The University of Missouri economist Glenn Grimes has warned pork producers that US$2 per bushel corn going into American pig feeds would rise by at least $0.50 per bushel and possibly as much as $1.00 over the next 10 years because of competition for feed grain from industrial processors. However, American animal producers and feed manufacturers are not the only ones nervous about the future availability of corn.

The latest annual conference of the UK-based International Grains Council heard that about 13% of the corn consumed in the USA already goes into ethanol production. Bill Hale, chairman of the North American Export Grain Association, told a mid-year meeting of IGC in London that by 2012 the amount is likely to have grown to 39%, which would mean an increase in maize uptake for biofuel from almost 37 million metric tons (tonnes) in 2005 to nearly 108 million tonnes per year.

China's ethanol industry also uses corn, as does the biofuel industry in Europe, where other grains such as wheat are also being used in ethanol production, albeit on a relatively small scale. The ethanol impact has been felt already on global markets, especially in the USA. High energy prices have helped to boost corn futures on the Chicago Board of Trade (,3181,1213,00.html) and, to some extent other grains, including wheat.

Many other countries are promoting fuel ethanol usage by mandate or through tax incentives, Mr Hale pointed out. For example, the European Union's policy is to increase the use of biofuels from 2% of motor fuel in 2005 to 5.75% in 2010. Brazilian law requires a minimum of 26% of ethanol in gasoline and most estimates say the alcohol represents about one-third of all vehicle fuel use nationally. These rates compare with 2.78% for ethanol in the USA today, rising to a projected 8.34% in 2012.

Corn for Chinese feed and fuel

Raw material for ethanol can come from many crops besides coarse and fine grains: for example, sugarcane in South America, sugarbeet or potatoes in Europe, native perennial prairie grasses, like switchgrass, in North America. However, feed manufacturers in the two largest feed producing countries, USA and China, are most concerned about supplies of corn as feedstuff or feedstock. At the IGC conference, Xubo Yu, vice-president of China National Cereals, Oils and Foodstuffs Corporation, compared US and Chinese data to show that whereas 27% of all corn in the USA last year went into industrial processing, in China the proportion was about 18% (see figure). Mr Yu also noted that there was even greater contrast between the quantities of corn used by the two countries for making fuel ethanol, with the Chinese total only one-tenth the American amount and with a greater proportion going into processing for human food. However, he pointed out that industrial consumption of corn in China is growing quickly, too, and estimated to reach 27.5 million tonnes in 2006, an increase of 25% over 2005.


China's corn biofuel development started quite recently with the implementation of a national policy in 2001 on using ethanol-blended gasoline. The target nationally is to be producing another 1.22 million tonnes of fuel ethanol annually over the next 10 years. Under the terms of the government's latest Five Year Plan, the expansion of fuel ethanol capacity will be achieved through the introduction of favorable policies in taxation, investment, and market share promotion.

China's annual output of corn is also rising at a rapid rate, Mr Yu reported, with some 26.7 million hectares (about 64 million acres) planted in 2006. This latest expansion in corn growing area, equivalent to an annual rise of about 1.9%, comes at a time when the national annual yield has grown to 5.2 tonnes per hectare (13.7 tonnes per acre). The expectation is for a corn crop of almost 139 million tonnes this year. Such a harvest would set a new record for China while representing about 1.6% more tonnage than harvested in 2005.

Not just feed and fuel are derived from this crop, of course. Chinese industrial production of starch sugar from corn has multiplied nearly nine times in the past 11 years, Mr Yu said. Lysine production has risen by 60% since 2000 to reach 200,000 tonnes in 2005 and probably will exceed 250,000 tonnes per year production in 2006. Xubo Yu commented that the increase of lysine capacity would further reduce cost and so enhance international competitiveness, helping to promote exports even more beyond the current total of approximately 80,000 tonnes annually.

Competing grain demand

Impact on the grain market from biofuel expansion also concerned Rachid Mohamed Rachid, minister for trade and industry in the government of Egypt, who will chair the IGC for the coming year: "We are in the midst of a significant transformation of the world market for grains.... To what extent will the large-scale production of bio-energy crops reduce the resources available for food grains and hence endanger future food security? How will markets adjust to significant new demands for agricultural goods for bio-energy? What will happen to prices and trade patterns? Will biofuel pricing tie prices of foodstuffs to fuel prices rather than to prices for foods?"