Siphoning Off Corn to Fuel Our Cars

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The Corn Debate

Across the country, ethanol plants are swallowing up more and more of the nation's corn crop, linking food and fuel prices just as oil is rising to new records.

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"I think we'll see this thing come back into balance," he says. "There's an ability to produce so much more at these price levels."

The Feed Price Shock

About 20 minutes' drive from Johnson's farm and the VeraSun plant, two neighbors, Bill Huebsch and Ray Avila, are raising about 15 percent of the nation's capons, castrated roosters that are popular fare on Easter, Thanksgiving and Christmas. In a shed longer than a football field, 13,000 of the birds scurry about, nibbling at a corn mixture fed through automated pipes. In a matter of weeks, each tiny bird will eat about 40 pounds of feed.

The cost of that feed, three-quarters of which is corn, has risen sharply, and as a result, Huebsch and Avila are asking to be paid more for their capons -- a premium of 10 cents a pound last year and maybe another 15 or 20 cents this year -- to cover the added cost.

"Ultimately, you know where that price has to go," Huebsch says. "Ultimately, it's the consumer that's got to take the brunt of it."

He doesn't buy Endres's argument. He says that capons, like egg-producing chickens, can digest only limited quantities of the dried distillers grain. And the price of that protein-rich feed is also rising. (Cattle, which have four-chambered stomachs, can digest the distillers' grain more easily.) Some studies have also linked dried distillers grains with the bacterium E. coli in feedlot cattle.

"I think the ethanol is hurting us," Huebsch says. "It hasn't lowered our fuel prices at all, and it has increased feed costs."

The sharp rise in corn prices has confounded Avila's buying plans. Ordinarily in the fall, he buys all the corn he needs for the next season. But with prices around $4 a bushel last fall, he decided to wait. Now they're even higher, and he's buying only four days' supply, hoping that the price will go down.

"I'm just going day to day," Avila says. He says that a corn farmer friend of his bought a boat, and Avila asked whether he would name it Four Dollar Corn. Now, Avila jokes wryly, his friend would have to name it Six Dollar Corn.

Capons are a niche product, but high corn-feed prices are also giving poultry and egg producers a lot to cluck about. Iowa produces more eggs, 13.5 billion, than any other state. And chickens, like capons, mostly eat corn feed. The Charles City ethanol plant alone consumes three-quarters as much corn as the entire Iowa egg industry.

"Corn has gone up dramatically since the ethanol plants went in," says Deb Wolf, a small egg producer in Osage. "They're buying millions of bushels. That's got to come from somewhere." She and her husband, Keith, have a sign reading "Eggs 4 Sale" outside their home on Route 9, and customers often get the eggs while they're still warm. The Wolfs have tripled the price they charge for a dozen.

"We don't have to make fuel out of corn and soybeans, but we do have to feed animals," says Kevin Vinchattle, executive director of the Iowa Egg Council. "We're going to be right there bidding for feedstocks and making sure that we have the highest-quality feed available. We just don't have an alternative."