Wednesday, February 28, 2007
POLK COUNTY -- While a hay shortage makes headlines in the Willamette Valley, many local livestock producers say their bigger burden is the cost of corn.
"It's costing an extra $35,000 a month to buy feed corn," Rickreall Dairy owner Louie Kazemier said.
Kazemier isn't alone in his concern about corn prices and the effects they will have on his business. Scott Jondle, owner of Abundant Life Farms in Dallas, said there are times when he can't even buy enough corn to feed his free-range chickens.
"The last time we went to buy feed, the store couldn't fill our order for three days because they couldn't get the corn in," Jondle said.
Experts point to a variety of reasons for the spike in corn prices, but they all agree on the biggest cause: the booming ethanol market.
Across the nation, ethanol plants are being built every month. For Kazemier the most frustrating part is that while ethanol is being touted as America's answer to foreign oil, it is inefficient to produce.
"It costs far more in energy to produce ethanol than it creates," Kazemier said.
That opinion is shared by some of the country's leading energy experts. In October 2005, Cornell University researcher David Pimentel published a report in the Journal of Agricultural and Environmental Ethics that analyzed the cost-to-benefit ratio of ethanol production.
Pimentel found that about 72 percent more energy is used to produce a gallon of ethanol than is provided by that gallon of ethanol.
"Ethanol production from corn is not renewable energy. Its production uses more non-renewable fossil energy resources in growing the corn and in the fermentation/distillation process than is produced as ethanol energy," Pimental wrote.
Yet the Midwestern United States is bursting with ethanol prospectors. Tom Webb of The Minneapolis-St. Paul Pioneer Press reports that last summer 55 ethanol plants were being built or were proposed for building in Iowa alone.
Webb's report cited experts who believe that in the next few years a real tug-of-war will erupt between ethanol producers, livestock raisers and dinner tables.
In Oregon, "The price of corn is about as high as it has been since 1996," said Pete Wentzell, owner of WW Feeds in Tualatin.
"The markets are very, very strong and corn has been the major mover. It's the one pulling everything else along. Part of this is because of the ethanol plants, and part of it is because of the Chicago Board of Trade and investment and commodity funds. They (the Board of Trade) thought corn was too cheap, and they've been driving the prices up," Wentzell said.
What it all means is that next season farmers will be planting fewer acres of soybean and alfalfa crops and more acres of corn.
Wenztell doesn't think an increased supply will stop the price inflation.
"It may slow the rise down, but I don't see corn prices coming down for the foreseeable future - at least not for the next couple of years. Especially since there are new ethanol plants being built all the time," he said.
Kazemier said this trend to ethanol dependency concerns him. And he's not alone in that concern.
New York Times reporter Alexei Barrionuevo reported last month that a new study by the Earth Policy Institute (an environmental group) found that ethanol plants could use up half of the U.S. corn crop next year.
"The saddest part is that we aren't feeding the world - we are just filling up our fuel tanks," Kazemier said.
The National Corn Growers Association puts its own spin on things, boasting that corn farmers are keeping up with demand, and that 2006 was the industry's third-largest season in history.
Next year, even more growers will join those ranks by plowing up their soybean fields to plant more corn.
"Corn growers are doing really well for the first time in decades," Oregon's Wentzell said.
The Department of Agriculture's prospective planning report comes out at the end of March. That report will give farmers, ranchers and feed brokers their first real idea of how many acres of corn will be planted in 2007.