Record Harvest Seeks to Meet Demand for Ethanol

US - When corn farmers headed out to their fields last spring to plant an expected record-breaking harvest this fall, critics of diverting a large portion of the crop to ethanol production said the result would be higher prices for everything from a hamburger to a beer.
calendar icon 2 October 2007
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The growing demand for ethanol for fuel would drive up feed prices for beef, pork and poultry producers, the critics said, and even the price of a beer in your local pub would spike as former barley farmers switched to corn to jump on the ethanol bandwagon.

Nationally, a record 13 billion bushels of corn will be harvested in 2007, with ethanol producers buying up about 27 percent of the total crop, according to the U.S. Department of Agriculture. Last year, ethanol producers consumed about 20 percent of the corn crop.

In Colorado, farmers have also pumped up their corn production, according to Mark Sponsler, executive director of the Colorado Corn Growers Association in Greeley. Sponsler said the state's farmers have responded to soaring prices by planting about 300,000 more acres of corn this year.

"It's been a very positive response to a good market incentive," he said. "It is a significant increase."

Sponsler noted that corn production would likely have been impressive this year anyway without the incentive of high prices. Good early moisture before planting and timely rains during the summer growing season set the stage for high harvest yields, he said.

Prices stay high

Sponsler said farmers have been thrilled to see corn prices stay significantly above $3 per bushel after falling from a high of $4-plus-per-bushel earlier in the year. That means they will likely still get 80 cents to $1 more per bushel this year than a few years ago.

OK, that's the good news for local corn producers. After years of getting by - sometimes with the help of federal crop subsidies - they'll likely be paying off some debts and buying some new equipment this time around without taxpayer assistance.

But what about consumers? Will we be paying more for our hamburger and beer because more corn is being sold for ethanol?

Source: Northern Colorado Business Report


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