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Policy, Energy, and Other Related Issues
Biofuels and Agricultural Commodity
Markets
Global Biofuels
Biofuels and Food Prices
Policy, Energy, and Other Related
Issues
Effects of Increased Biofuels on the U.S. Economy in 2022 (October 2010). Achieving greater energy security by reducing dependence on foreign petroleum is a goal of U.S. energy policy. The Energy Independence and Security Act of 2007 (EISA) calls for a Renewable Fuel Standard (RFS-2), which mandates that the United States increase the volume of biofuel that is blended into transportation fuel from 9 billion gallons in 2008 to 36 billion gallons by 2022. Long-term technological advances are needed to meet this mandate. This report examines how meeting the RFS-2 would affect various key components of the U.S. economy. If biofuel production advances with cost-reducing technology and petroleum prices continue to rise as projected, the RFS-2 could provide economy wide benefits. However, the actual level of benefits (or costs) to the U.S. economy depends importantly on future oil prices and whether tax credits are retained in 2022. If oil prices stabilize or decline from current levels and tax credits are retained, then benefits to the economy would diminish.
2008 Energy Balance for the Corn-Ethanol Industry (June 2010). The Agricultural Resource Management Survey of corn growers for the year 2005 and
the 2008 survey of dry mill ethanol plants are used to estimate the net energy balance of corn ethanol. This report measures all conventional fossil fuel energy used in the production of 1 gallon of corn ethanol.
Ethanol and a Changing Agricultural Landscape (November 2009). The Energy Independence and Security Act (EISA) of 2007 established specific targets for the production of biofuels in the United States. This report summarizes the estimated effects of meeting the EISA targets for 2015 on regional agricultural production and the environment.
Full
Throttle U.S. Ethanol Expansion Faces Challenges Down
the Road (September 2009). The Energy Independence
and Security Act of 2007 specified an ambitious agenda
to significantly expand biofuel use in the United States,
with an increased emphasis on “second generation”
cellulosic biofuel. However, challenges in both supply
and demand may limit future growth in the industry, ranging
from the development of new cellulosic biofuel production
technologies to the development of supporting infrastructures
at every step along the way from the field to the pump.
Growing
Crops for Biofuels Has Spillover Effects (March 2009).
Federal mandates for biofuel production promote expanded
crop acreage and shifts in cropping patterns and livestock
production due to higher prices for corn and other grain
crops. Research that improves crop productivity and conversion
efficiency, as well as conservation practices like no-till
and buffer strips, could lessen the environmental impacts
of biofuels.
Increasing
Feedstock Production for Biofuels: Economic Drivers, Environmental
Implications, and the Role of Research
(December 2008). The implications of increased demand
for feedstocks to meet the Nation's biofuels goals are
uncertain. Questions include what types of feedstocks
will be used, at what prices, grown where, and with what
implications for greenhouse gases and sustainability?
A report released by the interagency Biomass
Research and Development Board addresses these issues,
including analysis of scenarios for specific biofuel targets
with alternative assumptions about key variables like
crop productivity and input prices.
The
Economics of Biomass Feedstocks in the United States:
A Review of the Literature
(October 2008). A review of economic studies available
through the end of 2007 intended to support further economic
research on expanding the production of renewable fuels.
 2008
Farm Bill Side-By-Side (August 2008). A title-by-title
summary of key provisions of the 2008 Act in a side-by-side
comparison with previous legislation. The side-by-side
includes links to related ERS publications and to analyses
of previous farm acts. New features include a user's guide,
an A-Z list of major provisions, and a search function.
Ethanol
Transportation Backgrounder
(September 2007). An overview of transportation issues
facing a rapidly expanding U.S. ethanol industry in the
context of the U.S. corn market from USDA's Agricultural
Marketing Service.
USDA
2007 Farm Bill Theme Paper: Energy and Agriculture
(August 2006) describes the role of U.S. agriculture in
energy production and efforts to conserve energy use in
agriculture, discusses and evaluates energy programs administered
by USDA, and concludes with a discussion of general policy
approaches associated with energy and agriculture.
Agriculture
and Rural Communities Are Resilient to High Energy Costs
(April 2006). Rising energy prices may prompt farmers
and rural residents to make tradeoffs in their production
practices and daily lives. Farmers may be induced to adopt
farming practices that use less energy. Transportation
costs are higher for rural residents, while heating costs
are roughly the same for rural and urban residents.
Biodiesel Development:
New Markets for Conventional and Genetically Modified
Agricultural Products (September 1998). With environmental
and energy source concerns on the rise, using agricultural
fats and oils as fuel in diesel engines has captured increasing
attention. Substituting petroleum diesel with biodiesel
may reduce air emissions, increase the domestic supply
of fuel, and create new markets for farmers.
Industrial
Uses of Agricultural Materials (1993-97). Agricultural
producers provide industry with raw materials for a vast
array of nonfood industrial and consumer products. The
seven reports provide economic and market context for
new and ongoing industrial uses of agricultural materials,
such as ethanol and biodiesel.
