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NEW INTERNATIONAL REVIEW PUBLICATION: NOVEMBER 2009 UPDATE

BIOFUELS - THEIR IMPACT ON                                   CROP PRODUCTION WORLDWIDE

A strategic review for the benefit of the agricultural business sector -
Looking forward five years

Synopsis:

BIOFUELS - THEIR IMPACT ON CROP PRODUCTION WORLD WIDE

The strategic review carried out for the benefit of the agricultural business sector, and looking forward five years to 2013, was first published by Impact Reports in November 2008. An update has been published in November 2009.The 120 page report, written by Bruce Knight, shows how much of an impact demand for biofuels, both bio-ethanol and biodiesel, will have on cropping practice and consequently on the markets for seed, agrochemicals, fertilisers and other crop management systems.

Since the publication of the first report, changes in fossil fuel prices and grain prices, as well as the effect of the global recession, have had a significant impact on the biofuel industry in a number of regions. However, it remains the case that biofuels will continue to have a profound impact on agriculture worldwide.

Three regions and three crops dominate the biofuel scene today. Brazil with its mature, but still growing, sugar cane ethanol industry; the USA with continued if somewhat reduced investment going into corn ethanol production and in the EU, the global leader in biodiesel production from oil seed rape and sunflower oils.

Brazil has the advantage of low cost of production, such that ethanol costs can compete with fossil fuel costs. The energy balance is also favourable with ethanol from cane.

Biofuel production from these three crops and regions will grow considerably over the next five years, with China also becoming a leading bio-ethanol producer from corn or cassava.

Mandatory biofuel inclusion levels in transport fuels, backed by tax rebates, are creating new markets in most of the developed economies. The EU in particular has very challenging targets which has resulted in rapid investment in new plant in the EU, but also instability in the industry as low price biofuels are being imported from North and South America. The EU is bringing forward new sustainability rules to apply to biofuel production in 2010. This may impact on imports.

Very rapid growth in biodiesel production has been seen over the last two years in Argentina, Brazil and the USA, mainly from soya beans. Investments have also continued, although not smoothly, in bio-ethanol production in the EU from wheat and sugar beet. Canada has stepped up bio-ethanol production from wheat and corn. There are, in fact, few countries where some form of biofuel production is not underway or planned.

The investment in biofuel production is coming from a number of sources: multinational grain trading and processing companies, sugar companies, farmer owned companies and, latterly, multinational oil companies.

The fuel versus food argument is less of an issue in most regions than the media portrays. In Brazil, for example, there is scope to step up sugar cane plantings on uncultivated pasture land and without encroaching rain forests. However, the Chinese Government sees a potential conflict with corn and animal feed uses, consequently emphasis is being given in China to the development of cassava as a feedstock.

Conventional biofuel production from commodity crops will dominate over the five year period. However, there is considerable R & D effort going into alternative sources of biodiesel such as from the Jatropha tree and more radically from algae. The other major effort is into “second generation” biofuel production through enzymatic conversion of cellulose in wood waste and straw to bio-ethanol.
In the USA investment in second generation biofuel research is the priority under the Obama administration.

More frequent plantings in the rotation will add to the risk of increased pest incidence, such as with corn root worm and corn borer in the USA. Oil seed rape, if grown too frequently, may become susceptible to the soil organism causing clubroot.

There are opportunities for improved varieties: high starch corn or wheat, high sugar content cane and high oil level oilseed crops and efforts are underway through conventional breeding and by genetic modification to achieve such objectives.

The real growth in market opportunities for seed, agrochemicals, fertilisers and other inputs will, however, be proportional to the expanded areas of the crops. In some cases these will be very significant.

New projections of biofuel crop areas by 2013 have been made for all of the major agricultural regions using the plant capacities scheduled to be in operation by then. The forecasts also make allowance for the effects of imported biofuels, or crops grown for biofuels for export, or any relevant other factors. The review also signals, for each sector, the levels uncertainty applicable to the forecasts.

For the three most important biofuel crop growing areas: Brazil from sugar cane, USA from corn and the EU from oil seed crops, calculated annual market values, of the key inputs for 2013 have been made. Projected totals for the three markets in US$ billion (at user level) are Seeds: 1.6; Fertilisers: 7.8; Agrochemicals:- 4.15. In some cases there will be some substitution from other crops, but not universally.

Clearly, the continued investment in biofuels is going to have a major impact on global cropping and on any organisation involved in crop production or trading, internationally. Organisations will be well advised to monitor progress closely.

