2006 Legislative Agriculture Chairs Summit

Competition for Feed Resources from Other Applications: Ethanol and Bio-Diesel

January 2006

Otto Doering, Purdue University
Agricultural Economics Dept.
403 W. State Street
W. Lafayette, IN 47907-2056
Phone: 765-494-4226, Fax 496-1224
doering@purdue.edu Chris Hurt, Purdue University
Agricultural Economics Dept.
403 W. State Street
W. Lafayette, IN 47907-2056
Phone 765-494-4273, Fax 497-1224
hurtc@purdue.edu

Summary | Introduction | Background on Alternative Liquid Fuels and National Energy Policy | Ethanol’s Role as a Liquid Fuel Provider | Bio-Diesel’s Role as a Liquid Fuel Provider | Ethanol’s role in Supporting Agriculture | Figure 1: Index of Corn and Gasoline Prices and Ethanol Gross Margins 1990-2004 | Figure 2: Net Margin for 48 MMGPY Dry Mill Plant for Selected Corn Prices | Bio-diesel’s Role in Supporting Agriculture | National Estimates of Price and Quantity Impacts of Fuels Competition for Feed Resource | Competition’s Impacts Likely to Be Felt by Livestock Producers and Current Feed Suppliers | Conclusions

Summary

High petroleum prices and low commodity prices, especially for corn, have resulted in high profitability for ethanol and a better economic picture for bio-diesel. The profitability exists for ethanol even without the large public subsidies. This has already led to a rush in the expansion of facilities to produce such fuels – the building of new ethanol plants and the production of bio-diesel from facilities already capable of doing so coupled with the construction of new facilities. The new energy legislation has also extended the subsidies consistent with the supply emphasis of current energy policy. There is an overall question, given ethanol’s profitability, as to whether the subsidies make sense in their current form. One suggestion is that it would be more cost effective to have variable subsidies that cushion producers against loss, but not augment profits proportionally. The overall question is where best to invest to meet the nation’s energy needs. Investment in demand reduction, such as an increase in the CAFÉ standards for auto and light truck fuel efficiency may be a more cost effective approach today.

The concern of the livestock industry is that the rapid expansion of the bio-fuels industry will draw feedstuffs away from livestock production and increase costs over the long term for this industry. The conclusion on a national basis is that price increases will be moderate. Weather or disease related short crops or sudden extreme demands from overseas markets will still be the big price mover. As ethanol production increases, supplies of DGG will tend to moderate potential price increases for protein and corn acreage is likely to expand and yields increase as there are increases in demand for corn. In local areas, bio-fuel plants might raise prices in their radius of purchasing, but this may be tempered for livestock needs by local availability of DGG. Traditional transportation purchasing and storage infrastructure may be altered as well. It is these local impacts that will be more worrisome to livestock producers as this transition takes place.

If feed substitutions are to take place, as envisioned in a smooth transition to more bio-fuel production, the quality of DDG becomes a critical factor. Ethanol producers will have to keep high standards for the corn they purchase and monitor their processes carefully so that DDG can be a reliable entry into livestock nutrition. If ethanol producers do not do so, DDG will not be able to substitute as effectively into the livestock feed stream and this will cause increased demand for other protein sources that might have been augmented by DDG.

Introduction

There is concern that increased bio-fuels production will have a negative impact on the livestock industry. High petroleum prices, that are now projected to continue, and low corn prices make ethanol production extremely profitable. Bio-diesel with its subsidies is also profitable at these high petroleum and moderate soybean prices. If we have increased demand from bio-fuels coupled with high world grain prices this will limit livestock producers’ ability to get moderately priced feed (Wisner & Baumel, 2004). The question is what will drive potential grain and oilseed price increases? Will ethanol production and bio-diesel production be a major factor in reducing the net availability of livestock feeds, moving the price of feeds up to levels that reduce the profitability of livestock production?

