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The international competitiveness of the U.S. corn-ethanol industry: A comparison with sugar-ethanol processing in Brazil

Author

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  • Paul Gallagher

    (Economics Department, Iowa State University, 481 Heady Hall, Ames, Iowa 50011-1070)

  • Guenter Schamel

    (Institute for Agricultural Policy, Humboldt University, Berlin, Germany)

  • Hosein Shapouri

    (Office of Energy Policy & New Uses, Office of the Chief Economist, U.S. Department of Agriculture, Washington, DC)

  • Heather Brubaker

    (Economics Department, Iowa State University, Ames, Iowa)

Abstract

An indicator of competitive position, the cost difference between ethanol import from Brazil with sugar processing and domestic production with corn in the United States under ideal conditions without tariffs in the ethanol market, is developed conceptually. An ex ante version of the indicator that is based on historical prices and today's technology is calculated for the last 30 years and subjected to time series analysis. Results suggest that there are no trends, but there are cyclical periods of advantage for both industries. Further, long-term averages suggest that profits would be similar in both countries under ideal trade conditions. However, the corn wet-milling industry may have slightly higher profits than other processes and locations. Finally, the U.S. dry-milling industry could improve its competitive position using modified corn varieties with high starch content, and using corn residues for biomass generation of electrical and heat energy. [EconLit Classifications: F140, L650, Q420]. © 2006 Wiley Periodicals, Inc. Agribusiness 22: 109-134, 2006.

Suggested Citation

  • Paul Gallagher & Guenter Schamel & Hosein Shapouri & Heather Brubaker, 2006. "The international competitiveness of the U.S. corn-ethanol industry: A comparison with sugar-ethanol processing in Brazil," Agribusiness, John Wiley & Sons, Ltd., vol. 22(1), pages 109-134.
    • Handle: RePEc:wly:agribz:v:22:y:2006:i:1:p:109-134
    DOI: 10.1002/agr.20072
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    References listed on IDEAS

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    1. Jacinto F. Fabiosa & John C. Beghin & Fengxia Dong & JAmani Elobeid & Simla Tokgoz & Tun-Hsiang Yu, 2010. "Land Allocation Effects of the Global Ethanol Surge: Predictions from the International FAPRI Model," Land Economics, University of Wisconsin Press, vol. 86(4), pages 687-706.
    2. Luciana S. Soler & Peter H. Verburg & Diógenes S. Alves, 2014. "Evolution of Land Use in the Brazilian Amazon: From Frontier Expansion to Market Chain Dynamics," Land, MDPI, vol. 3(3), pages 1-34, August.
    3. Fox, Glenn & Shwedel, Kenneth, 2007. "North American Ethanol Bionenergy Policies and Their NAFTA Implications," 2007 NAAMIC Workshop IV: Contemporary Drivers of Integration 163897, North American Agrifood Market Integration Consortium (NAAMIC).
    4. Gallagher, Paul W. & Shapouri, Hosein, 2009. "Improving Sustainability of the Corn-Ethanol Industry," ISU General Staff Papers 200901010800001492, Iowa State University, Department of Economics.
    5. Frederic L. Pryor, 2009. "The Economics Of Gasohol," Contemporary Economic Policy, Western Economic Association International, vol. 27(4), pages 523-537, October.
    6. Carraresi, Laura & Banterle, Alessandro, 2015. "Agri-food Competitive Performance in EU Countries: A Fifteen-Year Retrospective," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 18(2), pages 1-26, May.
    7. Crago, Christine L. & Khanna, Madhu & Barton, Jason & Giuliani, Eduardo & Amaral, Weber, 2010. "Competitiveness of Brazilian sugarcane ethanol compared to US corn ethanol," Energy Policy, Elsevier, vol. 38(11), pages 7404-7415, November.
    8. K.M. Thomé & A.B.P. Soares, 2015. "International market structure and competitiveness at the malted beer: from 2003 to 2012," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 61(4), pages 166-178.
    9. Yi, Fujin & Lin, C.-Y. Cynthia & Thome, Karen, 2013. "An Analysis of the Effects of Government Subsidies and the Renewable Fuels Standard on the Fuel Ethanol Industry: A Structural Econometric Model," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150224, Agricultural and Applied Economics Association.

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