impacts of biofuels on the south
DESCRIPTION
Impacts of Biofuels on the South. Dwi Susanto & Parr Rosson: Texas AgriLife Research & Texas AgriLife Extension, respectively Darren Hudson: Mississippi State University SAEA Annual Meeting 2008. Background. High Oil Prices Rising Output & Demand for Ethanol - PowerPoint PPT PresentationTRANSCRIPT
Impacts of Biofuels on Impacts of Biofuels on the Souththe South
Dwi Susanto & Parr Rosson: Texas Dwi Susanto & Parr Rosson: Texas AgriLife Research & Texas AgriLife AgriLife Research & Texas AgriLife
Extension, respectivelyExtension, respectivelyDarren Hudson: Mississippi State Darren Hudson: Mississippi State
UniversityUniversity
SAEA Annual Meeting 2008SAEA Annual Meeting 2008
22
BackgroundBackgroundHigh Oil PricesHigh Oil PricesRising Output & Demand for EthanolRising Output & Demand for EthanolTrends in production of crops & Trends in production of crops &
animalsanimalsSouthern States: Grain deficit region, Southern States: Grain deficit region,
but major producer of animals but major producer of animals Energy PolicyEnergy Policy
33
44
Ethanol: Production, Demand, and Growth
(Billion Gallons & Percent)
Left Axis: Ethanol Production & Demand; Right Axis: Growth in Ethanol Production (%)
1984 1987 1990 1993 1996 1999 2002 20050
1
2
3
4
5
6
7
8
0
10
20
30
40
-10
-20
-30
Production Demand Growth
Ethanol % Change in Production
55
Nominal Crop Prices
1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 20070
2
4
6
8$ per bushel
0
0.2
0.4
0.6
0.8Cents per pound (Cotton)
Corn Cotton Soybeans Wheat
66
Area Planted in Main Crops: South-Million Acres-
49.646.3 47.6 46.9 47.6
44.9 45.5 45.8
2000 2001 2002 2003 2004 2005 2006 20070.0
10.0
20.0
30.0
40.0
50.0
60.0 Corn Cotton Soybeans Wheat
10.16.7
15.913.7
10.111.3
9.713.8
77
Corn Production: South
SP=Southern Plains; DL=Delta; SE=South East; AP=Appalachian;
Corn Production - Southern States
714.6
823.4
914.1
802.0
703.6
1116.5
2002 2003 2004 2005 2006 20070.0
200.0
400.0
600.0
800.0
1000.0
1200.0
1400.0
SP DL SE AP
189
105
67
306
347
105
359
343
-Million Bushels-
88
South’s Share of US Animals UnitsSouth’s Share of US Animals Units
12 12 11 11 11
24 23 24 23 2426 26 26 25 24
80 80 83 82 82
38 39 38 37 38
2002 2003 2004 2005 20060
20
40
60
80
100Dairy Cattle Cattle on feed Hogs Broilers Turkeys
99
Grain Deficit, SouthGrain Deficit, South
2000 2001 2002 2003 2004 2005 2006
0
100
-100
-200
-300
-400
-500
SP DL SE AP
1010
Energy PolicyEnergy PolicyEnergy Policy Act of 2005Energy Policy Act of 2005 Established Renewable Fuel Standard
Requires use of 7.5 billion gallons of biofuels (including ethanol and biodiesel) by 2012
Energy Independence and Energy Independence and Security Act of 2007Security Act of 2007
Increases supply of alternative fuels by increasing mandatory Renewable Fuel Standard
36 billion gallons of biofuels by 2022
1111
Objectives1. Project ethanol production
in US and South2. Project future corn supply
and utilization, focus on Feed Use & Exports resulting from 2007 Act
3. Discuss Implications for Agriculture, focusing on Animal Industries
1212
MethodologyMethodology Project Ethanol Production-used 12% Project Ethanol Production-used 12%
growth rate (actual), 1990-2007 for USgrowth rate (actual), 1990-2007 for US– South based on current & expected capacity South based on current & expected capacity
expansion (RFA)expansion (RFA) Projected Corn Production- used harvested Projected Corn Production- used harvested
area (exponential growth function with area (exponential growth function with dummy) & yield (geometric average), dummy) & yield (geometric average), 1987-20061987-2006