Background on Alternative Liquid Fuels and National Energy Policy

Our national energy policy places primary emphasis on increasing the supply of liquid and gas fuels. We have a national ethanol policy in place that calls for an expansion of our current production to 7.5 billion gallons by 2012 with a continuation of the current 51 cent a gallon subsidy. It already looks as though the new plants on the drawing board or under construction today will bring us close to that production level much sooner. There are multiple aspects to national ethanol policy, helping meet liquid fuel demands, helping agriculture (primarily corn farmers and ethanol processors), and meeting national strategic objectives about liquid fuel supplies. The public expects this to be done in a cost effective way. It also assumes that unintended consequences will be limited

Our liquid and gas fuels are of special concern. We import over half of our petroleum and now the North American continent is no longer self sufficient in natural gas. Importing natural gas is much more difficult than importing petroleum. That is one reason many expect natural gas prices to remain relatively high in the near future. Much of the petrochemical industry that uses large amounts of natural gas is moving off-shore. Natural gas is available for well under $1 per million BTU in the former Soviet Union and the Middle East. It is well above $10 here in the US.

While most of the policies in the recent energy bill are devoted to increasing supply, the best opportunities to make a difference may have shifted to decreasing demand. There are options for decreasing demands for liquid fuels by increasing auto efficiency and reducing natural gas demand through increasing coal electricity generation, both of which are very cost effective at current petroleum and gas prices. Such actions would have costs such as stranded assets, but the same kinds of subsidies could be applied to pay for stranded assets that are in force for subsidizing increased production of these fuels. If moving to more efficient vehicles is too expensive for financially vulnerable American automobile manufacturers, they could receive cost sharing to do so. The cost of increasing vehicle efficiency by 10% is estimated by the Congressional Budget Office at about 3.6 billion dollars. If we use 140 billion gallons of gasoline, the 10% is a saving of 14 billion gallons of gasoline - equivalent to an additional supply of 14 billion gallons of imports (CBO, 2003).

The argument continues over the net energy balance for ethanol production. This is not an argument for bio-diesel where much less energy is required for processing. The bulk of the science agrees that the energy balance is positive for ethanol (Brown, 2005). However, since we are short of liquid fuels then we may need to put more solid fuel energy into a liquid fuel’s production than it returns in caloric content. For example, if we fire ethanol plants with coal, in essence we change a solid fuel to a liquid. If we fire the ethanol plant with oil, or even natural gas which is also scarce, people should be concerned from a strategic perspective, but the energy balance should not be the deciding factor.

Bio-diesel is the newcomer to the alternative liquid fuel business. From a very small base its production has increased 50 fold in 5 years to 25 million gallons in 2004. In April 2005 there were 35 active plants with an additional 25 being proposed. Production for 2005 is estimated to be 75 million gallons. Current dedicated production capacity is 110 million gallons per year with an additional 110 of excess production capacity within the oleochemical industry. There is thus adequate processing capacity to increase production over the immediate term if demand increases (Eidman, 2005).

Bio-diesel, like ethanol, does not have the prospect of solving our liquid fuel shortage. We consume 55 billion gallons of diesel fuel annually. Soybean oil would be the major provider of the vegetable oil feedstock for bio-diesel, accounting for 2,378 million gallons out of a total of 2,965 million gallons of total vegetable oil supply available. Other sources, such as yellow grease, lard, edible tallow and inedible tallow could supply 1,213 million gallons for a total of a little over 4 billion gallons of oils suitable for conversion to bio-diesel (Eidman, 2005).

Federal legislation in 2004 provided a tax credit for bio-diesel of $1 a gallon if made from virgin oil. The subsidy is only $0.50 per gallon for bio-diesel made from non-virgin oil (yellow grease, etc.). The tax credit was extended through 2008 in the 2005 energy bill.

Ethanol’s Role as a Liquid Fuel Provider

The volumes of liquid fuels we use are so great that neither ethanol nor bio-diesel will come near meeting our demands. At 7.5 billion gallons of ethanol, we will meet about 5% of our gasoline needs. However it will help and may reduce petroleum prices slightly. Bio-diesel, however, may have a special niche as an additive to provide lubricity under the new EPA diesel fuel standards, playing a valuable role for clean fuels even though its potential volumes relative to diesel use are even smaller than ethanol’s.

Ethanol had a niche as an oxygenate and commanded a price equivalent to other additives like MTBE. However, once ethanol production gets above the effective demand for the oxygenate, then ethanol only commands a market price as a gasoline fuel extender. We saw that earlier this year when ethanol prices declined from levels consistent with its role as an oxygenate and went to levels consistent with its role as a gasoline substitute. Ethanol has roughly 67% of the energy value of gasoline, and one would then expect it to be priced at a level not too different from that proportion. In March 2005 with wholesale gasoline around $1.60, if we calculated an ethanol energy value of $1.07 (67% of @1.60) that is about where the markets figured the values were and where prices settled this spring (Doering and Seetin, 2005). What has happened since spring 2005 is that ethanol again has expanded demand as an oxygenate and its price has again gone higher than gasoline. California alone is taking almost a billion gallons of ethanol to make a 6% oxygenate blend in place of using MTBE.

