% by 2030.

Technology will boost corn output
The N.C.G.A. said its 15x15x15 strategy,
which calls for a 15 billion bus corn crop
producing 15 billion gallons of ethanol by

Cellulosic ethanol seen as fuel of future
As dramatic as the rise in corn-based
ethanol production has been, it's likely just

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Milling & Baking News - November 7, 2006

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