Crops

1
Crops Biofuels Policies, Outlooks, and Debates
Chad Hart Iowa State University chart_at_iastate.edu
515-294-9911 Iowa Farm Bureau West Des Moines,
Iowa August 14, 2008
2
Renewable Fuels Standard (RFS)
3
Government Policies for Ethanol

• Ad valorem tariff of 2.5
• Import duty of 0.54 per gallon
• Volumetric Ethanol Excise Tax Credit (VEETC)
• 0.51 per gallon in 2008
• 0.45 per gallon in 2009

4
Impacts of Removing Ethanol Support
Source McPhail and Babcock, June 2008
5
Population
2008   2020   2050
(billion) (billion) (billion)
World 6.678 World 7.601 World 9.393

China 1.330 China 1.431 India 1.808
India 1.148 India 1.362 China 1.424
U.S. 0.304 U.S. 0.336 U.S. 0.420
Indonesia 0.238 Indonesia 0.268 Nigeria 0.357
Brazil 0.192 Brazil 0.212 Indonesia 0.313
Pakistan 0.168 Pakistan 0.204 Bangladesh 0.280
Bangladesh 0.154 Bangladesh 0.190 Pakistan 0.278
Russia 0.141 Nigeria 0.184 Brazil 0.228
Nigeria 0.138 Russia 0.132 Congo 0.189
Source U.S. Bureau of the Census, International
Data Base
6
Real GDP
Sources International Financial Statistics,
Global Insight
7
Per Capita Meat Consumption
Source FAPRI
8
Liquid Fuel Usage
2004 2010 2015 2020 2025 2030
(Million Barrels Oil Equivalent per Day) (Percent of 2004 Value) (Percent of 2004 Value) (Percent of 2004 Value) (Percent of 2004 Value) (Percent of 2004 Value)
United States 20.7 103 109 115 121 129
Canada 2.3 100 100 104 104 104
Mexico 2.0 110 115 130 135 145
Europe 15.6 99 99 100 101 101
Japan 5.4 96 96 96 96 96
China 6.4 147 164 186 213 245
India 2.5 108 128 144 160 176
Africa 2.8 118 139 154 164 175
Central and South America 5.4 120 137 152 167 180
World 82.5 110 118 126 134 143
Source U.S. Dept. of Energy, Energy Information
Administration
9
Crude Oil Prices
Source U.S. Dept. of Energy, Energy Information
Administration
10
Countries Pursuing Biofuels

• US
• Brazil
• Argentina
• Colombia
• Paraguay
• Canada
• Uruguay
• Mexico

• Thailand
• New Zealand
• South Africa
• South Korea
• Philippines
• Indonesia
• Pakistan
• China

• India
• Malaysia
• Australia
• Japan
• EU
• Russia

• Not a complete list

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Price Ratios (Jan. 2, 2008 1)
Sources CBOT and NYMEX nearby futures
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Exchange Rate Ratios (Jan. 2007 1)
Source USDA-ERS
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Exchange Rate Ratios (Jan. 2007 1)
Source CME futures
14
Nearby Corn Futures
Source CBOT nearby futures
15
Nearby Soybean Futures
Source CBOT nearby futures
16
Hay Acreage
Source USDA-NASS
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CRP Expiring Contracts
Source USDA-FSA
18
Land Availability
Data from 1997 and 2002 Census of
Agriculture 1997 2002 Land in farms
955 938 Total cropland 445
434 Harvested cropland 319 303 Cropland in
pasture 66 61 Other cropland 60
71 Total woodland 77 76 Pastureland
(not crop) 398 395 Land in other uses
34 33
2007 931 304
Source USDA-NASS
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Corn Supply and Use
Source USDA
20
Soybean Supply and Use
Source USDA
21
Corn Soybean Area
Source USDA-NASS
22
Corn Soybean Area
Growth rate of 1.5 million acres per year
23
Input Costs
Source USDA, Agricultural Prices, July 31, 2008
24
Stocks-to-Use Ratios
25
Acreage Competition for 2009

• More land will shift to corn and soybeans
• High prices for both crops
• Tight stock situations
• Demand remaining fairly strong
• Futures price ratios favor corn (8/13/08)
• Dec. 2009 Corn 5.99 per bushel
• Nov. 2009 Soy 12.84 per bushel
• Current ratio 2.14
• Historical average ratio 2.3