Consumption based on GCAU by animal Consumption based on GCAU by animal type, then allocated by animal shares in type, then allocated by animal shares in each state (dairy, cattle, hogs, chickens, each state (dairy, cattle, hogs, chickens, turkeys)turkeys)
1313
Regions & Data Southern States Include:
Southern Plains: Texas and OklahomaDelta: Arkansas, Louisiana, and MississippiSouth East: Georgia, Alabama, Florida, and South
CarolinaAppalachian: Tennessee, Kentucky, North Carolina,
and Virginia
Data Sources:Ethanol production: Renewable Fuels Association (RFA)Acreage planted, Prices, Animal Units, and other
Related Data are mostly obtained from USDA publications
1414
ProjectionsProjections
Ethanol Production and Corn Ethanol Production and Corn Supply and UtilizationSupply and Utilization
1515
Corn Production and Use, Ethanol Output, United States: Projections
2008 2010 2012 2014 2016 2018 2020 2022
0
10
20
30
40
-10
Ethanol ProductionFeed StockCorn ProductionCorn Exports
Corn in Million Bushels Ethanol in Billion Gallons
1616
Corn Production and Use, Ethanol Output: Projected for Southern States
0.1 0.2 0.3 0.4 0.5 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.6
2.0 2.0 2.0 2.0 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.2 2.2 2.2 2.2 2.2
1.2 1.3 1.4 1.4 1.4 1.5 1.5 1.6 1.6 1.7 1.8 1.8 1.9 2.0 2.1 2.1
-1.2 -1.2 -1.3 -1.3 -1.4 -1.4 -1.4 -1.4 -1.4 -1.3 -1.3 -1.3 -1.3 -1.2 -1.2 -1.1
2007 2010 2013 2016 2019 2022
0.0
1.0
2.0
3.0
-1.0
-2.0
Supply Feed and Residual Fuel Net
Billion Bu Million Gallons
1717
Projected US Corn Exports and Regional Disposition in South
2006 2008 2010 2012 2014 2016 2018 2020 2022
0
500
-500
-1000
-1500
Million Bu-South
0
2
4
-2
-4
Billion Bu-US
South SPlainsDelta SouthEastAppalachian US Exports
Deficit to Surplus for Delta Region
Net Export to Net Import for US
S Plains Surplus to Deficit
1818
Key PointsKey Points US corn meets domestic demand US corn meets domestic demand
for ethanol and feed until 2018for ethanol and feed until 2018• After then, US becomes a Net Importer of After then, US becomes a Net Importer of
Corn, Up to 3.7 Billion Bu in early yearsCorn, Up to 3.7 Billion Bu in early years Assumes all ethanol needs met with cornAssumes all ethanol needs met with corn
Delta increases corn output, but S Delta increases corn output, but S Plains becomes deficit, forcing Plains becomes deficit, forcing South’s deficit to increaseSouth’s deficit to increase
• Supplies from other US regions & imports increaseSupplies from other US regions & imports increase Impacts of ethanol production on Impacts of ethanol production on
animal industries reflect higher animal industries reflect higher prices, but corn remains available in prices, but corn remains available in near termnear term
• Longer term, may strain infrastructureLonger term, may strain infrastructure
1919
Key Points (cont.)Key Points (cont.) Acreage Shifts difficult to predict with any Acreage Shifts difficult to predict with any
degree of confidencedegree of confidence– A work in progressA work in progress
Specialized Infrastructure likely a major Specialized Infrastructure likely a major constraintconstraint
Objectives of 2007 Energy Independence Objectives of 2007 Energy Independence Act Difficult to AchieveAct Difficult to Achieve– Technical Feasibility PositiveTechnical Feasibility Positive
Economics Pose DifficultiesEconomics Pose Difficulties– Energy & Commodity Price UncertaintyEnergy & Commodity Price Uncertainty– Import Tariff Changes & Tax Credit ExpirationImport Tariff Changes & Tax Credit Expiration– Requirements for Specialized InfrastructureRequirements for Specialized Infrastructure