According to the Food and Agricultural Policy Research Institute, 1.5 billion bushels of corn, about 10 percent of last year's crop, was used to produce ethanol. A recent Institute study estimates 2.6 billion bushels will be used in 2006 or roughly 20 percent of a projected 11.5 billion bushel harvest.
Investors, with many farmers among them, have done well this year. According to the Institute, the estimated price of a gallon of pure ethanol is currently $2.10. This amount includes $1.86 for the fuel and 24 cents for the distiller's grains which are used as a feed supplement. Subtracting these amounts leaves a gross margin of $1.07 for every gallon of the fuel additive. Even more can be squeezed out of the kernel if the carbon dioxide gas, another co-product, is captured and sold to the food industry. Estimates by Iowa State University show 12 cents is added to every bushel of corn used in farmer-owned ethanol plants.
Anne Steckel, American Farm Bureau: " ...we are increasing ethanol production facilities and...the future is very bright for ethanol and our farmers are doing all the right things.
Despite the rosy outlook, there may be some negative fallout from ethanol production. Experts at the University of Illinois proposed a possible set of circumstances where competition for corn needed to feed hogs and corn needed to feed an ethanol plant could spark more than healthy competition for corn off the combine. For example, if corn is in high-demand, the price at the elevator could increase to the point where local hog-producers would be forced to cut back production and lose a portion of their income. Though the highly regionalized scenario is unlikely to be felt nationwide, it may have a ripple effect into how much is spent on main street of rural communities.