The Long-Run Impact of Corn-Based Ethanol on the Grain, Oilseed, and Livestock Sectors: A Preliminary Assessment, November 2006

The ongoing growth of corn-based ethanol production raises some fundamental questions about what impact continued growth will have on U.S. and world agriculture. Estimates of the long-run potential for ethanol production can be made by calculating the corn price at which the incentive to expand ethanol production disappears. Under current ethanol tax policy, if the prices of crude oil, natural gas, and distillers grains stay at current levels, then the break-even corn price is $4.05 per bushel. A multi-commodity, multi country system of integrated commodity models is used to estimate the impacts if we ever get to $4.05 corn. At this price, corn-based ethanol production would reach 31.5 billion gallons per year, or about 20% of projected U.S. fuel consumption in 2015. Supporting this level of production would require 95.6 million acres of corn to be planted. Total corn production would be approximately 15.6 billion bushels, compared to 11.0 billion bushels today. Most of the additional corn acres come from reduced soybean acreage. Wheat markets would adjust to fulfill increased demand for feed wheat. Corn exports and production of pork and poultry would all be reduced in response to higher corn prices and increased utilization of corn by ethanol plants. These results should not be viewed as a prediction of what will eventually materialize. Rather, they indicate a logical end point to the current incentives to invest in corn-based ethanol plants.

Emerging Biofuels: Outlook of Effects on U.S. Grain, Oilseed, and Livestock Markets, 2007

Projections of U.S. ethanol production and its impacts on planted acreage, crop prices, livestock production and prices, trade, and retail food costs are presented under the assumption that current tax credits and trade policies are maintained. The projections were made using a multi-product, multi-country deterministic partial equilibrium model. The impacts of higher oil prices, a drought combined with an ethanol mandate, and removal of land from the Conservation Reserve Program (CRP) relative to baseline projections are also presented. The results indicate that expanded U.S. ethanol production will cause long-run crop prices to increase. In response to higher feed costs, livestock farmgate prices will increase enough to cover the feed cost increases. Retail meat, egg, and dairy prices will also increase. If oil prices are permanently $10-per-barrel higher than assumed in the baseline projections, U.S. ethanol will expand significantly. The magnitude of the expansion will depend on the future makeup of the U.S. automobile fleet. If sufficient demand for E-85 from flex-fuel vehicles is available, corn-based ethanol production is projected to increase to over 30 billion gallons per year with the higher oil prices. The direct effect of higher feed costs is that U.S. food prices would increase by a minimum of 1.1% over baseline levels. Results of a model of a 1988-type drought combined with a large mandate for continued ethanol production show sharply higher crop prices, a drop in livestock production, and higher food prices. Corn exports would drop significantly, and feed costs would rise. Wheat feed use would rise sharply. Taking additional land out of the CRP would lower crop prices in the short run. But because long-run corn prices are determined by ethanol prices and not by corn acreage, the long-run impacts on commodity prices and food prices of a smaller CRP are modest. Cellulosic ethanol from switchgrass and biodiesel from soybeans do not become economically viable in the Corn Belt under any of the scenarios. This is so because high energy costs that increase the prices of biodiesel and switchgrass ethanol also increase the price of cornbased ethanol. So long as producers can choose between soybeans for biodiesel, switchgrass for ethanol, and corn for ethanol, they will choose to grow corn. Cellulosic ethanol from corn stover does not enter into any scenario because of the high cost of collecting and transporting corn stover over the large distances required to supply a commercial-sized ethanol facility.

Production of Acetic Acid by Fermentation with Propionibacteria, HR-321, 1993

This project was undertaken jointly with a project supported by the Iowa Corn Promotion Board. Together the projects aimed at producing the organic acids, propionic acid and acetic acid, by fermentation. The impacts were to provide agriculturally-based alternatives to production of these acids, currently produced mainly as petrochemicals. The potentially high-demand use for acetic acid is as the "acetate" in Calcium Magnesium Acetate (CMA), the non-corrosive road deicer. Fermentation was, however, far from being an economically acceptable alternative. Gains were made in this work toward making this a feasible route. These advances included (1) development of a variant strain of propionibacteria capable of producing higher concentrations of acids; (2) comparison of conditions for several ways of cultivating free cells and establishment of the relative benefits of each; (3) achievement of the highest productivity in fermentations using immobilized cells; (4) identification of corn steep liquor as a lower cost substrate for the fermentation; (5) application of a membrane extraction system for acid recovery and reduction of product inhibition; and (6) initial use of more detailed economic analysis of process alternatives to guide in the identification of where the greatest payback potential is for future research. At this point, the fermentation route to these acids using the propionibacteria is technically feasible, but economically unfeasible. Future work with integration of the above process improvements can be expected to lead to further gains in economics. However, such work can not be expected to make CMA a less expensive deicer than common road salt.

Production of Acetic Acid for CMA Deicer, HR-304, 1988

Although the overall objective for undertaking this project is to help decide on the best way to produce CMA, the tasks to be performed deal primarily with acetic acid itself. The objectives of our part of this project can be restated here: A. Evaluate the cost and composition of potential low-cost fermentation substrates that are available in large quantity at central locations in Iowa. B. Compare the nutritional and physiological properties of a variety of homoacetogenic bacteria relative to acetic acid production, based on information available in the literature. C. Using both of these pools of information, evaluate the possibilities for use of substrates for acetic acid production that are significantly cheaper than the previous sugar, starch hydrolysate or whole corn based studies; also, compare the different acetogens encountered with the most commonly discussed acetogen, Clostridium thermoaceticum; arrive at conclusions on 1-3 of the best agriculture-derived substrates that should be further examined, and on 1-3 of the best organisms to evaluate experimentally. D. Collect experimental data at the tube and fermentor scale on 1-2 of the possibilities in C above. E. Comment on our understanding of acetic acid production possibilities from our perspective as microbiologists, and provide all this above information to Paul Peterschmidt for him to consider for his portion of this report. F. In addition, we would like to point out the possible advantage of examining the use of an agricultural by-product, corn steep liquor, as a direct, non-fermented feedstock for a non-acetic acid deicer.