Ethanol news

I must give credit to Mitch Daniels for interesting me in ethanol. As increasing ethanol production was one of his two chief agricultural proposals, he should get credit for me this post and others on the subject. Why such an attraction? Here is my answer: I think Daniels' agricultural policies show more clearly his absolute lack of business acumen for anything but the short term profit.

From today's Marion Chronicle Tribune is the report Ethanol: When will affair end?.

Local farmers are breathing a little easier at the bank thanks to high corn prices, but experts say the boon may not last forever.

Ethanol production, such as what's about to start at Central Indiana Ethanol is causing the price of a bushel of corn - about 56 pounds - to skyrocket nationally. This week, local prices were above $3.40 a bushel; a year ago at this time, it was just $2.28.

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He's as happy as any farmer would be about more money coming in, but he's a realist, too. With Central Indiana Ethanol, plus plants under construction in Blackford and Jay counties, the supply side of corn farming may not be able to keep up with demand.

"There's only so much corn to go around," he said. "The jury's still out. There's a lot of uncertainty. I hope it holds out. You can look at a lot of different scenarios; you can be pessimistic or optimistic. I hope it works out, but nobody has a crystal ball to see into the future."

Even if corn prices stay above $3 a bushel, Newhouse still sees his profit margin shrinking. An increase in his production costs is inevitable, eating into his bottom line.

"It's going to be a short-term deal for us farmers," he said. "Everyone wants a piece of that pie. All of our inputs will also go up. We'll probably make the same amount of money in the long run; it's going to take more to make our product. All of our inputs will increase; they hardly ever go down."

Then there is this from Friday's ECI Biz Blog:

The Andersons — the Maumee, Ohio-based company that owns a grain elevator in Oakville in southern Delaware County — is getting into ethanol in a big way.

The company has announced that it has received a state-approved air permit for a possible ethanol facility in Champaign, Ill.

The new plant, if it is built, would be located next to an existing Andersons grain elevator operation.

The company notes that construction is contingent on finalizing funding and the final approval of the company's board of directors.

The Andersons has interests in three other ethanol plants, located in Albion, Mich. and Clymers, Ind., and one in Greenville, Ohio, that is currently under construction.

The company has interests in grain, ethanol and rail car leasing and repair.

And then this also from today's Richmond Palladium-Item newspaper:

With more than half of Indiana's soybean crop and almost half of its corn crop rated as only fair, poor or very poor condition, agriculture officials are concerned about permanent damage to the state's most important crops.

The lack of rain and temperatures above 90 degrees are coming at a time when nearly a third of the corn crop is silking, a crucial period for grain fill.

The diminished corn and soybean yields could cost Indiana farmers $250 million this year, said Chris Hurt, Purdue University agricultural economist.

So, less of a corn crop with more going to ethanol but the future holds the opportunity of not enough Indiana corn for Indiana ethanol producers? Higher prices at the grocery as well as at the gas pump? Well, we got those short term profits, didn't we?