Ethanol: Will It Always Be In Demand Or Will It Ever Be A Surplus Commodity?

CattleNetworkNews.com
12/9/2008 7:42:00 AM

Through the hard work of nearly every corn farmer and various commodity and farm organizations, ethanol has become a significant motor fuel and new use of surplus corn. While corn has moved from surplus to a demand commodity in the past several years, more ethanol plants have been produced to meet the demand for ethanol by the motoring public and to satisfy the various governmental mandates for it use. But at some point ethanol will be found in nearly all of the US motor fuel, and what happens at that point of market saturation. Can agriculture afford for ethanol to be a surplus commodity?

The answer to that question is no. Agriculture cannot afford for ethanol to be in surplus and both economists and policy planners should anticipate the day that ethanol has saturated the conventional 10% blend of the motor fuel market. Iowa State economists Bruce Babcock and Michael Boland track the use of ethanol in the fall issue of the Iowa Ag Review.

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