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Long-Run Impact of Corn-Based Ethanol on the Grain, Oilseed, and Livestock Sectors: A Preliminary Assessment, The

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  • Elobeid, Amani
  • Tokgoz, Simla
  • Hayes, Dermot J.
  • Babcock, Bruce A.
  • Hart, Chad E.

Abstract

The ongoing growth of cornï¾–based ethanol production raises some fundamental questions about what impact continued growth will have on US and world agriculture. Estimates of the longï¾–run potential for ethanol production can be made by calculating the corn price at which the incentive to expand ethanol production disappears. Under current ethanol tax policy, if the prices of crude oil, natural gas and distillers grains stay at current levels, then the breakï¾–even corn price is $4.05 per bushel. A multiï¾–commodity, multiï¾–country system of integrated commodity models is used to estimate the impacts if we ever get to $4.05 corn. At this price, cornï¾–based ethanol production would reach 31.5 billion gallons per year. Supporting this level of production would require 95.6 million acres of corn to be planted. Total corn production would be approximately 15.6 billion bushels, compared to 11.0 billion bushels today. Most of the additional corn acres come from reduced soybean acreage. The demand for biotech corn varieties that allow for continuous corn production would increase dramatically as would the demand for corn, soybean, and wheat varieties that can be grown in marginal areas.

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Bibliographic Info

Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 12717.

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Date of creation: 01 Jan 2007
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Publication status: Published in AgBioForum 2007, vol. 10 no. 1, pp. 11-18
Handle: RePEc:isu:genres:12717

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
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Web page: http://www.econ.iastate.edu
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  1. Gallagher, Paul W. & Shapouri, Hosein & Price, Jeffrey & Schamel, Guenter & Brubaker, Heather, 2003. "Some Long-Run Effects of Growing Markets and Renewable Fuel Standards on Additives Markets and the U.S. Ethanol Industry," Staff General Research Papers, Iowa State University, Department of Economics 10648, Iowa State University, Department of Economics.
  2. Amani Elobeid & Simla Tokgoz, 2006. "Removal of U.S. Ethanol Domestic and Trade Distortions: Impact on U.S. and Brazilian Ethanol Markets," Food and Agricultural Policy Research Institute (FAPRI) Publications, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University 06-wp427, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
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