WILLMAR -- It's good to be green. Even better, it's good to grow the fuel for the bustling growth of the renewable energy economy.
Locally, the cash corn price is hovering around $3.70 per bushel, with demand driven by the booming ethanol industry.
The last time the corn price was this high was the summer of 1996, when a bushel of corn topped $5 per bushel. At that time, the ethanol industry was in its early stages, with farmers organizing and building the first cooperative ethanol plants.
The current high corn demand came through years of effort by corn growers who are now reaping the benefits, according to Curt Watson, president of the Minnesota Corn Growers Association.
"This is the culmination of our efforts," he said. "The call for greater demand for our crop is exciting."
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The demand for corn is pushing area producers to contract the 2007 crop and even commit to contracts for some portion of the 2008 and 2009 corn crops, according to Gary Ascheman, administrative manager for the Farm Service Elevator in Willmar.
Why? As of Thursday morning, the answer was $1.47 per bushel. That's the difference between the average October cash price of $1.73 per bushel at the Farm Service Elevator -- based on data from 1998 to 2005, and the new crop 2008 contract price of $3.20 per bushel.
Those significantly higher prices will impact the acreage that producers commit to corn this spring. Ascheman estimates a 15 percent increase in corn acres at the local level with some producers going well beyond that.
"Some people are abandoning the traditional rotation and will plant 100 percent corn," he said.
Nationally, estimates are that corn growers will need to plant between 7 million and 10 million more acres to corn this year to keep up with the increasing demand. How corn growers intend to respond to that demand will not be known until the U.S. Department of Agriculture releases its prospective plantings report on March 30. In 2006, about 80 million acres of American cropland was planted to corn.
Increasing corn acreage isn't that significant of a task, Watson said. If the weather is good, 10 percent of the nation's crop can be planted in a day. Thus, farmers would need to keep planting corn for one more day than last year to plant an additional 8 million acres.
However, weather and markets will drive those farm-based decisions. Good spring weather and an early start to planting will mean more corn acres. Cold, rain and weather delays will mean more soybean acres, he said. Above all, markets will impact the planting decisions.
"The market is going to be even more sensitive to the planting season," he said.
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Will the corn market return to $5 per bushel? Not likely, says Ascheman. It would take an agronomic event to push the price that high. And, if growers plant the needed extra acreage and produce a normal crop, the price will likely stay below $3 per bushel.
In his State of the Union address Tuesday, President Bush raised the bar even higher for renewable energy. He called for 20 percent of the nation's fuel to come from renewable sources by 2017. Fifteen percent would be from 35 billion gallons of renewable fuels and 5 percent would be a reduction of fuel use by reforming the corporate average fuel economy standards, used to regulate the gas mileage efficiency of vehicles.
The current mandate for ethanol use is 7.5 billion gallons by 2012. In 2006, the ethanol industry produced 5 million gallons of fuel from 2.15 million bushels of corn, according to the Renewable Fuels Association.
