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Biofuels create enviable position for some
8/22/2008
Corn and soybean farmers are in an enviable position, and it’s all due to projected expansion in biofuels, according to economist Bruce Babcock, director of the Center for Agricultural and Rural Development at Iowa State University. Babcock testified this week before the U.S. Senate Agriculture Committee at the Omaha Field Hearing on food and fuel production.
For corn farmers, increasing ethanol mandates means they have a new built-in demand of between 25% and 30% of their crop, according to Babcock. Just to entice farmers to plant adequate corn acreage in the coming years will require prices high enough to cover the additional costs involved in increasing corn plantings from 80 to 90 or 95 million, he said.
“I estimate that prices below $3.50 to $4 per bushel will result in inadequate acreage,” Babcock said. “Hence, I do not expect prices to fall below this level in the next five years.”
Babcock went on to testify that if we continue to have crude oil prices in excess of $100 per barrel and a string of good weather years that drive price down below $4 per bushel, then the economics of corn ethanol production would look “so good that we should see a new round of investment take place, taking capacity of the corn ethanol industry beyond mandated levels.”
As for the high feed costs on the U.S. livestock industry, he described the future as “fairly straightforward”: livestock prices will eventually increase enough over the next year or two to cover producers’ increase feed costs. There are only two ways this can happen. Either U.S. livestock producers will reduce production or producers in other countries – who face the same feed cost pressures – will reduce production.
What are your thoughts on this "enviable position?"
For Babcock’s complete testimony, visit: www.card.iastate.edu/presentations/
Friday, August 29, 2008 2:17 PM by: Anonymous
Perhaps you should get educated. What are you talking about anyway. The higher price of grains has absolutely saved billions of dollars for American taxpayers the last couple of years. Whats wrong, did your grocery bill go up a hundred bucks last year. Too bad. Get it straight, the American farmer has always subsidized the people of this country with the cheapest food in the world. Have you ever had "dirt under your fingernails"?? I'm guessing no. See, I can use quotation marks also.
Friday, August 29, 2008 9:42 AM by: Anonymous
C'mon you can do better than that. Perhaps you should take some of that subsidy money the govt is "redistributing" from those of us who work for a living and get an education.
Thursday, August 28, 2008 11:17 PM by: Anonymous
Another stupid comment by a jealous, clueless city slicker who doesn't have anything else better to do.
Tuesday, August 26, 2008 12:56 PM by: Anonymous
My thought is that universally accepted phrase "make hay while the sunshines" should be amended to "make hay while the sunshines and the American pulic is subsidizing your rears"
Monday, August 25, 2008 10:56 PM by: SacramentoE85
There should be plentiful corn even in drought, disease, and insect years. Today's (and especially the future's) corn genetics provide superior protection. There's already corn (almost ready for market) that can grow with substantially reduced water supply (think desert conditions). The seed companies stack insect, disease, herbicide, and other traits on top of that, and increased yields each year are almost guaranteed. Monsanto and Pioneer expect 300 bushel averages in coming years; almost twice today's averages. Now if they could only make them stand up in high winds, and grow gills when flooded, there won't be much to stop the corn crop other than volcanic eruption. Maybe there's a plant in Hawaii that they can borrow some genetics from that would even stand up to that?...
Saturday, August 23, 2008 4:36 PM by: Anonymous
Did anyone testify concerning what would happen if we have a major drought or disease porblem. The danger with this expanded demand for corn is that we are creating it before we have an adequate supply. Doesn't anyone read all the
ag comentaries that are running acerage balance sheets. No one seems to know how the increased supply will be created, yet we plunge ahead. Maybe it will turn out all right, but what is we only have a half a crop? How many individuals, businesses and banks will fail due to this follie? The country has a strategic reserve for oil in case of interupted supply. Would it not be wise to slow down ethanol until the government could build a reserve of corn? Say 6 months supply. That might bring some sanity to these markets.
Saturday, August 23, 2008 4:20 PM by: Anonymous
I belierve the cap only applies to the mandate. As far as I know there is no law saying more can't be produced. I might assume that any tax incentive might end at the mandate level.
Friday, August 22, 2008 5:30 PM by: Anonymous
How can we have a new round of investment in corn ethanol plants when they are capping production from corn ethanol at 15 billion gallons per year and with the plants on the drawing board we will be there in a couple of years.
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