Fort Dodge Messenger, IA
11-13-06
Ethanol expansion to require changes
Iowa leads U.S. in production
By JESSE HELLING Messenger staff writer
An expansion of ethanol production in Iowa will require massive new investments
in infrastructure and a realignment of state agriculture.
That’s according to seven economists from Iowa State University, who presented
information on various aspects of the ethanol industry Monday in a presentation
broadcast at ISU Extension offices throughout the state.
Iowa is now the leading ethanol producer in the United States – a title the state is
not in danger of losing in the near future, according to the presenters.
‘‘The rural economy is growing after a period of decline,’’ said John Miranowski,
a professor of economics at ISU. ‘‘This is an exciting time.’’
Since 1980, ethanol-producing technology has improved vastly, Miranowski said.
Modern methods yield up to three gallons of ethanol per bushel of corn.
As such, national production has increased from 100 million gallons in 1980 to 4
billion today, according to data presented by Miranowski.
‘‘A rapid rise after 2001 was driven by higher gasoline prices,’’ he said.
Tax incentives and clean air requirements have also spurred ethanol production,
said Miranowski.
Rapid expansion in ethanol production is scheduled for the next 18 to 24 months,
according to Robert Wisner, professor of economics at ISU.
In recent years, corn processing for ethanol is up 34 percent, he said.
Iowa’s operating ethanol plants can process up to 970 million bushels of corn in a
year, Wisner said, with scheduled expansions and new plants designed to
increase processing by 480 million bushels.
Potential capacity will exceed the latest Iowa corn crop by 25 percent, according
to Wisner.
Thus, a shift to more land under corn cultivation will be necessary for further
ethanol growth, Wisner said.
“For 2007, Iowa will probably need nine to 12 percent more acres of corn,” he
said.
To induce farmers to shift away from a half-and-half rotation of corn and
soybeans, corn prices in excess of $3 per bushel would be required, said ISU
economics professor Robert Jolly.
“If ethanol prices remain above $1.50 a gallon, plants can pay that much for
corn,” Jolly said.
Amani El Obeid, an associate scientist with ISU’s Center for Agricultural and
Rural Development, presented figures as to the effect of the ethanol industry on
a world-wide scale.
“Once the size of the ethanol industry reaches 22 billion gallons (per year),
America will have no surplus corn to export,” said El Obeid.
In the livestock sector, farmers will increasingly use distillers grain, a byproduct of
ethanol production, as feed, she said.
However, current distillers grain feeds cannot fully replace corn in the livestock
diet, said John Lawrence, an economics professor at ISU.
With cattle, “For each bushel of (distillers grain), you will still need two bushels of
corn,” Lawrence said.
With swine and poultry, even less distillers grain can be substituted, he said.
Lawrence called for a “balancing act” between livestock and ethanol production
as the key to Iowa economic success.
Massive infrastructure improvements will eventually be required for the
burgeoning ethanol industry, according to ISU economist Roger Ginder.
“Rural roads and bridges will require more upkeep,” Ginder said. “Tractor-trailers
still dominate ethanol transport.”
Expansion of rail shipping of ethanol is beset by long waiting times for the
production of appropriate tanker cars, Ginder said.
“A 30,000-gallon tanker car costs $95,000,” he said.
Companies that manufacture said cars are currently booked out for two years,
said Ginder.
Additionally, more corn will require more storage space on farms or at grain
elevators, he said.
“Infrastructure problems can be expected to retard ethanol production if they are
not addressed,” he said.