1. Department of Economics Crops & Biofuels: Policies, Outlooks, and Debates Chad Hart Iowa State University chart@iastate.edu 515-294-9911 Iowa Farm Bureau West Des Moines, Iowa August 14, 2008

2. Department of Economics Renewable Fuels Standard (RFS)

3. Department of Economics Government Policies for Ethanol  Ad valorem tariff of 2.5%  Import duty of $0.54 per gallon  Volumetric Ethanol Excise Tax Credit (VEETC)  $0.51 per gallon in 2008  $0.45 per gallon in 2009

4. Department of Economics Impacts of Removing Ethanol Support Source: McPhail and Babcock, June 2008

5. Department of Economics Population 2008 2020 2050 (billion) World6.678World7.601World9.393 China1.330China1.431India1.808 India1.148India1.362China1.424 U.S.0.304U.S.0.336U.S.0.420 Indonesia0.238Indonesia0.268Nigeria0.357 Brazil0.192Brazil0.212Indonesia0.313 Pakistan0.168Pakistan0.204Bangladesh0.280 Bangladesh0.154Bangladesh0.190Pakistan0.278 Russia0.141Nigeria0.184Brazil0.228 Nigeria0.138Russia0.132Congo0.189 Source: U.S. Bureau of the Census, International Data Base

6. Department of Economics Real GDP Sources: International Financial Statistics, Global Insight

7. Department of Economics Per Capita Meat Consumption Source: FAPRI

8. Department of Economics Liquid Fuel Usage Source: U.S. Dept. of Energy, Energy Information Administration 200420102015202020252030 (Million Barrels Oil Equivalent per Day)(Percent of 2004 Value) United States20.7103%109%115%121%129% Canada2.3100% 104% Mexico2.0110%115%130%135%145% Europe15.699% 100%101% Japan5.496% China6.4147%164%186%213%245% India2.5108%128%144%160%176% Africa2.8118%139%154%164%175% Central and South America5.4120%137%152%167%180% World82.5110%118%126%134%143%

9. Department of Economics Crude Oil Prices Source: U.S. Dept. of Energy, Energy Information Administration

10. Department of Economics Countries Pursuing Biofuels  US  Brazil  Argentina  Colombia  Paraguay  Canada  Uruguay  Mexico  Thailand  New Zealand  South Africa  South Korea  Philippines  Indonesia  Pakistan  China  India  Malaysia  Australia  Japan  EU  Russia  Not a complete list

11. Department of Economics Price Ratios (Jan. 2, 2008 = 1) Sources: CBOT and NYMEX nearby futures

12. Department of Economics Exchange Rate Ratios (Jan. 2007 = 1) Source: USDA-ERS

13. Department of Economics Exchange Rate Ratios (Jan. 2007 = 1) Source: CME futures

14. Department of Economics Nearby Corn Futures Source: CBOT nearby futures

15. Department of Economics Nearby Soybean Futures Source: CBOT nearby futures

16. Department of Economics Hay Acreage Source: USDA-NASS

17. Department of Economics CRP Expiring Contracts Source: USDA-FSA

18. Department of Economics Land Availability Data from 1997 and 2002 Census of Agriculture 19972002 Land in farms 955 938 Total cropland 445 434 Harvested cropland 319 303 Cropland in pasture 66 61 Other cropland 60 71 Total woodland 77 76 Pastureland (not crop) 398 395 Land in other uses 34 33 2007 931 304 Source: USDA-NASS

19. Department of Economics Corn Supply and Use Source: USDA

20. Department of Economics Soybean Supply and Use Source: USDA

21. Department of Economics Corn & Soybean Area Source: USDA-NASS

22. Department of Economics Corn & Soybean Area Growth rate of 1.5 million acres per year

23. Department of Economics Input Costs Source: USDA, Agricultural Prices, July 31, 2008

24. Department of Economics Stocks-to-Use Ratios

25. Department of Economics Acreage Competition for 2009  More land will shift to corn and soybeans  High prices for both crops  Tight stock situations  Demand remaining fairly strong  Futures price ratios favor corn (8/13/08)  Dec. 2009 Corn = $5.99 per bushel  Nov. 2009 Soy = $12.84 per bushel  Current ratio = 2.14  Historical average ratio ~ 2.3