Ethanol Boom Divides Farmers, Ranchers

The Associated Press
Sunday, January 7, 2007; 7:07 PM

SALT LAKE CITY -- From corn fields to Wall Street, enthusiasm for ethanol is at an all-time high. But not everyone is enthusiastic.

Demand for the corn-based fuel is driving up the cost of feed corn, making it more expensive to feed cows, chickens and pigs.

"It's hard to see where the future is, if corn keeps going up," said Kerby Barker, a cattle rancher in southwestern Wyoming. "Anytime you jack up the price of fuel, anytime you jack up the price of corn, it just drives up our bottom line."

Long-term, it could drive up the cost of food, which is alarming to meat producers and food companies.

Like many ranchers, Barker questions the 51-cent-a-gallon tax credit created by Congress to encourage growth of the ethanol industry.

"The feeling in our area is that all the subsidies going to support ethanol production is really hurting livestock production," Barker said.

A potential split is in evidence this week during the annual meeting of the American Farm Bureau Federation this week in Salt Lake City. Farm Bureau is the country's largest general-interest agriculture group.

Its members still are trying to understand the consequences of the nation's rapid expansion of ethanol.

"We have a bull on the loose here, and it's going to have a lot of implications for American agriculture and our population," Keith Collins, the Agriculture Department's chief economist, told Farm Bureau members Sunday morning.

Enough plants are under construction or being expanded to more than double the nation's ethanol production, from around 5 billion gallons now to 11 billion gallons, according to industry estimates.

Production will probably keep expanding even if prices rise higher, Collins said. Prices have climbed above $3 a bushel, the highest level in more than a decade. Strong returns mean plants could cover costs even above $4 or $5 a bushel, depending on prices for ethanol byproducts, he said.

The ethanol boom has been good news for grain farmers and rural communities, where new plants are opening at a breakneck pace. While big agribusiness companies such as Archer Daniels Midland Co. and Cargill Inc. produce the most ethanol, many new plants are farmer-owned cooperatives.

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