Corn Growers Plan To Meet Ethanol Demand

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DES MOINES, Iowa -- Iowa farmers hope to get in their fields early this spring, especially since a new U.S. Department of Agriculture report shows they will be planting 14 million acres of corn.

High demand for ethanol and strong export sales are two major factors contributing to the 15 percent jump in corn planting this spring.

Cliff Smith is busy getting ready for the spring planting season. He said that typically the Greene County farm will plant a 50-50 split between corn and soybeans.

Last year, he started shifting toward planting more corn.

"Last year, we planted 55 percent corn. This year, we're planning to (plant) 60 percent corn and depending on the crop report today, we had another 150 acres. We could switch to corn if we wanted to," Smith said.

Smith said he may just devote those acres to soybeans now after seeing USDA predictions of a 10 percent increase in corn planting in Iowa and a 15 percent increase overall.

The shift to increased corn production means about an 11 percent drop in the number of soybean acres that will planted this spring.

It's a decision all farmers are weighing in order to meet demand.

"As corn growers, we try to satisfy our whole, all demand, which is exports, our livestock sector and the ethanol business, so just because of the demand (it) looks like we need to raise more corn," Smith said.

Ethanol is one of the driving forces behind the increase in demand; at one point pushing corn up to around $4 a bushel. And it looks like production of the fuel additive will continue to influence prices.

"It's kind of a balancing act between farmers ability to supply the corn everybody needs at reasonable price and so we're going to see how that plays out over the next two years or so," said Bruce Babcock of the ISU Center for Agriculture and Rural Development.

Babcock said the USDA report shows that Iowa farmers are willing to respond to the need for more corn despite some skepticism to the contrary.

That's good news for any market or industry dependent on corn, especially ethanol.

"It's actually the best news of all for ethanol production because the profitability of Iowa's ethanol plants just increased a tremendous amount because the corn price is dropping," Babcock said.

Babcock said that unlike last year when farmers didn't plant enough corn, this year there would be enough to meet demand in all sectors.