Sometimes rational debate is neither encouraged nor welcomed
Sometimes rational debate is neither encouraged nor welcomed
BakingBusiness.com, April 23, 2009
by Editorial Staff

Bookmark and Share

In the midst of a crisis — real or imagined — measured rational debate is sometimes neither encouraged nor welcomed. For example, when crude oil prices were approaching $150 per bbl, No. 2 yellow corn was approaching $8 per bu and every drop of ethanol was whisked into a gasoline blend as quickly as it could be placed in a tank car or truck; everyone wanted to invest in ethanol. Even Bill Gates, of Microsoft billions, was a major shareholder in a West Coast corn ethanol venture.

The press — print and electronic — not wanting to let any flame go unfanned, began bemoaning the food versus fuel issue. The issue may be roughly captured in the following "every gallon of ethanol produced in the U.S. from corn deprives a child in Central America of the tortilla needed to sustain life." The production livestock industry was none too happy about higher grain prices either.

Situation has changed dramatically

It is interesting to note that the situation has changed dramatically in less than a year. Crude oil is below $50 per bbl. Nearby corn is below $4 per bu and ethanol companies are queuing up at bankruptcy court. Gasoline and ethanol volumes have declined as the recession has changed America’s driving habits. For the livestock production industry weak demand has become more of a problem than high costs.

While the ethanol industry is in its current trough, it is important to remember the ethanol mandate by the federal government still remains and will grow over the next few years. There is considerable discussion of increasing the maximum percentage replacement in gasoline above 10%. There is also substantial postponed capacity ready to enter the market.

Altering the WASDE

This is a propitious time for the U.S. Department of Agriculture to make an addition to the WASDE report that would have the dual advantage of providing additional factual content and reducing the volume of some of the rhetoric surrounding ethanol when the ethanol market recovers and the corn crop is two weeks late being planted.

Every bushel of corn used in ethanol production results in approximately 16.15 lbs of feed products both from the wet and dry milling processes. The table above uses the U.S.D.A.’s own factors for starch and feed yields. Fully 33% of the No. 2 yellow corn, which is a feed ingredient, is returned to the market as a feed component. The one exception to that is the corn oil from wet milling, which is used as edible oil. Some dry millers also have been extracting corn oil from distillers dried grains (DDG) because of the higher returns from oil. The production of feed is essential both to the economics and positive energy balance of ethanol production from corn.

If, for example, 4 billion bus of corn are used in ethanol in a given year, then 1.28 billion equivalent bus of feed are created and moved to domestic and export feed markets.

Using the June 2008/2009 WASDE projection for corn, the example adds back byproducts to the feed total. This addition to the WASDE would reflect the reality of ethanol production and its consequent impact on the availability of feed. This data may not be found in the existing U.S.D.A. reports.

Because the food versus fuel crisis has passed for the moment, perhaps it provides a good opportunity to clarify the feed value of corn used to make ethanol.

This article can also be found in the digital edition of Milling and Baking News, April 21, 2009, starting on Page 45. Click here to search that archive.


Bookmark and Share
   EDITOR'S PICKS
Add a Comment
We welcome your thoughtful comments. Please comply with our Community rules.
Name:
Email Address:
Comment:
The views expressed in the comments section of BakingBusiness.com do not reflect those of BakingBusiness.com or its parent company, Sosland Publishing Co., Kansas City, Mo. Concern regarding a specific comment may be registered with the Editor by clicking the Report Abuse link.
Enter code as it is shown (required):
READER COMMENTS (0)
  

LATEST NEWS