World Grain - September 2012 - 82

FEATURE: THE FUTURE OF FEED

increased sharply. Prices of other crops also responded as higher corn prices led to competition for crop acreage. “As a result, feed costs have risen substantially, become more volatile and increasingly sensitive to ﬂuctuations in crude petroleum prices,” the report said. “Feed markets also have become potentially more responsive to exchange rate ﬂuctuations, due to the sensitivity of crude petroleum prices to the value of the U.S. dollar.” To meet the demand for more corn, more idle land was planted and there was a shift from other crops to corn. U.S. corn planted area increased 17% from 78.9 million acres in 2002 to 91.92 million acres in 2011. Approximately 67% of the increase in corn acreage since 2002 was matched by reduced sorghum, barley, and oats plantings. The 4.4-billion-bushel increase in U.S. corn processing for ethanol since 2000-01 is equivalent to 10% of 2010-11 global feed grain production and 13% of world corn production, the report said. After adjusting for replacement of corn by distillers grains, the numbers are approximately 7% and 10%, respectively. However, in the next decade, corn use for ethanol is expected to increase more slowly. As a result, provided U.S. corn yields return to their longer-term upward trend, corn supplies for the feed and livestock industries appear likely to be more adequate than in the past few years, the report said.

Ethanol mandates will increase at a slower rate, and the nation is approaching the blend wall with the average U.S. ethanol-gasoline blend percentage now at or slightly above 10%. One area the feed industry is monitoring closely is the development of biobutanol, which could take the biofuels market beyond the blend wall, Wisner said. “If biobutanol production becomes economical, it could create a secondstage biofuels expansion and growth in corn demand that could be signiﬁcantly greater than projected Chinese imports and could tighten U.S. feed supplies,” according to the study. It will likely take several years for the industry to adopt biobutanol facilities, and the carbon footprint would have to be evaluated closely before it would become a large-scale biofuels alternative, Wisner said. Another concern is the increased production of de-oiled distillers grains, a new development stemming from the demand for feedstocks for biodiesel. Additional research is needed on how to most effectively feed this product, the report said. CHINA’S DEMAND China is on the verge of becoming a major corn importer, as it is for soybeans, the report said. Economic growth, rising consumer incomes and urbanization are shifting diets from grain to animal products. U.S. exports to China increased to

an estimated 200 million bushels of corn in 2011-12, despite record Chinese corn yields and production, the report said. The U.S. Department of Agriculture (USDA) projects China will import 9 million tonnes, or 350 million bushels, of corn in 2016-17 with a doubling of imports by 2021-22. “China’s corn imports also will be affected by how rapidly its farmers can adopt new corn genetics, increase crop fertility, improve weed control, enhance water management, and adopt other technology to increase corn yields,” the report said. “Reported Chinese average corn yield was about 56% of a normal U.S. corn yield in 2011-12.” Asia’s population is expected to grow 41%, which will decrease per capita land area to less than a quarter of an acre by 2050. Countries in those regions will need to increase agricultural production or import a large portion of their food, the report said. Total major crops area harvested in China increased from 102.1 million hectares in 2002-03 to 114.7 million hectares in 2011-12. It is doubtful that China can continue its recent rate of increase in cropland for the next several years, the report said. CROP YIELDS Increasing production will rely on improving yields. In the last 50 years, production of wheat, corn and soybeans has increased substantially, mostly from high-

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