Changes to Ethanol Fuel Policies Unlikely

By CnAgri2012-08-24 19:38:43 Print

An agricultural economist with the University of Missouri says the government appears unlikely to alter its ethanol fuel policies to ward off anticipated shortages of feed grains in the wake of reduced corn production due to drought.

Although farmers seeded the largest number of acres to corn this year since 1937, since mid-June corn prices have been on the rise to the point where they've hit record levels well above $8 per bushel in recent days fueled by concerns over drought.

The reduced availability of feed grains has prompted calls for Washington to re-think policies that encourage the use of ethanol fuel blends.

Dr Ron Plain, an agricultural economics professor with the University of Missouri, says that appears unlikely.

"We're using close to 40 percent of our corn crop to make ethanol. That tightens up the supply for everything else and contributes to these high feed costs for the livestock industry and the cattle and the hog industry has said that reducing ethanol production would free up some feed and help the economics of the livestock industry and therefore help consumer food costs down the road," Plain said.

He says another key factor will be corn exports and because of the high prices, the U.S. Department of Agriculture expects corn exports to decline.