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USDA gets it right by changing corn for ethanol category

USDA has changed a reporting category in its monthly supply and demand estimates to better clarify how corn is being used for ethanol.

It may not stop the critics of corn used for ethanol, who are always quick to use any ambiguity to their advantage, but it definitely does put a crimp in their style.

When USDA first started reporting corn used for ethanol in May 2004, it listed the gross corn bushels as simply “ethanol for fuel,” giving the impression that 100 percent of each bushel is used for fuel ethanol.

U.S. corn farmers produced 12.5 billion bushels of corn in 2010-11 and USDA projects that 5 billion bushels will be used by the ethanol industry. Without the clarification, a layman would figure that 40 percent of the U.S. crop went into ethanol production.

Several newspapers and numerous critics have consistently cited, and continue to cite, the 40 percent figure to reinforce their contention that corn for ethanol is driving up food prices because so much of the crop is used for it.

But the real story is that one-third of every bushel used in the ethanol process returns to the animal feed market in the form of distillers grains, corn gluten feed or corn gluten meal. When you consider this, corn used for ethanol drops to 23 percent of U.S. corn production, a big difference.

In USDA’s April 8 World Agricultural Supply and Demand Estimates, USDA changed the category from “ethanol for fuel” to “ethanol and byproducts,” and included a footnote explaining that corn used for ethanol also produces distillers grains, corn gluten feed, corn gluten meal and corn oil.

The change doesn’t reflect exactly how much of a bushel is used for fuel versus how much is returned as feed, but it definitely is a more accurate representation of corn use patterns. USDA has been criticized at times for its reporting, some deserved, some not. But the agency should be commended for recognizing that a change needed to be made to provide additional clarity.

I doubt that critics of corn for ethanol will ever mention this, but just in case, according to the Renewable Fuels Association, the ethanol industry is expected to produce more than 39 million metric tons of animal feed in 2010-11, enough to produce 50 billion quarter-pound hamburgers – or seven patties for every person on the planet.

RFA says the 39 million metric tons of animal feed produced by the U.S. ethanol industry this marketing year is nearly equal to the combined amount of corn produced by Mexico and Argentina – the world’s fourth- and fifth-leading corn producers. In 2010, the United States exported 9 million metric tons of distillers grains – the same volume of corn imported by Mexico, which is the second-leading importer of U.S. corn. 

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