For decades, the main concern of the global food system was scarcity. Today, however, a different challenge is emerging in the cereal sector: what happens when production consistently outpaces demand?
Written by Julia Alvarez Garcia, Agrifood Journalist
Global cereal output continues to rise steadily, while consumption is growing at a more moderate pace. According to the International Grains Council (ICG), production could reach 2.46 billion tonnes in the 2025/26 campaign, with stocks approaching 631 million tonnes, highlighting the strength of global supply.
This growth has been largely driven by technological advances in agriculture, including genetic improvements, precision farming and more efficient use of inputs, which have boosted yields in major producing countries. “Seeds, including genetically modified ones, have enabled very high production levels,” explains Mercedes Ruiz, director of Aestivum, a consultancy specialising in cereal markets, pointing to countries such as Brazil, where maize production has increased significantly in recent years.
However, the sector remains highly dependent on weather conditions, making it difficult to speak of structural abundance rather than temporary surpluses. Spain provides a clear example: the 2023 drought reduced cereal production to 10.38 million tonnes, showing how quickly the balance between supply and demand can shift.
“Continuously adjusting supply and demand is extremely complex in agriculture,” Ruiz notes, which explains why markets remain cautious despite higher production levels.
If production continues to increase, the key issue is no longer how much is produced, but how to manage the surplus in a system that, in some campaigns, already generates more than the market can absorb.
In response, the sector has been exploring alternative uses for cereals in recent years, seeking new outlets beyond food markets to improve profitability.
Cereals as an energy source
Biofuels are emerging as one of the main outlets for surplus production. “In certain periods, biofuels act as a major absorber of excess supply,” says José Luis Esteban, Country Manager at Olam Agri. In countries such as the United States, around one third of maize production is already used for ethanol, consolidating this industry as a key destination for cereals.
In Europe, the bioethanol sector has also been expanding, albeit at a slower pace. In 2024, European plants produced more than 5.4 million tonnes, with around 86% destined for energy use, according to the European renewable ethanol association (ePURE). This fuel now achieves an average emissions reduction of 79% compared to petrol, a significant increase from 49.6% in 2011.
According to José Ramón Freiré López, director general of the Spanish Bioethanol Association, this development is closely linked to technological progress within the sector. “Producing bioethanol from cereals does not only generate alcohol,” he explains. “It also produces industrial co-products and uses biogenic CO₂, improving efficiency and reducing the carbon footprint.”
The development of bioethanol largely depends on national energy policies. France is one of the leading examples within the European Union, with fiscal incentives and adapted infrastructure supporting both production and consumption. In Spain, however, growth has been more limited, as policy has prioritised other renewable sources such as solar and wind energy.
Beyond providing an outlet for surplus production, the use of cereals for energy raises a broader debate about the balance between food and fuel uses. This is particularly relevant in a global context where food access remains unequal, and the use of crops for fuel continues to generate controversy despite its role in decarbonisation.
If current trends continue, the focus of the debate may shift in the coming years. “The discussion will move from how much is produced to what to do with that volume,” note sources at Olam Agri, in a market that is already capable of producing more cereals than it can absorb in certain seasons.
In this context, energy, industry and the bioeconomy are emerging as potential outlets for surplus production. The challenge for the sector is evolving: no longer simply increasing output, but deciding how to manage it. If these alternative uses do not grow at the same pace as production, the market could face recurring surpluses, downward pressure on prices and increasing difficulty in maintaining balance.
