Economist Sees Biofuels Growth, Challenges

Economist Sees Biofuels Growth, Challenges

USDA chief economist says pressure is increasing to make blend higher than 10%.

Jim Glauber, USDA chief economist, says he sees growth in biofuels manufacture but that things remain challenging for ethanol.

Glauber was one of several speakers to met with members of North American Agricultural Journalists last week in Washington, D.C.

"About 84 percent of the finished gasoline today is mixed with ethanol. Ten years ago, it was about 30 percent," Glauber said.

He said he does see the blend wall as real, and that approval of a waiver to 15% ethanol blends will take a period of adjustment.

"Ethanol stocks have grown, prices relative to gasoline have dropped," he said. "And the returns for ethanol investors have gone negative again."

Glauber said the talk of acreages of cropland shifting into forest land in the interest of climate change mitigation is not likely to happen, at least not in the numbers that have been talked about.

"What we are looking at is a presumption that the value of converting farmland to forest will pay," he said. "But we need to look at the very real need to grow food. And if the price of food crops goes up because of shortages and you want to convert the forest back to farm land, how do you do that? I think a lot of people are going to think about that and they aren't going to get into it in the first place."

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