Ethanol mandate could risk US losing its status as top corn exporter
By Amanda Brodhagen, Farms.com
The US has long been ranked as the world’s biggest corn exporter, but that rank may be slipping due to the ethanol mandate. According the U.S Department of Agriculture (USDA), American corn exports are likely to drop to some of the lowest levels in 40 years, even falling below wheat exports.
The sharp decline in US corn market share correlates with the increased use of corn used to produce ethanol for the nation. Also, strong corn prices have led to increased corn production in other countries. For example, Argentina was at one time considered the only other major corn exporter next to the United States, but Brazil, Ukraine, and India are now catching up.
In 2005, the US government mandated that all gasoline must contain a percentage of ethanol, made from corn. The intention of this policy was to wean the nation away from its dependence on foreign oil while making efforts to improve the environment. In 2007, Congress passed the Energy Independence and Security Act which required a gasoline blend of 15 billion gallons of ethanol mix in the domestic gasoline supply by 2015.
The corn ethanol mandate, which creates a demand for 40 percent of the US domestic corn crop, leaves America’s corn market less competitive in the global market, because increased domestic demand will drive up the prices at home.