We need to recognize that there are other liquid fuel substitutes. Ethanol from corn will be only one of them. The key questions for substitutes like ethanol from cellulose will be technology and cost. It makes more sense to convert agricultural biomass to high value products like methane gas, liquid fuels, and petrochemicals rather than burning such biomass for heat in power plants, competing with inexpensive coal. Deriving liquid fuels from biomass conversion negates some of the arguments about fuels from food and feed that are made against corn based ethanol. With a different front end, much of the investment in ethanol plants could be adapted to biomass ethanol. This may be a commercially viable reality in five years.

For liquids from coal, we still have abundant coal resources if we can burn that coal so as to limit the by-product pollutants. The key question for coal liquefaction is both cost and dealing with the negative by-products of coal conversion. Liquids from coal are probably not economically possible below $40 a barrel. The question for all petroleum substitutes is how major oil producers (Saudi Arabia) might act in a strategic way to increase production and try to keep petroleum prices below $40 a barrel and forestall too much investment in competitive fuels. There have been projections that oil will be closer to $30 a barrel in 2010 and still below $40 in 2025. However, the recent projections of the Energy Information Administration have oil at $47 a barrel in 2014 and at $54 a barrel in 2025, in 2004 dollars (EIA, December 2005).

Bio-Diesel’s Role as a Liquid Fuel Provider

Bio-diesel can also only be a supplement, not contributing a tremendous amount to our liquid fuel demands. A soybean crop of 2.9 billion bushels would yield the oil feedstock for something like 4 billion gallons of bio-diesel (2005 National Biodiesel Board). I.e., the whole soybean crop would contribute a bio-diesel fuel that was a little over 7% of the total diesel use of 55 billion gallons. If the available supply of yellow grease, tallow, etc. (approximately 9.7 billion pounds) were also converted to bio-diesel, this would yield an additional 1.3+ billion gallons of bio-diesel (at a 7.35 lbs/gal conversion) (Eidman, 2005 and Althoff, et al, 2003)

The key here is not likely to be bio-diesel’s role as a fuel extender, but its role as an additive. This is especially important given the new EPA rules for Diesel fuels that will come into force by 2007. B2, a blend of 2% bio-diesel gives lubricity to the new EPA required blend that may be critical for performance. Without B2 or some other lubricating additive, the product expected to meet the new EPA standards does not have enough lubrication for the diesel engine. An extra value as a lubricity additive can change the whole value picture for bio-diesel, as the additive oxygenate role for ethanol has done. If B2 were required for a future 60 billion gallon diesel demand it would require 1.2 billion gallons of bio-diesel from yellow grease and/or soybeans.

Approximating December 2005 soybean oil prices, using either 20 or 25 cents per pound, a 30 million gallon bio-diesel plant would have a net bio-diesel cost of about $1.90 or $2.40 per gallon. December 2005 wholesale diesel costs about $1.70 a gallon, so bio-diesel is more expensive. However, there is also the $1.00 per gallon subsidy for bio-diesel if made from virgin oil. With the $1.00 per gallon subsidy, virgin oil based bio-diesel is competitive with petroleum diesel at any price above the $0.90 to $1.40 per gallon range – making it currently competitive.

Ethanol’s role in Supporting Agriculture

The primary beneficiaries of public support for ethanol are corn farmers and ethanol processors. The government subsidy goes to the farmer indirectly through increased corn prices and more directly to the blender/processor. One of the key things to remember is that over the last several decades much of the increased demand for US feed grains has come from domestic processing, not exports. The processing demand is critically important for corn. This includes both high fructose corn syrup and ethanol, and both of these receive strong support from government policy. Fructose is supported through the quotas on sugar that keep domestic sugar prices high and ethanol through the direct per gallon subsidy. Remove either of these and there is less demand for corn and lower corn prices. There are both direct and indirect costs to such policies. For fructose, as an example, the higher sugar prices resulted in Chicago’s major candy maker moving to Canada to lower input costs.

