allow goods to freely flow to where their use is most highly valued and to allow for adjustments that will minimize market disruptions.15 In the European Union and the United States,
the use of maize and rapeseed oil in biofuel produc- tion grew quickly until 2008/09, and this growth will likely stabilize as the US mandates for maize- based ethanol are met in 2015 and as policies in the industrialized countries encourage the use of alter- native fuels with lower environmental impacts (see Figure 1). Te significant rise in the use of maize in the United States—which nearly tripled over the period 2000 to 2009—implies that the maize market will be tight in the face of future changes, unless supply expands and grain inventory lev- els are rebuilt. Even though the rate of growth in rapeseed oil use is much smaller in comparison, its effect in tightening market conditions for vegetable oils will be similar. Te US Volumetric Ethanol Excise Tax Credit
was scheduled to expire at the beginning of 2012, leaving the production and blending of ethanol to be driven by market forces. Given rising oil prices, it is likely that demand will continue pushing etha- nol production above existing mandate levels. It remains to be seen whether the expiration of the tax credit will have an appreciable impact on US domestic feed prices for maize or on exports of US maize to the world market (which have, in turn, their own effect on world prices). As long as oil prices remain stable or rise slightly, there is litle expectation that the profitability (and volume) of US ethanol production will be affected much. If demand for ethanol from Brazil or other countries rises, that would introduce an additional driver for ethanol production that is independent of the effects of any US policy instrument and would help remove the topic of ethanol subsidies from US political debate during this pivotal election year. If the food price increases seen in 2011 persist
into 2012, they will continue to provide increas- ing revenue to US grain producers while raising the cost of feed for livestock producers and of biofuel feedstock for US ethanol producers. Any US policies in 2012 to create incentives for the use of second-generation biofuel feedstocks (such as switchgrass, miscanthus, or other dedicated
FIGURE 1 US and EU use of maize and rapeseed oil in biofuel production and other industrial uses, 2000/01– 2024/25
100 120 140 160 180
20 40 60 80
0
US maize EU rapeseed oil
10 12
2 4 6 8
0
Source: Food and Agricultural Policy Research Institute, FAPRI-ISU World Agricultural Outlook 201
1 (Ames, IA: Iowa State University, 2011). Note: Maize use includes food, and rapeseed-oil use includes other industrial uses.
energy biomass) will promote innovation and encourage the US biofuels sector to diversify its sources of feedstock beyond grains to include agricultural residues (such as the maize stover leſt behind aſter harvesting). Tis may serve to relieve pressures on market demand for grain and on the land required to produce it. Careful assessment, however, is still necessary to measure the agro- nomic consequences of removing these residues from the field. It is expected that the European Commission
will make a formal biofuel policy recommendation in 2012 followed by a legislative process involv- ing the European Parliament. Any decision by the European Commission will have global conse- quences because, besides changing the level and nature of biofuel production in Europe, it will serve as a model for lobbies and policymakers in many other countries. Given the trajectory of the biofuels debate dur-
ing 2011, policy discussions over the production and blending of biofuels seem likely to continue and will be fed by new research findings on the implications of biofuel policies for food security and the environment. ■
BIOFUELS, ENVIRONMENT, AND FOOD 53
EU rapeseed oil use (million metric tons)
US maize use (million metric tons)
2000/01 2002/03 2004/05 2006/07 2008/09 2010/11 2012/13 2014/15 2016/17 2018/19 2020/21 2022/23 2024/25
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