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Feeding the ethanol beast

Published 1/18/2007
By AMY BICKEL
The Hutchinson News

It's a modern day gold rush.

Ethanol plants sprout up by the dozens across the nation - churning out a fuel produced from Midwestern farm fields of corn and sorghum.

Some call it hope for rural communities - hurting from the farm economy's hard times - as well as a possible answer to stopping outward migration, bringing young families back to town, as well as dollars.

However, a question remains in Kansas and Farm Belt states where another 70 or so ethanol plants are expected to come on line in the next year: Where will the grain come from to meet ethanol's growing demand?

Needing more corn

Some call it a gold mine driven by several factors - increased corn prices, substantial government subsidies to expand the industry and growing concern over the nation's dependence on foreign oil.

The U.S. Department of Agriculture estimates the nation's 110 ethanol plants consumed 2.15 billion bushels of corn in 2006. Chief economist Keith Collins told lawmakers earlier this year that farmers must grow an additional 6.5 million acres above the 78.6 million planted last spring to meet demands in 2007.

That's about a billion more bushels of corn - slightly less than what the state of Nebraska already harvests.

Collins also estimates U.S. farmers will need to increase corn acreage to 90 million acres by 2010, about the time another 70 to 90 ethanol plants come on line, producing about 12 million gallons of fuel.

The discussion of how much grain producers must grow has been ongoing for months, with producers needing to grow enough corn to keep up with the expanding ethanol industry, as well as the current livestock feedstocks.

Could it mean a change in the rural landscape? Possibly, according to Kevin Dhuyvetter, a Kansas State University agriculture economist.

With corn prices around $4 a bushel at some elevators, even Kansas, where wheat has been king for decades, might see more acres sown into corn and sorghum rather than cotton, soybeans and wheat.

Others speculate that some of the 37 million acres enrolled nationwide in the Conservation Reserve Program {CRP} could be switched back to crop production.

The program pays farmers to turn erodible farmland into grassland.

With corn acreage poised to increase, other questions also are cropping up. For instance, Garden City Co-op General Manager John McClelland said he wonders what the increased demand will mean on traditional grain flow from state to state, as well as the additional pressure it could cause infrastructure, including grain elevators and railroads.

Dhuyvetter also said the booming ethanol industry could mean increased land values, with one economist saying assessments could jump 30 to 70 percent in the next five years.



Keeping up with demand

Of more than 30 plants currently under construction nationwide, four plants are in Kansas.

The state's eight ethanol plants currently operating produced 215 million gallons in 2006. When the four other plants come online, the state will produce nearly 450 million gallons, said Kansas Corn Growers Association spokeswoman Sue Schulte. Another four or five plants are nearing construction, which could boost production another 300 million gallons, the association reports.

While state producers harvested 345 million bushels of corn and 145 million bushels of sorghum - with about 76 million bushels going to the state's ethanol plants currently running - Kansas still probably won't produce enough grains to keep up with the state's own ethanol demand, let alone the nation's burgeoning industry, K-State's Dhuyvetter said.

Not that state farmers aren't contemplating more acres to corn as the commodity's price continues to soar. Seed sales are up 10 to 20 percent in some areas of the state, including western Kansas, said Verle Amthauer, Hutchinson, an account manager for Pioneer Hy-bred.

Still, Kansas' terrain probably won't change significantly, Dhuyvetter said. A depleting Ogallala Aquifer limits much corn acre expansion in western Kansas. Central and eastern Kansas might have bigger shifts to corn and sorghum, but probably not this year, unless farmers destroy land already seeded to wheat.

Even if Kansas producers could grow enough grains for future ethanol production, other factors come into play, including the state's livestock industry. Kansas ranks second nationally with 6.65 million cattle - the livestock depending on 248 million bushels of corn as feed.

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