Estimates for the average increase in corn prices to farmers due to ethanol production range from 10 to 15 cents a bushel, and this may be higher in the local area that draws corn in for processing. If our policy goal were to increase farm incomes, the ethanol subsidy would not necessarily be the most cost effective way to do it. When ethanol production is 7.5 billion gallons, the subsidy cost will be approximately 3.8 billion dollars annually. If we just paid the subsidy directly to the corn farmers with that amount it would be 32 cents per bushel for a future 12 billion bushel corn crop. (There can be a savings on the ethanol subsidy if it raises corn prices and reduces commodity subsidy payments.) However, we also want to supplement liquid fuels.

It makes sense to take action to encourage biomass as an energy source. The question is what is the most cost effective way to do so? This will become increasingly important if Congress realizes that the current fiscal deficit is a real problem. The public may look more closely at the cost effectiveness of alternative measures to reduce our liquid fuel imports. If oil prices remain high, then liquid fuel from coal will be a competitor of ethanol and bio-diesel. Coal prices are more stable than corn prices, so the key economic factor for coal liquids profitability will be the price of petroleum. Ethanol is caught between the corn price and the oil price. Corn farmers like high corn prices – above the government support price. High corn prices increase the cost of ethanol production, so ethanol processors would prefer low corn prices. The index of ethanol gross margins in Figure 1 illustrates the corn/petroleum price trade-off (Paulson, et al, 2004). In 1996, high corn prices that farmers liked combined with low gasoline prices and ethanol gross margins went negative. In 1990 we had relatively low corn prices, higher gasoline prices and high ethanol gross margins.

Figure 1

Index of Gordn and Gasoline

In late 2005, with high oil prices (gasoline wholesale at @ $1.60 a gallon) and relatively low corn prices (@ $1.90 per bushel) there are high margins for ethanol production. We see a high value placed on existing ethanol plants, several times their current construction costs, which reflects their prosperity today. At this low corn and high oil price the subsidy supplements existing profit rather than just protecting against loss. If oil prices remain high and corn prices remain low, ethanol subsidies may be less palatable to the public. Figure 2 shows the profitability of ethanol production at different corn prices with ethanol at its early 2006 futures price, natural gas at a $10.50/mmbtu contract price, and DDG sold at $80 a ton. Note this simulated plant is still profitable with corn over $3.15/bu (Eidman, 2005).

Figure 2

Net margin

One alternative is to make the subsidy a variable counter cyclical subsidy that comes into play when gross margins get below a certain level (Quear & Tyner, 2006). This is similar to the counter cyclical concept for commodity payments that have traditionally supported agriculture. A variable subsidy also can encourage innovation so that more efficient plants make proportionally more money. It would protect against loss, reduce the perception of profits as subsidy based and reduce the political threat to the subsidy.

Bio-diesel’s Role in Supporting Agriculture

The extent to which bio-diesel production raises soybean prices is going to depend upon how much demand there is for soybeans that would go into bio-diesel production. Here we begin to get some interactions between ethanol and bio-diesel that become very complex depending upon what trade-offs emerge. There will be some kind of trade-off between protein that will come from increased ethanol production and the protein from soymeal. Greatly increased ethanol production and increased DDG availability might act to dampen soybean prices. Thus more utilization of soybeans destined for bio-diesel production might not increase soybean prices as much as one might think. We will also have interactions between the soymeal and soyoil markets that are not easy to predict. At this point we do not have enough historical evidence to draw on for projections that take all these interactions into account.

Given that we have two potential competitors for different feed products, and there is interaction between them, at a minimum on the protein market, we need to ask the overall question about the interaction between the two crops in land use as well. However, one thing is certain, and that is that the current profitability of soy-diesel is not as much as that for ethanol. The biodiesel blending and distribution system is not as well developed as that for ethanol. We would not expect bio-diesel to be the draw on soybeans proportional to the current draw on corn for ethanol in the foreseeable future. Land is more likely to be pulled into corn production. What would speed up the development of bio-diesel and increase soybean use would be a special niche providing lubricity for the new clean diesel fuels that will be required in several years.

National Estimates of Price and Quantity Impacts of Fuels Competition for Feed Resource

The trade-offs we face in terms of additional demand for corn or soybeans from ethanol or bio-diesel are illustrated by the price and quantity forecasts that take this into consideration. If we produce 7 billion gallons of ethanol this is projected to increase corn prices between 10 and 15 cents above the current baseline in this scenario. Corn production increases between 600 and 650 million bushels a year, coinciding with increased ethanol demand for corn, up to 2012. There are declines in corn exports, feed consumption (of corn) and corn stocks. Soybean meal prices decline by 10% as a result of increases in DDGs, and soybean prices remain roughly constant. DDGs increase from 8 million tons in April 2005 to over 18 million tons by 2012 (FAPRI, 2005).

