Ethanol: Ripples of Corn

The Center for Agricultural and Rural Development @ Iowa State University is forecasting a long term increase in corn prices. Here's their full report.

Well, no surprise there. The explosion in ethanol plant building and record corn prices have been reported on widely. A couple of interesting points, though:

1. Sacrificing Soybeans: To keep up with increased ethanol demand, US farmers are expected to grow their acreage to 94 million acres. Farmers will most likely replace their soybeans crops with corn to do so. The irony, of course, is that the soybean is a more efficient feed stock source of biofuel at a rate of about 3:1. But don't get me started on this, as I've already commented on it here and here.
2. Ripple Effect: No surprise with all that corn headed to fuel, other parts of the economy will be significantly impacted. Inevitable higher feed costs for livestock would increase US food prices by an estimated 1.1% over baseline. Specifically, meat and poultry would jump by 4% and eggs by 8%.
   
3. Cellulostic Fantasy: The much ballyhooed cellulostic ethanol is essential dismissed out of hand for the simple reason that the authors do not envision economic feasibility in the long term for farmers. Too expensive to haul corn stover over long distances to a commercial production facilities, apparently.
   

Admittedly, much of the report reads like a statement of the obvious, but it's worth a read.