Economist report says corn prices, acreage will skyrocket if E12 blends allowed in non flex-fuel vehicles

Advanced Economic Solutions released a report on the impact of E12 or E15 blended ethanol, and said that the increase would require the cultivation of more than 100 million acres of corn by 2010-15, up from the 76.5 million acre average between 1983 and 2006.

The report said that there would be an associated price increase in corn that would make last year’s price spike (where futures briefly topped $8 per bushel) “look like a walk in the park,” according to a Reuters report. The full study can be downloaded here.

According to the American Meat Institute, the study was completed on behalf of members of the Balanced Food and Fuel Campaign, “an alliance of animal agricultural groups concerned about the impact that the corn-based ethanol policy may have on the competitiveness of animal agriculture, exports, the food industry and ultimately the consumer,” according to the BF&FC website. Members include American Meat Institute, National Cattlemen’s Beef Association, National Chicken Council, National Meat Association, National Milk Producers Federation, National Pork Producers Council, and the National Turkey Federation.

An additional study was produced by Dr. Tom Elam of FarmEcon, and is here. According to Elam, “U.S. biofuels policies and regulations contain inherent contradictions and have also resulted in significant economic damage to diverse sectors from inside and outside of the energy industry.” Elam said that “increasing the maximum blend of ethanol in gasoline, combined with higher 2010 Renewable Fuels Standard requirements, will increase cost pressures on both ethanol and food producers.” The Elam study can be downloaded here, from the Food Before Fuel website.

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