What happens to acreages and yields is critically important here. If we increase yields by a conservative multiple year trend factor (@1%), this would give us yields of 152 bu/acre in 2015. If we also increase corn acreage on trend, this gives us a total of 90.5 million acres. The extra production would yield about 5.8 billion gallons of ethanol above where we are now, or somewhere between 9 and 10 billion gallons total. There would be an additional 17+ million tons of DDG that would help feed an additional 75 million hogs and 20 million cattle (Babcock, 2005). Again, DDG is assumed to substitute for soybean meal and soybean prices remain relatively stable. If there is less increase in yields and land devoted to corn, then exports drop and corn prices increase more. The general conclusion is that livestock is left in about the same position it is now with respect to total feed availability and feed price (corn and soybeans). This price however will vary on the basis of weather, export demands, etc. What bio-fuel development is doing is building up increased domestic utilization that may give us more variability in price with short crops or greatly increased export demand. Short crops would be taken out of our export sales. FAPRI and Babcock see increased ethanol and bio-diesel as a minor impact on livestock production nationally. DDG is the chief factor here. The assumption of substitutability emphasizes the need for more consistent DDG quality and nutritional specifications.

Competition’s Impacts Likely to Be Felt by Livestock Producers and Current Feed Suppliers

Ethanol may become an important concern locally to specific states in terms of their own situations in the next few years. In the last decade, the growth of corn based ethanol has primarily been in Minnesota, Iowa, South Dakota, Nebraska, and to a lesser extent Illinois. A number of these states offer state ethanol subsidies and corn prices tend to be 20 to 25 cents per bushel lower in the Western Corn Belt compared to prices in the Eastern Corn Belt. Indiana illustrates how a state in the Eastern Corn belt might have impacts from increased ethanol production that are not illustrated by national averages.

Over the past decade, only one 100 million gallon per year plant operated in Indiana. Currently at least eight new ethanol plants have been announced ranging in size from 45 million gallons of ethanol production per year to 110 million gallons. At least six of these plants have secured financing and therefore have a reasonably high probability of actually being built.

What are some of the expected impacts in the state? Indiana produces about 850 million bushels of corn per year. If six new plants are built and used at capacity, corn utilization for ethanol would rise from the current 35 million bushel per year to about 195 million bushels per year. The current estimated distribution of corn is 150 million bushels (18%) fed to animals produced in the state; 250 million bushels processed in the state (29%); and 450 million bushels (53%) shipped out of the state. The largest of these markets is the southern and southeastern United States poultry and hog markets. The smaller of these is corn destined for export out of the country primarily at Ohio River locations and Lake Michigan ports.

The 165 million bushel (19%) increase in utilization is expected to result in both demand responses and supply responses. On the corn demand side, higher corn prices will result in some reduction in the consumption for livestock feed. One issue is where the reduction in animal feed demand may take place. Will this reduction be for animals fed in Indiana, or rather animals fed in the southeast, or animals fed in foreign countries through exports? The answer will depend on the relative costs of production in each region and relative processing and distribution costs to various final markets. There is also the question of which species may suffer the greatest impact. It is anticipated that the DDG will have the most value for diary and beef and potentially less value for poultry and hogs. This is based upon the relative feed value for each of the species.

Other impacts are expected to occur for the infrastructure in the grain industry as well. Since Indiana is a major excess corn producer, there is a large industry devoted to accumulating the surplus production and moving it to deficit production areas in the U.S. and the world. Since the in-state use of corn may increase by 19%, there would be a substantial portion of the state’s grain industry whose marketing functions would be greatly reduced. This is expected to result in closing of some facilities and further consolidation of others.

It is clear that transportation infrastructure would also change. If a 35 million bushel corn plant displaces the movement of this corn to the southeast poultry and hog markets, this represents 10,000 fewer rail cars per year. The use of rail lines could also be altered. Corn is currently shipped by rail to the southeast markets may now move DDG to the cattle feedlots in Plains states instead. Ethanol shipments in tanker trucks would displace what have been rail shipments as well.

