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Speaker questions value of ethanol

David Swenson of Iowa State University discusses recent troubles in the ethanol industry Monday at the North Dakota Grain Dealers Association convention in Fargo. David Samson / The Forum

FARGO, N.D. - The U.S. ethanol industry, which has taken some nasty hits in the past year, may never produce big economic gains for rural America, a researcher said Monday.

"Right now, I'm not very optimistic about how it will affect our rural economy," David Swenson said.

Swenson, a research scientist with the economics department at Iowa State University, spoke Monday at the North Dakota Grain Dealers Association's annual convention at the Fargo Holiday Inn.

About 975 people are attending the convention, which began Sunday and ends today.

Swenson also spoke at the convention a year ago, when he said economic gains from ethanol for rural communities aren't as significant as some ethanol advocates claim.

For instance, converting corn to ethanol pushes up corn prices, helping farmers who grow and sell the crop but hurting other ag producers who buy corn and feed it to livestock, he said last year and again on Monday.

Swenson - who for years has studied the effects of ethanol on Iowa's rural economy - said Monday that ethanol's star has dimmed in the past year.

Higher corn prices have cut sharply into the profitably of producing the fuel, he said.

Ethanol also has been criticized by environmentalists and for supposedly driving up food prices, he said.

He cited two important lessons to be learned.

- "Technical feasibility does not mean economic feasibility."

- "Economic feasibility does not mean environmental, political or social feasibility."

Swenson said he doesn't know what America's ethanol industry will be like in 10 years.

But, "I'm more excited about wind energy than biofuels," he said.

Also speaking Monday was Leland Barth, executive director of the Jamestown, N.D.-based Dakota Pride Cooperative, whose 200 members raise grains and oilseeds with special traits for special users.

Consolidation in the seed industry raises concerns about farmers' access to seed varieties that haven't been genetically modified, he said.