Ethanol predicted to consume more corn than livestock

//25 Aug 2011
For the first time in US history vehicles are predicted to use more corn than livestock this year. According to USDA estimates, 5.1 billion bushels of corn will be used to make ethanol this year, compared to 4.9 billion for livestock feed.
“Ethanol is taking a larger and larger share of production,” said Seth Meyer, an MU agricultural economist with the Food and Agriculture Policy Research Institute. “I know it’s been overtaking feed for a long time.”

Several things have driven the demand for corn by ethanol producers and have contributed to ethanol’s projected outpacing of feed demand:

Government mandates for biofuel production, as well as ethanol tax subsidies, have in part supported the demand for corn, according to a USDA report from June 2011.
Oil prices have also pushed ethanol demand. As oil prices rise, Meyer said, gasoline manufacturers use more ethanol in their blends since it becomes cheaper relative to oil. Even when oil prices drop, government mandates ensure a minimum level of ethanol consumption.
Exports of corn also affect overall demand for the commodity. According to the USDA, developing economies such as China and India are helping to accelerate worldwide food consumption. As global incomes rise, consumers in other countries eat more meat, which is produced partly using U.S. corn exports as feed.


Parcell describes it as a perfect storm, this combination of ethanol-boosting government policies, jumps in oil prices starting in 2007 and a world economy that wants more meat. All these factors contribute to the exploding global demand for corn, which has significantly increased in price.

Higher corn prices provide incentives for farmers to grow more corn. They have also forced the livestock industry to reconsider its options. Livestock producers are looking for lower-cost alternatives, such as distiller grains created during the production of ethanol.

Gary Marshall, CEO of the Missouri Corn Growers Association, believes the USDA should include distiller grains in its total estimates for feed corn since the grains can be fed to livestock.

“We don’t think that we are going to use more corn for ethanol than for cattle feed or hog feed,” Marshall said. The Missouri Corn Growers Association has an ongoing dispute with the USDA over how it does its accounting, he said.

Even with these alternative feeds available, livestock numbers in the US have decreased. Part of this has occurred because farmers have bred larger animals to produce more meat, but Parcell said some is also due to the high prices for corn, which ethanol has helped drive up.

Parcell said the burgeoning ethanol industry and the higher corn prices that have accompanied it have been "a big boon” for rural America. However, he does not think that the number of jobs created by ethanol production has replaced the jobs lost in the livestock industries.

CP Pokphand acquires integrated livestock leader in Vietnam

//03 Jun 2011
CP Pokphand (CPP), a Chinese provider of animal nutrition solutions in the food industry, will acquire a 70.82% interest in CP Vietnam Livestock Corporation (CPVL), a leading integrated livestock and aquaculture company in Vietnam.
CPP will acquire the interest from the Bangkok, Thailand-based Charoen Pokphand Group (CPG), its majority shareholder, for about HK$4,735 million (US$609 million).

CPP is the investment arm in China of this same Charoen Pokphand Group, and is known in China as ‘Chia Tai’, CPP and its subsidiaries have been investing and working in China since the country first opened its doors to foreign investment in the late 1970s.

Unique opportunity
As one of the largest corporate acquisitions in Vietnam, the deal represents a unique opportunity for CPP to acquire a controlling stake in a market leader and expand into one of the fastest growing feed and farming markets in South East Asia. The acquisition enables CPP to broaden and diversify its business base.

Established in Vietnam in 1993, CPVL’s integrated livestock and aquaculture businesses span the entire food production value chain, from the manufacturing and distribution of animal feed, to breeding and farming of livestock and aquatic animals, as well as processing and production of meat and food products.

CPVL commands a leading position with approximately 20% of commercial feed market, 77% of industrial swine farming markets and 30% of broiler farming markets in Vietnam. For the year ended 2010, CPVL recorded an audited total revenue and net profit of VND20,077,880 million (US$1,046.5 million) and VND964,584 million (US$50.3 million), respectively.

Related websites:
Charoen Pokphand Group
CP Charoen (Chia Tai)