There will also be a supply response. Higher corn prices, with little change in soybean prices imply an increase in corn acreage relative to soybeans and wheat. Today, corn and soybean acreage is nearly equal. However, to supply these added corn demands, rotations could shift closer to 60 percent corn and 40 percent soybeans, especially in areas within 50 miles of a major ethanol plant. A shift in rotations has implications for input suppliers and for agronomic practices.

One would expect such shifts to be gradual over time. However, the high profitability of ethanol today is speeding development of this production capacity and its potential draw on local suppliers. The technical infrastructure for turnkey operations is in place for such a rapid expansion as well. The changes described for such a local situation will not likely be severely damaging for local livestock producers, but the adjustments may be important and real for many of them. Different states and locales will be affected differently.

Conclusions

Given the high petroleum prices, which are likely to continue for the next several years, the low feedstock prices, and the subsidies, bio-fuels are profitable and their production will be expanded rapidly. This is partially driven by our supply based national energy policy. The profit driven expansion is especially likely for ethanol where the technology and the industry are much more mature than they were a few years ago. Bio-diesel is not at the same expansion point technically and in terms of the maturity of the industry. The utilization of B2 to add lubricity to the new EPA standard for diesel could speed this development as bio-diesel could then command a price premium for this additive characteristic.

On a national basis over time, we expect land use, yields, and prices to adjust so that there is gradual transition to using more corn and soybeans for bio-fuels. We would not expect this, in and of itself, to disrupt US livestock production. However, with a greater proportion of these crops going for domestic processing use, the export fraction may decline and provide less of a buffer against yield or demand shocks. On the local level, individual livestock producers may well feel impacts from bio-fuel production greater than the national average estimates depending upon the particular situation of their state or region. A large bio-fuel processing presence in an area may well increase corn or soybean prices above the national average change and disrupt existing marketing and transportation logistics. But, the national picture is still expected to be one of more gradual adjustment, which can also change with alterations in energy policy.

References

Althoff, Kyle, Cole Ehmke and Allan Gray. (2003) Economic Analysis of Alternative Indiana State Legislation on Biodiesel, Department of Agricultural Economics, Purdue University, Lafayette.

Babcock, Bruce (2005) “Aggregate Market Impacts in Food and Agricultural Markets,” Paper presented at the USDA/DOE conference on Energy from Agriculture, December 14-15, St. Louis MO, available at farmfoundation.org

Brown, Robert C. (2005) “The Future of Biorefining Agricultural Biomass,” Paper presented at the USDA/DOE conference Energy from Agriculture, December 14-15, St. Louis MO, available at farmfoundation.org

Congressional Budget Office. (2003) The Economic Costs of Fuel Economy Standards Versus a Gasoline Tax. Congressional Budget Office, Washington, D.C.

Doering, Otto and Mark Seetin (2005) Ethanol Prices, What Influences Them and Determines Ethanol Use? What Impact Will This Have on the Ethanol Industry? What are the Policy Implications? White Paper, Washington, DC (available from the authors).

Eidman, Vernon. (2005) “Agriculture’s Role in Energy Production: Current Levels and Future Prospects,” Paper presented at the USDA/DOE conference Energy from Agriculture, December 14-15, St. Louis MO, available at farmfoundation.org

EIA (Energy Information Administration) (December 2005) Annual Energy Outlook 2006 with Projections to 2030 (Early Release – Overview, US DOE, Washington, D.C.

FAPRI (2005) “Energy Outlook: Impacts on Bio-fuels and Implications for the Farm Sector,” Presentation by Lori Wilcox, FAPRI at the Missouri 2005 Crop Management Conference, December 14^th.

National Biodiesel Board. (2005) Tax Incentive Fact Sheet, NBB, Washington, D.C.

Paulson, N, B. Babcock, C. Hart, and D. Hayes. (2004) Insuring Uncertainty in Value-Added Agriculture: Ethanol Production, Working Paper 04-WP 360, Center for Agriculture and Rural Development, Iowa State University, Ames IA.

Quear, Justin and Wally Tyner. (2006) “Analysis of the Impacts of a Variable Ethanol Subsidy,” Honors Paper, Agricultural Economics Dept., Purdue University, Lafayette.

Wisner, Bob and Phil Baumel (2004) “Will there be enough corn: Implications for Related Industries,” AgDM newsletter article, September 2005, Iowa State University Extension, Ames.

Paper for presentation at the Fourth Mid-Atlantic Nutrition Conference, March 29-30, 2006, Baltimore, MD. Revised after review1/26/06