By Jean Caspers-Simmet
NEW HAMPTON, Iowa — Where will all the corn from is a question Robert Wisner, Iowa State University Extension grain marketing economist, is attempting to answer as he looks at the country’s booming ethanol industry.
"This is the most rapid change we’ve seen in Iowa agriculture in 50 years," Wisner said at last week’s ISU Web cast on the corn-based ethanol industry.
Wisner said a combination of events have fueled unprecedented expansion the past two years. These include record-high crude petroleum prices, the 2005 energy bill that mandated 7.5 billion bushels of renewable fuels production by 2012 and a 51 cents per gallon blending credit.
"There are 25 corn processing plants operating in Iowa with total capacity of 980 million bushels per year," Wisner said. "That is equivalent to 47 percent of the estimated 2006 Iowa corn crop. Plants being expanded and new plants currently under construction will need 430 million bushels of corn processing capacity. These plants will bring capacity to 68 percent of the current Iowa corn crop."
Because many plants operate at 20 percent above capacity, that number understates corn needs, Wisner said. Plants that would use another 1.16 billion bushels of corn are in various panning stages in Iowa.
"If all these plants are built, we’ll (use) 123 percent of the current Iowa corn crop, and there are at least seven plants operating or planned to operate just across Iowa’s borders," Wisner said. "These plants will use a substantial amount of Iowa corn."
The need for additional corn has major implications for the entire agricultural sector, Wisner said. About 650 million bushels of corn is fed to livestock and poultry and 600 million bushels of Iowa corn are exported to domestic and foreign markets. A small part of the corn being fed in the state is replaced by distillers grain and solubles.
To maintain livestock and poultry feeding and supply corn to out-of-state markets, a large increase in Iowa corn acres will be needed if all planned ethanol plants are built, Wisner said.
Using an Iowa average corn yield of 188 bushels per acre, which is 15 bushels above the 2005 yield, corn acreage would need to increase by 60 percent to accommodate corn processing for all current and planned plants. If plants are operating at 120 percent of capacity, Iowa corn acreage would need to increase by 83 percent.
"These are huge increases in acreage and would require a sharp reduction in soybean plantings as well as shifting some oats, hay, pasture and Conservation Reserve Program land into corn," Wisner said.
Wisner said that ethanol plants have little storage and if they run low on corn they will bid aggressively for supplies.
"At times during the past nine months, differences as large as 15 to 20 cents per bushel have occurred in corn bids in relatively small areas of Iowa," Wisner said. "Greater differences are possible in the future as more ethanol plants come into operation and compete with each other and livestock feeders for corn supplies. When adverse weather reduces yields, the competition for corn will intensify."