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Can farmers keep up with ethanol demand?

Wednesday, January 7, 2009

Some experts feel farmers will not be able to keep up with the increased demand for corn for the production of ethanol
Some experts feel farmers will not be able to keep up with the increased demand for corn for the production of ethanol

Although the growing need for ethanol has increased demand for corn for many farmers, some experts fear that the farms won't be able to meet the increasing growth of the ethanol industry.

The last 12 months were a bit of a roller coaster ride for the ethanol industry. Rising prices in gas throughout much of the year increased demand for the product, but the combination of low gas prices and high corn prices toward the end of 2008 caused the industry to struggle.

Ethanol plants across the country reduced production or shut down and VeraSun Energy, one of the largest ethanol producers in the U.S. filed for bankruptcy in November.

However, the government still wants 11 million gallons of ethanol in 2009 to offset the dependence on foreign oil, and some say the increased demand will hurt farmers.

"We have about a billion-gallon capacity of ethanol production sitting idle because the (U.S. ethanol) industry built up too much capacity," FarmEcon president Tom Elam told the Peoria Journal Star. "There's so much capacity that American agriculture can't supply enough corn."

Elam said that the rise in feed prices, which is partially attributable to ethanol production, has hurt many livestock farmers and only the corn farmers are profiting.
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