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You've got a great point. Not to mention the costs of production that are
involved in growing corn. From an insiders view (forgive me while I whine) there is currently no incentive for the farmers of this country to produce corn for ethanol if they have any other alternatives. Ethanol companies are true bottom feeders. They purchase the poorest and cheapest corn they can, often paying more in freight than they do for the corn, then they sell the by products back to the feed companies and dairies, competing directly with the farmers that supply them the higher quality corn. Currently, the cash corn market is around $2 per bushel, the alcohol plants are buying it for less. Assume an average yield of 150 bu / A at the $2 price and you end up with $300 per acre gross income. Throw in about $1 per bu from uncle Sam because the market is so low, but wait, don't forget about the max subsidy limit of $60,000 so, make that $0.50 from Sammy. Now we're getting a whopping $375 per acre gross income to grow the corn. That's about $100 per acre under the cost of production, drying, and storage. Forget about return on investment. I'm looking at returns for growing peas, green beans, and sweet corn... $450-$600 per acre and I don't have to harvest it, dry it, store it, haul it, or market it. Plus they are all shorter season crops which means less herbicide, insecticide, aerial application, and irrigation. Current US corn production is roughly 10 billion bushels. The carry over from the previous year has been getting smaller. Next year there won't be a carry over. This is due to increased usage including ethanol production. Unless corn prices rise significantly, the US will not produce enough corn to meet current market demands PLUS enough to produce enough ethanol to treat 100% of the gasoline. Other methods for producing ethanol will no doubt be tried, but when 1 bu of $2.00 corn will produce 2.5 gallons of ethanol, other US available sources may not be as efficient. Watch for ethanol imports. It will happen. The monkey is definitely turning the ethanol crank. Jim |
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