Estimating the Net Energy
Balance of Corn Ethanol (July 1995). Variations in
data and assumptions used among studies estimating the
net energy value of corn ethanol have resulted in a wide
range of estimates. This report identifies the factors
causing the variation and develops a more consistent estimate.
The net energy value of corn ethanol has become positive
in recent years due to technological advances in ethanol
conversion and increased efficiency in farm production.
Biofuels and Agricultural Commodity
Markets
Feed
Outlook (monthly). This report examines supply, use,
prices, and trade for feed grains, with a focus on corn.
New information on corn used for ethanol production is
covered in the text as well as in Table 5 (Corn: Food
and industrial uses).
Oil
Crops Outlook (monthly). This report analyzes recent
trends and emerging developments for the U.S. and international
vegetable oils markets. For the production of biodiesel,
these oils provide the primary feedstock and are its main
cost. Thus, market information on vegetable oil supply
and demand is vital for the production economics of this
rapidly growing biofuel.
Market Issues and Prospects for U.S. Distillers’ Grains Supply, Use, and Price Relationships(December 2010). Growth in corn dry-mill ethanol production has surged in the past several years, simultaneously creating a co-product—distillers’ grains (DDGS). Many in the U.S. feed industry were concerned about the size of this new feed source and whether it could be used entirely by the feed industry, but they also worried about the price discovery process for the product. The authors of this report provide a transparent methodology to estimate U.S. supply and consumption of DDGS. Potential domestic and export use of U.S. DDGS exceeds current production and is likely to exceed future production as ethanol production continues to grow. The authors identify the DDGS price discovery process along with the price relationships of distillers’ grains, corn, and soybean meal.
Next-Generation Biofuels: Near-Term Challenges and Implications for Agriculture (May 2010). This report assesses the short-term outlook for production of next-generation biofuels and the near-term challenges facing the sector. See related Amber Waves feature, Next-Generation Biofuels: Near-Term Challenges and Implications for Agriculture (June 2010).
Ethanol
Co-Product Use in U.S. Cattle Feeding: Lessons Learned
and Considerations (April 2009) examines evolution
of ethanol-industry byproducts to "co-products" that have
market value separate from primary products. Co-products
such as dried distiller's grains, corn gluten feed, corn
gluten meal, corn oil, and brewer's grains have become
economically viable components, along with traditional
ingredients such as corn, soybean meal, and urea in feed
rations.
Grain
Prices Impact Entire Livestock Production Cycle (March
2009). Changes in U.S. livestock-industry structure and
the use of alternative feeds, such as byproducts from
ethanol production, will help reduce the impact of higher
input costs on livestock producers.
Ethanol
Expansion in the United States: How Will the Agricultural
Sector Adjust? (May 2007). Corn is currently the primary
feedstock for ethanol in the United States. Market impacts
of the expansion in ethanol production extend well beyond
the corn sector to supply and demand for other crops,
such as soybeans and cotton, as well as to U.S. livestock
industries. As a consequence of these commodity market
impacts, farm income, government payments, and food prices
also change. See narrated
slideshow for an overview; see related Amber Waves
feature U.S.
Ethanol Expansion Driving Changes Throughout the Agricultural
Sector (September 2007).
An
Analysis of the Effects of an Expansion in Biofuel Demand
on U.S. Agriculture
(May 2007). This analysis assesses the effects on agriculture
of further expansion of biofuels production than that
in USDA’s February 2007 long-term projections and
reviews the potential for cellulosic ethanol production.
Two scenarios were developed to evaluate the effects of
biofuel production on crop markets, national and regional
livestock markets, farm income, and the environment for
crop years 2007-16.
Ethanol
Reshapes the Corn Market (May 2007). Work is underway
to add billions of gallons to the annual production capacity
of the fuel ethyl alcohol market. Expanded ethanol production
in the United States has helped to reduce corn ending
stocks and boost corn prices.
Feed
Grains Backgrounder (March 2007). The rapidly expanding
use of corn by the ethanol industry is raising issues
throughout U.S. agriculture, including the implications
of using grain for fuel instead of for food or feed and
the adequacy of future grain supplies. This report addresses
key market and policy developments that have affected
the U.S. feed grains sector in recent years. During the
ongoing farm policy debate, the U.S. feed grain sector
faces uncertainty about the future level and type of government
support. For the related AmberWaves finding,
see Ethanol
Reduces Government Support for U.S. Feed Grain Sector
(April 2007).
Soybean
Backgrounder (April 2006). Key domestic and international
market and policy developments have affected the U.S.
soybean sector in recent years. The report also covers
the development of nontraditional soybean uses such as
biodiesel, which is becoming an important new source of
demand for soybean oil. For the related AmberWaves
finding, see
International Trade, Biofuel Initiatives Reshaping the
Soybean Sector (September 2006).
Agricultural
Baseline Projections: Current and Previous Baseline Projections
(annually in February). The USDA baseline report provides
longrun (10-year) projections for the agricultural sector.
