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Biofuel development to lead to food oversupply, not shortage


Biofuels Digest carries a startling report that predicts the USA will experience a massive corn oversupply as a result of improved yields in the search for more ethanol, rather than the feared shortages.
 
Buried inside the US Department of Agriculture’s (USDA) Biofuels Strategic Production Report is a startling prediction from both EPA and USDA: if the Renewable Fuel Standard targets are to be met by 2022, there will be a wholesale change in US crop usage.
 
However, doomsayers who have been predicting an inevitable conflict between food and fuel appear to have been completely off the mark.
 
Rather than a shortage of food, the increased pace of biotechnology innovation associated with bioenergy is set to usher in a period of food abundance so intense that US food policy may have to move back towards crop subsidies, because there will be far more food available than the world will know what to do with.
 
The EPA and the USDA are differing on their projections for the feedstock mix that will support the RFS2 targets, but using EPA figures, which include projections for tallow, algae and municipal solid waste, the US is expected to cap its use of corn- and soy-based biofuels at 16.34 billion gallons (1 gallon=3.71 litres).
 
Of this, roughly 16 billion will come from current uses of corn and soy (corn stover will form a key source for ethanol moving forward, and corn oil for biodiesel, but these are incremental production using the same corn crop).
 
The EPA projections are:
  • Switchgrass (perennial grass): 7.9 Bgy (billion gallons per year)
  • Soy biodiesel and corn oil: 1.34 Bgy
  • Crop residues (corn stover, includes bagasse): 5.5 Bgy
  • Woody biomass (forestry residue): 0.1 Bgy
  • Corn ethanol: 15.0 Bgy
  • Other (municipal solid waste (MSW)): 2.6 Bgy
  • Animal fats and yellow grease: 0.38 Bgy
  • Algae: 0.1 Bgy
  • Imports: 2.2 Bgy
 The EPA and USDA differ materially on switchgrass and other energy grasses (the USDA projecting 13.4 Bgy from this source), and both groups have not considered the use of short-term wood biomass crops such as poplar.
 
Why is this news? Monsanto has projected that corn yields will reach an average of 300 bushels per acre by 2030, and Ceres CEO Richard Hamilton has stated that he is comfortable with a range of 12 tons per acre for switchgrass yields by 2022, based on current trends.
 
In the US, 2020 corn acreage is estimated at 87.9 million acres, and if this acreage holds, by 2030 the US can be expected to produce, according to Monsanto projections, up to 26.37 billion bushels of corn, or roughly 13.1 billion bushels more than today. Monsanto’s increased yield vision does not necessarily involve a freakish level of nitrogen juicing of the Midwest, but rather a series of genetic enhancements through breeding that may, in fact, reduce overall fertiliser despite the boon in production.
 
How much of that will go to biofuels? Today, corn ethanol soaks up around 33 percent of the corn harvest.
 
But let’s put that in perspective because quoting crop percentages tends to cause panic when there’s no need for it. In 2002, the US produced 9.0 billion bushels of corn with 1.1 billion of those used for ethanol.
 
Overall, that was 7.9 billion bushels available for other uses.
 
In 2009, the US produced 13.2 billion bushels, and after subtracting 4.3 billion bushels for ethanol production, there was 8.9 billion bushels for other uses. Or, a 15 percent increase in food and feed availability. Not to mention the 1.4 billion bushels returned in the form of dried distillers grains. Adding those, that’s nearly a 30 percent increase in food and feed, in a 7-year period, during a period in which the world population increased less than 5 percent.
 
What’s the future outlook? We can expect, over time, that ethanol production across the US will reach 3.0 gallons per bushel (as already achieved by POET) as companies develop or license technology to be competitive on cost with POET and other leaders.
 
In total, around 5 billion bushels of corn to produce 15 billion gallons of ethanol, which will leave 21.3 billion bushels available for food and feed, just 20 years hence.
 
The full report is available here.
 

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