CARD Study Indicates Growth for U.S. Ethanol Production

A recent report has indicated growth for production of U.S. Ethanol along with the demand for corn. The growing interest of the U.S. in renewable fuels has sparked off a robust debate about the advantages and disadvantages of changing or continuing present ethanol policies of the U.S. federal government, especially on topics like the increase in the usage of renewable fuels such as ethanol, tax credit for the blenders towards the addition of ethanol to gasoline to the extent of 45 cents per gallon and a tariff that increases foreign import prices to the extent of 54 cents per gallon.

A new report prepared by Bruce A. Babcock, an economics professor at the Iowa State University and the Center for Agricultural and Rural Development (CARD) director, indicates that the expiry of the tariff and blender credit would not have any adverse impact claimed by U.S. ethanol producers nor will it create any kind of export bonanza for foreign producers.

Additionally, this report indicates that the production of ethanol in the U.S. and demand for corn will grow without or with government subsidy and tariff. For this report, partial funding had come from a grant from UNICA—the Brazilian Sugarcane Industry Association to CARD.