Soaring corn prices fuel ethanol debate - News

By Ad Crable

Published Jan 11, 2007 14:19

The demand for corn to feed burgeoning ethanol plants � a large one is proposed for Conoy Township � is sending the value of field corn soaring nationwide.

The price paid for a bushel of corn has risen meteorically, from $2.50 over the summer to $3.70 now. That�s a boon for farmers who grow corn to sell, as in the Midwest.

But here in Lancaster County, most of the 87,000 acres of planted corn is used by farmers to feed their dairy herds.

Local farmers won�t be selling much corn to an ethanol plant, local or otherwise.

Even with their homegrown corn, they still have to purchase about half the feed they need, according to the Penn State Extension Service � and now at higher prices.

Local poultry, pig and beef cattle farmers rely on large amounts of corn to feed their livestock.

This week�s theme at the Pennsylvania Farm Show is a call to arms for Pennsylvania farmers to step up and help supply the movement for agriculture-based alternative fuels.

Yet, at the same time, federal farm economists, farmers and others warn that higher corn feed costs are bound to elevate grocery bills for such staples as milk, eggs, chicken and pork.

That�s led to a debate inside the agriculture industry on whether the best use of corn is for food or fuel.

Lancaster County may be a case in point.

�Lancaster County is a grain-deficient area. The majority of farmers are livestock based. So there are far more on the short side of the equation,� observes Leon Ressler, director of the local Penn State Extension Office.

�At the moment, it�s somewhat painful but manageable for farmers. But if (corn prices) continue to go up, this is really going to get painful.�

�It�s a road for disaster� for many poultry farmers, warns Paul Sauder, president of Lititz-based R.W. Sauder Inc., which sells the eggs from some 5 million chickens in three states.

Corn is the main basis for chicken feed and its soaring price could put poultry farmers out of business, he says.

Long-term, Sauder maintains, continued high corn prices will eventually filter into supermarkets as poultry farmers go under and shrinking supplies drive up prices for eggs.

�It�s a pay me now or pay me later situation. Are you going to pay at the gas pump or are you going to pay at the grocery store?�

The steep increases in corn feed is poor timing for many dairy farmers, says Luke Brubaker of Brubaker Farms, a Mount Joy family enterprise with more than 700 milking cows, as well as a large poultry operation.

�Right now, dairy farmers and grower farmers are having a pretty tight year. With the rising corn price, it�s going to be very serious to their bottom line right now.

�The price of milk has come up a little bit, but with the increase in feed costs it�s almost a wash,� Brubaker says. �We don�t need a wash right now. We need something better than that.�

Because so much of Lancaster County�s corn stays here to feed concentrated livestock operations, Ressler does not foresee many farmers planting corn over soybean, hay and tobacco crops.

The owners of both the Penn-Mar ethanol plant that failed in Conoy Township several years ago and the current proposal at the same site by Lancaster Biofuels say most of their corn needs would be shipped here from the Midwest.

Even if every ear of corn grown in Lancaster County�s 87,000 acres of corn fields was earmarked for the Lancaster Biofuels plant, it would still need about 55,857 more acres of corn.

Of course, the considerable flip side to this debate is the energy savings the nation, including farmers, may reap if alternative and renewable fuels offset the use of foreign oil.

On a national scale, the ethanol boom is pumping millions of dollars into local farm economies.

Some ag industry leaders and studies say market forces will propel farmers to plant more corn, new technology will increase yields and corn prices will eventually stabilize.

Millions of acres of potential cornfields, for example, are currently set aside by farmers for conservation purposes under the federal Conservation Reserve Program.

Seth Obetz, Lancaster Biofuels president, readily acknowledges high corn prices can have negative effects on some farmers and consumers.

�The fuel versus food debate has to be worked out and managed through a variety of tools like CRP, yield increases, technology and feed efficiency improvements,� he says.

Obetz said he hopes corn prices can be mitigated through market forces and regulations.

But he says the reality is ethanol is enriching many farmers and the agricultural economy nationwide. Ethanol, he says, �is proof in the pudding if you want to save farmland and income for farmers.�

Sauder and others think ethanol produced not from corn but from cellulosic sources, such as straw, switchgrass, leftover trees and other renewable fibers is the way to go.

Obetz said the Conoy plant would be designed to shift to cellulosic ethanol production if and when it comes technologically feasible.

In the meantime, though, �I�d much rather be sending my money to Midwest farmers than Middle Eastern oil cartels.�

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