Is there enough corn for ethanol boom?

Sandy Moore, Courier-Times Staff Writer

The myth of an easy answer for the nation's gluttony of liquid fuel was dispelled Tuesday by Chris Hurt, Ph.D., agricultural economics professor at Purdue University. Hurt spoke at the Area Agribusiness Breakfast sponsored by Henry, Rush and Hancock Community Foundations.

According to Hurt, if all the 24 ethanol plants which are proposed to be built in Indiana come to reality, it will take 120 percent of the possible corn crop to keep them in production. If all the ethanol plants in Iowa are built, it would take over 133 percent of their corn crop. Likewise, in Illinois they would require 140 percent of all the corn produced to be made into ethanol.

That figure means that all of the corn produced in Indiana would go toward the use of ethanol with no corn being used in livestock production and none for food products for consumers. And still production would come up short by 20 percent. It just isn't going to happen, says Hurt.

His prediction is that many of the proposed ethanol plants will not be built. The "gold rush mentality" which caused many to want to invest in ethanol production will subside when the numbers are crunched and profit margins narrow, says Hurt.

"We (the agriculture industry) can only make a contribution to the liquid fuel industry," said Hurt. "We can not eliminate the need for foreign oil."

According to Hurt there are eight ethanol plants under construction in Indiana right now. Plants in South Bend and Rensselear are already in production and Clymers and Linden ethanol plants are beginning hiring in March and April. Other plants are in various stages of being constructed.

Hurt predicts that ag will need a little time to adjust, and Purdue University is working on solutions for the next generation of ethanol production. Research is under way to find economical ways to use stalks of the corn and other plant products to make cellulose to make ethanol fuel.

"This is a historic time in agriculture," said Hurt. "A huge success story for agriculture. It's exciting times. Grain prices have not been this high since record numbers in the 1995-96 crop year. We produce $1 trillion for the food sector of the United States and now there is the prospect of producing $1 trillion in the fuel sector. The magnitude for the agriculture industry is unending."

Hurt said there are plans to increase the production of ethanol from 5 billion gallons to 11 billion gallons this year alone which should keep corn prices high throughout the coming growing season.

"It has been 30 years since we have had such a strong ag economy," he said.

Hurt predicts that soybean prices will reach the $8 to $9 range in the next six to eight weeks due to the shift in acreage to corn.

The only bad news in agriculture could be for livestock producers. Hurt predicted that 70 percent of farm sales would be from crop sales this year, leaving 30 percent to livestock.

He said that even if there were no weather disruptions in this growing season, the United States is near a crisis in food supplies. We are extremely close to the edge and need to have a good crop this year.

Land values are up 15 to 20 percent across the state of Indiana, according to Hurt.