Agri News, MN
11-21-06
Ethanol production may stress corn storage, transportation
By Jean Caspers-Simmet
Agri News staff writer
NEW HAMPTON, Iowa -- The rapid increase in ethanol production will stress
rural grain storage and shipping infrastructure and require substantial investment,
says
Ginder made his comments during a recent webcast on the corn Roger Ginder,
professor of economics at Iowa State University.ethanol industry.
Growing more corn will require more production inputs and services.It will be
necessary to produce and distribute more seed, chemicals and fertilizer for each
acre switched from soybeans to corn. Ginder expects that there will be adequate
seed, but it may be difficult to get seed varieties with greatest yield potential or
biotech traits that farmer want.
A 25 percent increase in corn acres will require more nitrogen fertilizer. While
there is infrastructure to quickly increase the quantity of some fertilizer products
moving into the state, producers may find it difficult to obtain all their nitrogen in
the form they want.
Application equipment and trained applicators may not be adequate to
accommodate large increases in corn acres in the short run.
"This is especially true if adverse weather conditions occur during spring
application season," Ginder said.
An acreage shift from soybeans to corn will add pressure on storage, drying and
handling infrastructure, Ginder said. An acre of soybeans creates the need for 60
bushels of storage. Shifting to corn will create a need for 180 to 220 bushels.
"If this switch materializes, significant additional investment in grain storage and
drying capacity will be necessary," Ginder said.
Storage capacity will need to increase by nearly 1.4 billion bushels by 2010. That
is more than all commercial storage currently in service in Iowa. Because ethanol
plants generally have storage for only 15 to 30 days, much of the new storage
will have to be built on farms and at elevators.
Ginder said there are risks because changing basis patterns may not ensure
enough carry to pay for new storage. As cellulosic ethanol feedstocks replace
corn, the new storage could become excess capacity.
"Low margins in the grain elevator sector will make it difficult to expand
commercial storage as rapidly as the ethanol production sector is expanding,"
Ginder said.
Dennis and Mark Meirick, owners of the Farmers Mill in Protivin, watched the
webcast at the Chickasaw County Extension office in New Hampton.
"It all comes down to economics," said Mark Meirick. "If the plants are willing to
pay for the corn, the farmers will grow it, but it has to be economically feasible to
switch to growing more corn."
Dennis Meirick said someone will have to build grain storage, but there needs to
be some incentive to do it.
The Meiricks said that switching rotations involved a lot of considerations ranging
from inputs to tillage to equipment to bins and dryer capacity.