Projections cover agricultural commodities, agricultural
trade, and aggregate indicators of the sector, such as
farm income and food prices. Energy and bioenergy issues
and impacts are discussed in various sections of the report.
Global Biofuels
China Is Using More Corn for Industrial Products (December 2009). Use of corn to make starch, sweeteners, ethyl alcohol, and other industrial products has accounted for most of the growth in China’s corn use over the past decade. Despite the surge in industrial use, China still has a surplus of corn. The country’s exports of corn-based industrial products have grown as exports of unprocessed corn receded. Industrial processing was encouraged by government policy early in the decade. Industrial processors in China benefited from policies that kept domestic corn prices from rising in 2007/08, but many experienced losses in 2008/09 when demand slowed and the government supported corn prices.
Colombia: A New Ethanol
Producer on the Rise? (January 2009). Colombia's sugarcane-based
ethanol industry, after operating for only 3 years, is
the second most developed in the Western Hemisphere. Colombia's
sugarcane-based ethanol production is increasing; proposed
expansion projects have the potential to more than triple
daily production from 277,000 gallons in 2007 to almost
1 million gallons in 2010.
The
Future of Biofuels: A Global Perspective (November
2007). Global biofuel production tripled between 2000
and 2007, but still accounts for less than 3 percent of
the transportation fuel supply worldwide. Biofuels will
likely be part of a portfolio of solutions to high energy
prices, including conservation, more efficient energy
use, and use of other alternative fuels.
Pacific
Food System Outlook 2006-07 The Future Role of Biofuels
(November 2006). Unlike previous periods of high oil prices,
the current increase in oil prices is having a fundamentally
different impact on the food system, creating a more sustained
interest in agriculture as a supplier of energy, not just
a consumer. Prospects for Pacific Rim agriculture to be
a supplier of energy are the focus of this report, which
is based on two days of discussion at the 10th annual
Pacific Food System Outlook meeting in Singapore in May
2006.
Brazil's
Booming Agriculture Faces Obstacles (November 2006).
Brazil has emerged as an important player in global food
and agricultural markets. Brazil’s sugarcane and
associated sugar and ethanol industries have grown rapidly
in the last 5 years, and the country has become the world’s
largest exporter of sugar and ethanol.
Biofuels and Food Prices
Agricultural
Commodity Price Spikes in the 1970s and 1990s: Valuable
Lessons for Today (March 2008) examines the recent
runup in commodity prices in light of similar occurrences
in 1971-74 and 1994-96. Although similar to those earlier
price runups, rising demand for grains and oilseeds for
biofuels adds a new dimension of complexity.
Rising
Food Prices (September 2008). The Consumer Price Index
(CPI) for all food has been rising at an accelerated rate
in 2007 and 2008, a trend that is expected to continue
into the first half of 2009. Higher commodity and energy
costs are responsible for higher retail prices. The main
factors behind higher food commodity costs include stronger
global demand for food, increased U.S. agricultural exports
resulting from stronger demand and a weaker dollar, weather-related
production problems in some areas of the world, and the
increased use of some food commodities, such as corn,
for bioenergy uses (requires Windows
Media Player).
Fluctuating
Food Commodity Prices: A Complex Issue With No Easy Answers
(November 2008) explores the many factors that contributed
to the rapid escalation of food commodity prices through
mid-2008. For the full report, see Global
Agricultural Supply and Demand: Factors Contributing to
the Recent Increase in Food Commodity Prices (July
2008).
Rising
Food Prices Intensify Food Insecurity in Developing Countries
(February 2008). The use of food crops for biofuels, coupled
with greater food demand, has reversed the path of declining
price trends for several commodities. For highly import-dependent
or highly food-insecure countries, any decline in import
capacity stemming from rising food prices can have challenging
food security implications. Food aid, a key safety net
source, has stagnated during the last two decades, and
its share has declined relative to total food imports
of low-income countries.
Corn
Prices Near Record High, But What About Food Costs?
(February 2008). This Amber Waves article traces
the effect of higher corn prices on U.S. retail food prices
by analyzing data on price trends from 1987-2007 and the
price responsiveness of corn-dependent food to cost changes.
The results indicate ethanol's impact on retail food prices
depends on how long the increased demand for corn raises
farm corn prices and the extent to which higher corn prices
are passed through to retail.
Rising
Food Prices (June 2007). Retail food price inflation
has accelerated in 2007 as higher commodity and energy
prices have begun to work their way through the food price
system. This short USDA news video focuses on the main
factors impacting retail food price inflation and provides
insight into what is likely to occur for the rest of the
year (requires Windows
Media Player).
Ethyl
Alcohol Becomes a Global Commodity (April 2005). Most
ethyl alcohol used in the U.S. is produced domestically.
However, sharp increases in U.S. ethanol use in 2004 pushed
prices high enough to stimulate imports, despite duties
matching the blender tax received by U.S. producers of
alcohol used for fuel.
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