Livestock producers already know the negative economic consequences that come with a federal-bio-fuels policy that artificially inflates feed grain prices. A report from the Congressional Budget Office last week details how much the policy costs taxpayer relative to the returns.
According to the report, "Using Bio-fuel Tax Credits to Achieve Energy and Environmental Policy Goals," the costs to taxpayers of using a bio-fuel to reduce gasoline consumption by one gallon are $1.78 for ethanol made from corn and $3 for cellulosic ethanol. Meanwhile, the cost of reducing an equivalent amount of diesel fuel (that is, a quantity having the same amount of energy as a gallon of gasoline) using biodiesel is $2.55, based on the tax policy in place through last year.
Among the report conclusions:
- “After adjustments for the different energy contents of the various bio-fuels and the petroleum fuel used to produce them, producers of ethanol made from corn receive 73¢ to provide an amount of bio-fuel with the energy equivalent to that in one gallon of gasoline. On a similar basis, producers of cellulosic ethanol receive $1.62, and producers of biodiesel receive $1.08.”
- “Federal bio-fuel mandates require vendors of motor fuels to produce or blend specified minimum volumes of the different fuels with gasoline and diesel fuel; the annual targets are scheduled to rise through 2022. In the past, those requirements have not directly increased the quantity of bio-fuels sold in the U.S. because the combination of underlying economic conditions and the bio-fuel tax credits has caused the use of bio-fuels to exceed the mandated quantities…”
- “In the future, the scheduled rise in mandated volumes would require the production of bio-fuels in amounts that are probably beyond what the market would produce even if the effects of the tax credits were included. To the extent that the mandates determine levels of production in the future, the bio-fuel tax credits would no longer be increasing production, but they would still be reducing the costs borne by producers and consumers of bio-fuels and shifting some of those costs to taxpayers.”
Meanwhile, a report published by USDA’s Office of Energy Policy and New Uses claims corn-based ethanol is a net energy saver and that efficiency continues to improve. According to the Brock Report, the study measured how much total fossil-fuel energy was required by corn growers and ethanol plants to produce 1 gal. of corn ethanol in 2008. According to the research, every British Thermal Unit (BTU) of fossil-fuel energy used to make ethanol results in 2.3 BTUs of energy being produced. The net energy balance of corn ethanol had improved significantly since 2004 when this ratio was 1:1.76 BTUs. The improvement is attributed to several factors, among them, the ethanol-production process has become more efficient, resulting in an increase in output per bushel of about 10% in the past 20 years; and average corn yields have increased 39% over the past 20 years, thus requiring less fossil fuel energy (and land) to produce 1 bu. of corn.
For the week ending July 11, according to the National Agricultural Statistics Service:
Corn – 38% is at or beyond the silking stage, 23% more than last year and 12% more than average. Silking was at or ahead of normal pace in all of the 18 major producing states, with the exception of Colorado, Nebraska and South Dakota. In Indiana and Ohio, ample soil moisture levels and warm weather in recent weeks pushed progress to 38% and 32% ahead of normal, respectively. 73% is in Good to Excellent condition, 2% more than a year ago.
Soybeans – 40% was at or beyond the blooming stage, 18% ahead of last year and 3% ahead of the average. Nationally, 8% was setting pods, 4% ahead of last year and 1% more than the five-year average. Pod setting was underway in all 18 major producing states except Kansas and Wisconsin. Mississippi was the most advanced in development with 68% setting pods, 14% ahead of last year and 4% ahead of normal. 65% is rated in Good or Excellent condition, 1% less than last year.
Winter wheat – 63% is harvested, 2% ahead of last year, but 2% behind the average pace. Harvest was complete in Arkansas and North Carolina, and nearly complete in Missouri. Significant harvest progress was made in Michigan and Ohio, where 43% and 47% of the winter wheat crop was combined during the week, respectively. Elsewhere, lingering showers hampered fieldwork in Nebraska, where the crop is 25% behind the normal harvesting pace. In Kansas, mild temperatures, damp weather, and high humidity slowed wheat harvest in most areas.
Spring wheat – 72% was at or beyond the heading stage, 8% ahead of last year but 6% behind the 5-year average. Although significant heading development was made during the week in Idaho, Montana, North Dakota and Washington, progress was more limited in Minnesota and South Dakota. 83% is in Good to Excellent condition, 1% more than last year.
Sorghum – 27% of the crop has headed, which is 1% ahead of last year but 3% less than the average. Heading progressed most rapidly in Arkansas and Illinois, where heading progress advanced 19% and 20% during the week, respectively. Heading development in Texas progressed only slightly during the week and was 7 percentage points behind the normal pace. 20% of the crop is coloring, which is 2% behind last year and average. 73% is in Good to Excellent condition, 21% more than the same time last year.
Oats – 95% of the crop is at or beyond the heading stage, 8% ahead of last year and 2% in front of the five-year average. Heading was complete or nearly complete in all estimating states except North Dakota, which typically lags behind other states in heading development and was actually at normal pace by week’s end. 9% is harvested, 2% ahead of last year and 1% ahead of normal. 80% is reported in Good or Excellent condition, 32% more than at the same time a year ago.
Barley – 68% is at or beyond the heading stage, which is 18% ahead of last year but 5% behind the five-year average. The most substantial heading progress during the week was made in North Dakota and Washington, which both advanced 27% from last week. 85% is reported in Good or Excellent condition, 7% more than at the same time a year ago.
Pasture – 65% of the nation’s pasture and range is rated as Good or Excellent, 15% more than at the same time last year. 11% is rated Poor or Very Poor, compared to 23% a year ago. States reporting more than 25% of pasture as Poor or Very Poor were: Arizona (45%); Maryland (55%); New Mexico (26%); North Carolina (44%); Pennsylvania (35%); Tennessee (25%); Virginia (64%); West Virginia (41%).