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Farmers Will Respond Sustainably to Increased Demand for Food and Fuel

November 21, 2013

News of this year’s corn crop should put to rest the debate over whether the nation’s corn crop is redirected for fuel use at the expense of feed for livestock.

With the release of its 2013 corn crop report, the USDA has estimated that this year’s corn harvest will hit a new record of 13.99 billion bushels, which is 7% larger than the previous year. Additionally, corn prices are projected at $4.10-$4.90 per bushel, the lowest in three years. Lastly, the report found that livestock feed is again projected to be the top use of corn, with 5.2 billion bushels of consumption and when feed co-products from ethanol are considered, livestock will consume the equivalent of 46% of the corn supply.

Clearly, demand for corn for both fuel and animal feed can be met. Corn production has been so successful that the US has exceeded export sales and shipments from past years, leading to strengthened global competitiveness for U.S. corn.

Through such tools as ag biotech, farmers are meeting the demand of corn production more economically. Ag biotech has allowed them to increase their yields substantially with less tilling, fewer pesticide applications and less time on the tractor - all of which result in the reduction of greenhouse gases. Additionally, biotechnology has provided farmers and their families a greater return on their investment.

Additionally, such tools as drought-resistant seed technology has allowed the total cropland planted for corn to decrease. In 2013, U.S. farmers planted 97 million corn acres compared to the 1930s, where farmers planted 103 million acres of corn. Farmers have increased the corn harvest through higher yields, not more acres.

On the other hand, the oil market lacks stability. Developments that reduce, reshuffle, or create risks to oil supply can contribute to higher crude oil prices. Some examples include the civil unrest in Libya, wars in Iran and Iraq and EU sanctions. However, despite, a reduction in oil consumption and imports, the price of crude oil continues to rise, causing an increase in the price of gasoline and other commodities, including s agricultural crops (CRS Report).

Paul Winters, Director of Communications at BIO, wrote a blog post last year naming oil a major contributor to the rising costs of food prices. In his blog post titled, Diverting Attention from Rising Food Costs, Paul cites that, “the price of oil has the greatest impact on food inflation - and most other measures of inflation - as the U.S. Energy Information Administration recently wrote in their report.”

Lastly, research conducted by the World Bank identified crude oil as the number one determinant of global food prices. The longstanding Renewable Fuel Standard (RFS), which requires a progressive amount of renewable biofuel to be introduced to the oil supply each year, provides farmers an opportunity to grow more and harvest more from the same amount of land. Evidence has shown a substantial increase in corn crop yields over the years, a decline in the costs of producing corn and an increase in corn exports. This evidence suggests that if the RFS remains stable, U.S. farmers will respond positively to the growing demand for new energy crops and agricultural residues - such as corn stover.