September 28, 2007
Thanks to Iowa farmers, our corn crop delivers food, feed, and fuel in Iowa, across the nation, and around the world.
Iowa corn growers harvest nearly two billion bushels of corn each year, or about 7% of the world's total production. With increased demand for corn, Iowans have planted 13% more acres of corn this year. That crop is then transformed into livestock products that put protein on the world's dinner plates, ethanol that fuels more cars and thousands of other essential ingredients and products. Corn is used in more than 4,000 food and non-food products and Iowa's farm sector supplies nearly $15 billion to the state economy each year.
The Iowa Corn Promotion Board, or ICPB, believes that agriculture will continue to meet the nation's growing demand for both food and fuel. In addition to farmers planting more corn acres, new studies shatter the myths about the relationship between the price of corn, ethanol production and food prices.
New studies shatter the old myths
Three individual reports, from the Center for Agricultural and Rural Development or CARD at Iowa State University, the Consumer Federation of America or CFA and Houston Biofuels Consultants LLC, show that higher corn prices have little effect on either food or fuel prices. The National Corn Growers Association did not participate in or provide funding for any of the studies. "The CARD report repeats the conclusions it had reached in its study earlier this year," says ICPB chairman Julius Schaaf of Randolph. "However, some people misinterpreted that study's findings as it was 'worst-case scenario.'
This report is very clear – a 30% increase in corn prices would increase consumer food prices by only about 1.1%."The CFA study includes a stinging criticism of the oil industry for failing to use ethanol as a way to increase supplies of refined gasoline. The study notes increased use of ethanol could actually help reduce food price increases. "High energy prices cause higher food prices," says CFA director of research Marc Cooper. "The historic corn-crude price relationship will cushion the impact that ethanol production has on food prices." The report also said, "Based on the historical relationship between crude [oil] prices and corn prices, current prices for corn are lower than one would predict. Houston Biofuels Consultants come to much the same conclusion. "Historically, ethanol prices haven't tracked corn prices," he notes in the July issue of "Ethanol Producer Magazine".
Ethanol's energy balance is positive
From the University of California-Berkeley to Argonne Labs in Chicago, there's general scientific agreement that ethanol has a positive energy balance. One reason is that modern corn farming is so efficient. For every 100 Btus of energy that go into producing the crop, delivering it, and processing it into ethanol, we get 160 Btus of energy, according to USDA.
"It's not a food vs. fuel decision," says Schaaf. "Corn is a key component in thousands of products, but it's been such a cheap ingredient that even today's stronger corn prices have little effect on what consumers pay."
When corn is made into ethanol, a third of each bushel still feeds livestock feed, (especially dairy and beef cattle).
The corn used to make a 12 ounce box of cornflakes costs just 9 cents (when corn costs $3.50 per bushel).
Global demand for milk is growing faster than production – that's what produced the recent run-up in milk prices, according to USDA. Strong milk demand is expected to prompt dairies to expand, despite feed prices.
All the corn sweetener in a six-pack of soft drinks represents just 6 cents (when corn costs $3.50).
For more information on how Iowa supplies corn for food and fuel, call Iowa Corn at 515-225-9242 or go to www.iowacorn.org.
Each year, the ICPB and the ICGA encourage all Iowans to recognize the contributions of Iowa's corn producers by celebrating September as Corn Month. The ICPB works to develop and defend markets, fund research, and provide education about corn and corn products. The ICGA is a membership organization, lobbying on agricultural issues on behalf of its 6,000 members.
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