Corn Prices Climb as Ethanol Demand Rises

By Mark Geary, Reporter

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By Mark Geary

Story Created: Nov 14, 2006 at 8:31 PM CST

Story Updated: Nov 14, 2006 at 11:41 PM CST

IOWA -- Corn prices have jumped 83 percent in the past few months.

That means more money for farmers, but it could also leave you paying more at the meat market.

Ethanol plants are popping up all over Iowa. The main ingredient they require is corn, and these plants could change the way Iowa uses its best-known crop.

It's hard to drive anywhere in Iowa without coming across a cornfield.

Now, some experts say there might not be enough of the crop by as early as next spring.

"This is may be one of the biggest changes in Iowa agriculture -- maybe the Iowa economy -- since the steel plow," ISU professor John Lawrence said.

Ethanol plants are driving up the cost of corn and eating up the supply, too. Experts say Iowa needs to increase corn production to meet the growing demand.

"It's very exciting for farmers. We can finally sell corn for a profit," farmer Larry Jons said.

But, a bigger corn market could also shrink the livestock market. That's because higher corn prices make it more expensive to feed animals. So, farmers may want to focus on growing instead of grazing.

That comes at a price, too.

"If we give up the livestock industry to have ethanol production, we lose jobs. It takes more people to raise livestock than it does to produce ethanol," Lawrence said.

The next few months and years will determine exactly what happens to Iowa's cash crop.

Experts insist the farm of the future isn't too far away and the state must adapt to keep up with the industry.

"These are huge changes and they're coming very rapidly. They're the most drastic changes that we've seen in half a century of Midwest agriculture," ISU professor Robert Wisner said.

The professors say meat prices could eventually increase if livestock production drops, but farmers don't necessarily think that will happen.

E-mail Mark Geary at Mark.Geary@kcrg.com

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