Do Ethanol Plants Provide Nearby Farmers With A Corn Price Advantage?
Spurred on by federal policy support of ethanol, thousands of Cornbelt farmers began coffeeshop meetings, then community meetings, and ramped up to form cooperatives and build ethanol refineries. Their vision was an investment that would pay premium prices for corn sold to the ethanol plant. How did that work out for them? There is no secret to the success of ethanol as a (relatively) new use for corn that was designed to consume surpluses and keep a steady forward pressure on the corn throttle. Just a few years ago, consumption was measured in a few million bushels that would be turned into a few million gallons of ethanol. This year we’ll convert 3.7 billion bushels of corn into 10.5 billion gallons of ethanol. Corn demand pushed prices higher in 2007 and 2008, but the trend has partially reversed. As new ethanol plants began operating and competing for corn from the surrounding area, the question is asked that if the payoff met the expectations of farmers who sold corn to these new
