The United States is the largest producer of ethanol from maize and is expected to use
about 81 million tons for ethanol in the 2007/08 crop year. Canada, China and the
European Union used roughly an additional 5 million tons of maize for ethanol in 2007
(USDA 2008a), bringing the total use of maize for ethanol to 86 million tons, which was
about 11 percent of global maize production. The large use of maize for ethanol in the
U.S. has important global implications, because the U.S. accounts for about one-third of
global maize production and two-thirds of global exports and used 25 percent of its
production for ethanol in 2007/08.
Global grain production did decline by 1.3 percent in 2006 but it then increased 4.7 percent in 2007. Thus the production shortfall in grains would not, by itself, have been a major contributor to the increase in grain prices. But when combined with large increases in biofuels production, land use changes, and stock declines it undoubtedly contributed to higher prices.
Rapid income growth in developing countries has not led to large increases in global
grain consumption and was not a major factor responsible for the large grain price
increases. However, it has contributed to increased oilseed demand and higher oilseed
prices as China increased soybean imports for its livestock and poultry industry. Both
China and India have been net grain exporters since 2000, although exports have declined
as consumption has increased.
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