WILLMAR -- The new economics created by high demand for corn means crop and livestock producers, ethanol investors and common citizens must change the way they view Minnesota's largest cash crop.
"We have to get out of the paradigm of food vs. fuel," said Erik Osmon, Bushmills Ethanol general manager. "We can't look at any material now and call it food or fuel; it's energy."
Osmon was one of numerous speakers Friday at the sixth annual Strategic Animal Ag Conference, sponsored by the Kandiyohi County and City of Willmar Economic Development Commission and the Minnesota Department of Agriculture.
The conference grappled with issues surrounding the co-existence of the state's blossoming renewable fuels industry and the $4.9 billion livestock industry.
According to figures from the department of agriculture, the state's agricultural economy is evenly divided between crop and livestock, each at $4.9 billion of annual economic impact.
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"We are facing very interesting times right now," said Gene Hugoson, MDA agriculture commissioner. "I tell young people that this is the most optimistic time for agriculture."
That optimism doesn't extend to the state's livestock industry, where high corn prices are evaporating profitability.
While economists need to work more on models to study ethanol's impact on the livestock industry, the losses for livestock producers are significant, according to Brian Buhr, University of Minnesota economics professor.
In 2006, preliminary figures show that the beef, pork and chicken producers in the state lost more than $500 million. Future losses could reach billions as the livestock industries struggle to reduce and realign production based on higher corn prices.
In the pork industry, for example, the value of corn was not really considered as the industry consolidated over the past 15 to 20 years, Buhr said. Production levels are measured in the number of pigs produced, not on the optimum use of corn.
"The price of corn had been the least of our worries as the pork industry changed," he said. "Every action we take, especially with a main input like corn, has a ripple effect on the industry."
At the other end of the corn spectrum, corn growers are seizing the opportunity for their industry. New figures from the Minnesota Corn Growers Association project that the annual corn crop will be 1.36 billion bushels by 2012, up from 1.09 billion bushels last year. The data shows a doubling of the state's corn crop in 20 years, up from 1992's crop of 715 million bushels.
The additional 250 million bushels will come from corn farmers pushing further into technological and genetic advancements, according to MCGA President Curt Watson, Renville.
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According to the MCGA, the 1.36 billion bushel crop would be divided with 270 million bushels, 20 percent fed as livestock feed; 80 million bushels or 6 percent as high fructose corn sweetner; 480 million bushels or 35 percent for ethanol; and 530 million bushels or 39 percent as corn shipped out of the state.
Those 530 million bushels are "the corn that got away," Watson said, noting that the association wants to push more economic development to find uses for that grain in the state, thus keeping the value here instead of exporting it.
Corn will also compete for acreage with soybeans, which will likely have a domino effect on wheat acreage, Watson said, noting that farmers are still looking for key price indicators before they commit to the exact proportion of the 2007 crop.
