Commentary: Conflicted over corn
Conversely, an EPA waiver could have little effect if crude oil moves beyond $120 a barrel and oil companies continue blending ethanol at current levels, Tyner said.
USDA now estimates that U.S. corn production will total only 10.8 billion bushels this year, down from 14.7 billion bushels, at prices averaging $8.20 a bushel. Should the drought strengthen and the EPA mandates 13.8 billion gallons of ethanol in 2013, a corn crop of 10.5 billion bushels could push corn prices to $8.57 per bushel, according to the Purdue report.
But if drought conditions abate and corn production reaches 11.5 billion bushels, corn prices could fall to $7.02 a bushel under a full RFS ethanol mandate.
Should a waiver lead to reduced ethanol use, the EPA could have an influence on who bears the brunt of the drought-related corn losses, Tyner said.
“The total amount of harm from the drought is in the tens of billions of dollars,” he said. “EPA cannot change the loss. It can only potentially redistribute it among the affected parties: ethanol producers, livestock producers, corn growers, and domestic and foreign consumers.”
Not only that but another conclusion seems obvious: Far from demonizing corn production as a waste of farmland, resources and food productivity, the crop is critical to much of the entire agricultural economy. Moreover, by now it should be obvious that turning corn into ethanol is not a long-term, sustainable solution to our energy needs.
All it takes is for weather or market conditions or global supply-and-demand issues to upset the balance among the many constituencies dependent on corn, and we’re no longer able to afford both robust use of corn in animal agriculture, food production and fuel refining.
Ethanol may offer some positive contributions to energy independence, but only as a transition strategy.
Long-term, maintaining the viability of the livestock industry trumps any short-term benefits we might derive from taking a critical feedstock and burning it up in our cars.
The opinions expressed in this commentary are solely those of Dan Murphy, a veteran food-industry journalist and commentator.