LIST OF CONTENTS

SCOPE OF THE REVIEW GLOSSARY EXECUTIVE SUMMARY 1. OVERALL SITUATION 1.1. Brief description of technologies involved  1.1.1.Bioethanol  1.1.2.Biodiesel  1.1.3.Comparative energy efficiences 1.2. Second generation biofuels on the horizon  1.2.1.Cellulose ethanol  1.2.2.Biodiesel  1.2.3.Biomassto liquid conversion-Btl 1.3. The main driving forces behind the adoption of biofuels for        transport 1.4. Biofuels-Utilisation and market positioning  1.4.1.Bioethanol  1.4.2.Biobutanol  1.4.3.Biodiesel 1.5. Environmental issues  1.5.1.Bioethanol  1.5.2.Biodiesel 2. REGIONAL SITUATION 2.1. Global biofuel production quantities  2.1.1. Bioethanol  2.1.2. Biodiesel 2.2. South America  2.2.1. Brazil  2.2.2. Argentina  2.2.3. Other South and Central American countries 2.3. North America  2.3.1. USA  2.3.2. Canada 2.4. Europe  2.4.1. European Union  2.4.2. Other European and neighbouring countries 2.5. Asia Pacific  2.5.1. China  2.5.2. India  2.5.3. Other Asian countries  2.5.4. Pacific countries 2.6. Africa  2.6.1. Nigeria  2.6.2. South Africa  2.6.3. Mozambique  2.6.4. Other African countries

3. KEY BIOFUEL CROPS - AGRONOMIC DEVELOPMENTS 3.1. Key factors 3.2. Sugar Cane – Brazil  3.2.1. Sugar cane – yield development  3.2.2. General developments in Sugar cane production  3.2.3. Specific aspects related to biofuel crops 3.3. Corn – USA  3.3.1. Yield trends  3.3.2. Developments in Corn Production methods 3.4. Oilseed Rape – Europe  3.4.1. Yield trends  3.4.2. Developments in Crop Management methods  3.4.3. Impact of extended areas for biodiesel production 4. FUEL VERSUS FOOD 4.1. Are biofuels the main cause of food price           escalation? 4.2. Or are other factors more important? 4.3. Wider Political factors often determining policy. 5. IMPACT ON AGRICULTURE - 5 YEAR SCENARIOS 5.1. Brazil - Sugar cane 5.2. Brazil - Oil seed crops 5.3. Argentina - Oil seed crops 5.4. South and Central America - Sugar cane 5.5. USA- Corn 5.6. USA - Oil seed crops 5.7. Canada - Wheat 5.8. European Union - Oil seed crops 5.9. European Union - Wheat and Sugar beet 5.10. China - Corn, Wheat, Cassava 5.11. India – Sugar cane 5.12. Other markets – Oil seed crops 5.13. Other markets – Starch and Sugar crops

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PUBLICATION DETAILS

PRODUCTION TEAM: The research and preparation of the review has been carried out by Bruce Knight, Principal Consultant, Innovation Management. He has many years’ experience in consultancy work covering numerous studies and reports on biofuels and related topics. Details of consultancy topics covered, and previous publications can be seen on the web site: www.innovationmanagement.co.uk

Additionally, with a strong marketing management background, covering input products and services used in the production of crops internationally, he will be well placed to present the findings of the study in a form of value to managers.

Adam Wimshurst was co-founder of Impact Reports and acted as managing editor for this report. He has extensive experience in market research report preparation for clients in the international agrochemical and seeds industry.

REPORT LENGTH: 120 pages

REPORT STYLE: Information is presented in the form of, section by section, detailed findings and analyses. References and sources are given as footnotes throughout the report. Projected crop hectares by 2013 are presented in the final section based on the author’s best estimates.

This provides a firm basis to project the markets for the various crop inputs. More exact projections for seed, agrochemicals and fertiliser markets by 2013 are presented for the three most important regional and crop sectors.

ILLUSTRATIONS AND CHARTS: Full colour

PUBLICATION DATE: - November 2009

PRICING: Electronic (PDF) (Single User): £550.00   - Hard Copy: £650.00  
                 - CD ROM: £650.00   - Electronic (PDF) (Multi-Site License): £1650.00   - All Prices excluding VAT.

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Researched and written by: Bruce Knight. Edited by Adam Wimshurst. Experienced consultants in agricultural technologies worldwide

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