Biofuels could create new kind of corn
By ANNE FITZGERALD
Register Agribusiness Writer
October 25, 2006
Ames, Ia. — Corn raised by future Iowa farmers could look more like the corn produced by their ancestors, with more substantial stalks, biofuels industry experts said Wednesday.
As investment in biomass-based, or cellulosic, ethanol production grows, so will demand for crop residue. At the same time, corn-based ethanol production will continue to drive demand for grain. Look for university and private sector researchers to develop corn hybrids that yield more of both, said speakers at a symposium focused on the impact of biorenewable energy on the rural economy.
“There is a demand for corn like we’ve never seen before, and I think we will see demand for cellulosic biomass like we’ve never seen before,” said Robert Brown, director of the Office of Biorenewables Programs at Iowa State University and a speaker at the event.
Since 2000, annual U.S. ethanol production has quadrupled to about 4.5 billion gallons, and that number is expected to double by 2008, said John Miranowski, an ISU professor of economics. By 2015, U.S. ethanol production is expected to reach 15 billion gallons, while commercial production of biomass-based ethanol is expected to be widespread, he said.
Iowa has emerged as the nation’s leading producer of corn-based ethanol. Now, business, university and government leaders are seeking ways to ensure the state has a leading role in biomass, or cellulosic, ethanol production, as well. They believe the bioenergy business will be key to the future of the largely rural state.
“I’ve never seen things change so fast in such a short period of time in the Midwest, and especially in Iowa, in agriculture,” said Miranowski, who also spoke at the two-day event, which was co-sponsored by the Federal Reserve Bank of Chicago, the Iowa Department of Economic Development and the Iowa Bankers Association.
The economic impact of producing 1.6 billion gallons of ethanol in Iowa, as the state is expected to do in 2006, looks like this: $4.6 billion in sales, $220 million in personal income and 6,000 jobs.
“When we double that or triple that, we will have a sizeable impact on the economy, jobs-wise and sales-wise and income-wise,” Miranowski said.
He and others predicted that some sectors could be hurt by the growing industry. Corn production may take cropland from soybeans, for instance, making soy products more costly. Higher corn prices, driven up by demand from ethanol plants, could increase costs for many livestock feeders.
“The intersection of agriculture and energy is going to be a disruptive event,” said David Miller, director of research and commodity services for the Iowa Farm Bureau Federation. That “can be good or bad, but it is going to be disruptive.”
“The energy markets are magnitudes larger” than agricultural markets, he said. “We’re like the dog that chased the car. We caught it. We caught the car. Now, what do we do?”
Others cautioned that there would be shakeups in the biorenewables industry as it grows, particularly if crude oil prices fall below $50 per barrel and remain there long-term.
“Then we have some problems,” Miranowski said.
But for now, the outlook is bullish for biorenewables, he said.
“It’s hard to lose, even if (oil) prices change,” Miranowski said, “because a lot of (ethanol plants) are being paid off so quickly.”
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