The Future of Corn Ethanol

NEWS ITEM:

Southwest Iowa Renewable Energy reported corn ethanol revenue from operations was $157.7 million for the nine months ended June 30, 2018, compared to $162.2 million for the nine months ended June 30, 2017. SIRE is located on 275 acres in Council Bluffs, Iowa, operating a 140 million gallon per year ethanol plant. SIRE began producing corn ethanol in February, 2009 and sells its ethanol, distillers’ grains, corn syrup, and corn oil in the continental United States, Mexico and the Pacific Rim. For the first nine months of Fiscal 2018, SIRE produced 93.5 million gallons of corn ethanol, compared to 90.9 million gallons in the first nine months of Fiscal 2017.

 

 

POINT:

Using corn to make automotive fuel may be one of the oddities of history when we look back at the late 1900s. In fact perhaps using corn to feed production animals will also be viewed as an aberration, given the recent advance in plant-based proteins. But Andy, as a master of the petroleum age, tell me the future for corn ethanol and for companies like SIRE. Also what about scenarios for the broader alternative fuel market given the likely electrification of transportation and the possibility of a growing wave of biogas out of sewage sludge, manure and food waste that we envision.

 

 

ANDY’S COUNTERPOINT:

Corn Ethanol is an artificial market driven by political mandate driven due to Iowa’s early primary position in the quadrennial Presidential sweepstakes. It cannot last forever. But with broader incentives for the Ag sector, we now produce corn at record levels, topping 14 billion bushels a year. And using corn for ethanol has tripled from 2b bushels ten years ago to over 6b bushels a year. Some corn is for export (about 2b bushels); some as storage offers “food sovereignty” which is a public good, tied to the USA maintaining a base of farms. That “Food Sovereignty” is too difficult to value — until you lose it. Biodiesel from waste grease is better in ecological terms, but gathering costs are prohibitive once oil prices slump as they did in 2014. Sewage, manure and food waste do represent more economical potential sources of biogas.
LAST: A carbon tax would help monetize the public benefits — and help offset big deficits. The tax cuts in 2017 were not paid for, just as in 2001 and 2003. CBO estimated in June 2012 that the Bush tax cuts of 2001 (EGTRRA) and 2003 (JGTRRA) added approximately $1.5 trillion total to the debt over the 2002–2011 decade, excluding interest.

 

See corn ethanol statistics:


https://www.fb.org/market-intel/whats-next-consuming-the-record-setting-u.s.-corn-and-soybean-crops