In corn belt, ethanol boom a bust for ranchers

The alternative energy source has turned around dying towns, but the high price of corn makes it hard to raise livestock.

By Amanda Paulson | Staff writer of The Christian Science Monitor

from the March 28, 2007 edition

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IOWA FALLS, IOWA - In ethanol-happy Iowa, where presidential candidates are falling all over themselves to support the corn-based fuel additive and farmers are reveling in corn prices double those of a year ago, Joe Kerns sometimes hands out bumper stickers that read: "Ethanol: A complete waste of otherwise perfectly good corn."

It is not a popular opinion. "It's tough to be the lonely voice out in the desert when there's a party going on," acknowledges Mr. Kerns, director of purchasing for Iowa Select Farms, the state's largest pork producer. "But I've had enough of [ethanol]."

In the past six months, agriculture in America's heartland has been turned on its head. Corn is selling at $4 a bushel, ethanol plants have turned around dying towns, and land values and rents are soaring. It's a boom time for farmers who haven't had a really good year in several decades, but not everyone is benefiting. Livestock producers like Kerns, for instance – who depend on cheap corn for their feed – are feeling the pinch.

Agricultural economists and forecasters, meanwhile, are struggling to sort out the new dynamics. They debate whether the new fuel demands on corn are sustainable and what impact they might have on food supply.

"The whole world for agriculture here in Iowa and in the Midwest has changed," says Mike Duffy, an agricultural economist at Iowa State University. The effects vary widely for farmers, he says. "Depending on the point of view, I've heard ethanol described as the good, the bad, and the ugly."

Bill Couser is one who sees it as an unequivocal good. A corn producer who farms about 10,000 acres in Nevada, Iowa, he's thrilled about the price of corn. As the owner of one of Iowa's few cattle feedlots, he can take advantage of the cheap ethanol byproducts that cattle can eat instead of corn better than can beef producers located far from ethanol production. And as an investor in a local ethanol plant, he's looking ahead to healthy returns.

"It seems like a farmer gets one or two home runs in his career," says Mr. Couser, sitting in his office surrounded by John Deere paraphernalia and hats from cattle shows. "Is this our home run? I think so."

Moreover, when he looks around his town – at the new elementary school, swimming pool, police station, and the thriving main street – he sees a local economy that's benefiting. Sixty percent of the financing for the ethanol plant he helped start came from small investors, and they've given almost all the jobs to locals.

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