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The production of corn-based ethanol in the U.S. has increased from 1,630 million gallons in 2000 to 4,855 million gallons in 2006, representing a 198% growth over the period considered. This growth is favored by the availability of more efficient technologies in the production process of ethanol and is sustained by the high prices of ethanol in the market. The industry is also supported by a favorable public policy, expressed in the form of laws, mandating an increase in the use of ethanol, and also in the form of tax incentives. The tremendous increase in the use of corn for the ethanol industry is made at the expense of the livestock industry that was the traditional destination for much of the U.S. corn grain. As the ethanol industry continues to expand, concerns are raised in regard to its impact as more and more corn is diverted from the livestock sector. This study investigates the economic impact of the ethanol industry on the U.S. livestock sector. Specifically, a shipping cost model is developed to simulate the impact of the ethanol industry on the shipping cost of corn at the national and individual state levels. The dynamics for major livestock producing states are also analyzed at the crop reporting district level. Different scenarios based on assumptions on the availability of corn and the production capacities of the ethanol industry are displayed. Results from the model indicate that nationwide there is a 5 to 22% increase in the shipping cost of corn for the livestock industry due to the ethanol industry, depending on the scenario involved. At the state level, there is an increase in the transportation cost for most of the states, with shipping cost doubling in some cases. Nevertheless, some states benefit from the dynamics created by the development of ethanol plants and are experiencing a reduction in their livestock industry corn transportation cost.
Ethanol production in the United States totalled almost 5 billion gallons in 2006, about 1 billion gallons more than in 2005. While this was a significant increase, further expansion in the industry is continuing, with production expected to exceed 10 billion gallons by 2009. This large and rapid expansion of U.S. ethanol production affects virtually every aspect of the field crops sector, ranging from domestic demand and exports to prices and the allocation of acreage among crops. Many aspects of the livestock sector are affected too. As a consequence of these commodity market impacts, farm income, government payments, and food prices also change. This book examines the economics of ethanol production and its impact on food prices and greenhouse gas emissions.
A large expansion in ethanol production is underway in the United States. Cellulosic sources of feedstocks for ethanol production hold some promise for the future, but the primary feedstock in the United States currently is corn. Market adjustments to this increased demand extend well beyond the corn sector to supply and demand for othercrops, such as soybeans and cotton, as well as to the livestock industries. USDA¿s long-term projections, augmented by farmers¿ planting intentions for 2007, are used to illustrate anticipated changes in the agricultural sector. Graphs.
The byproducts of making ethanol, sweeteners, syrups, and oils were considered less valuable than the primary products. But the increased livestock-feed market for such byproducts has switched that perception to one of the ethanol industry making grain-based ¿co-products (CP)¿ that have market value separate from the primary products. CP such as dried distiller¿s grains, corn gluten feed, corn gluten meal, corn oil, and brewer¿s grains have become economically viable components, along with traditional ingred., in feed rations. The CP have limitations, such as variable moisture content, product avail., nutrient excesses or deficiencies, and nutrient variability. These limitations affect how they must be handled and stored and how much they cost. Illus.
The production and use of ethanol in the U.S. have been steadily increasing since 2001, boosted in part by production subsidies. That growth has exerted upward pressure on the price of corn and, ultimately, on the retail price of food, affecting both individual consumers and fed. expend. on nutritional support programs. It has also raised questions about the environmental consequences of replacing gasoline with ethanol. This analysis examines the relationship between increasing production of ethanol and rising prices for food. It estimated how much of the rise in food prices between 4/07 and 4/08 was due to an increase on the production of ethanol and how much that increase in prices might raise fed. expend. on food assistance programs. Tables and graphs.