Life in ethanol era

Remember those once-upon-a-time days when corn sold for 20 cents either side of $2 per bushel year after year? If you want to go way back, before the Earl Butz “fencerow-to-fencerow” farming days, all the way back to the 1960s, corn sold for 20 cents either side of about $1.10 per bushel, year after year.

Farmers struggled in the 1960s, and they struggled in more recent times with corn on either side of $2 per bushel. Remember how farmers kept their heads above water by “farming the government”? Or remember when the battle for acres between commodities wasn’t an annual event?

Key Points

Take a look at ethanol five years after the big change.

Indiana corn producers near plants typically see better basis.

Not all the impacts of ethanol are positive.


Those years are not as far back as it now seems.

“Ethanol has absolutely changed the landscape of agriculture in Indiana,” says Chris Hurt, a Purdue University ag economist. “The closest thing to this was the boom in exports from 1972 to 1981, but this time we did it in five years. The only other similar demand surges in the last hundred years were during world wars I and II.”

Ethanol and corn

This story and related stories in this issue look back at the past five years and the effect ethanol has had on corn prices. It hasn’t all been positive, especially for livestock producers. But there’s no question it’s been a game-changer. The goal of these stories is to reflect on the ethanol story and who it has impacted and why, especially in Indiana.

Mike Shuter, a grain and livestock producer, Frankton, and president of the Indiana Corn Marketing Council, lobbied hard for years to get plants to Indiana. With a Poet ethanol plant at nearby Alexandria, he’s switched his rotation to two-thirds corn and one-third soybeans. He says the benefits of ethanol for farmers have far exceeded his original expectations.

Basis boost

“We’re seeing a lot stronger basis levels than ever before,” Shuter says. He’s referring to his local area, affected by having an ethanol plant nearby.

“This year [2011] we had 25 cents per bushel over basis at harvest, and before the plants came online, at 30 cents under,” he explains.

Not every change in the ethanol era is positive, even for grain producers.

“Yes, inputs and cash rents have gone up, but we’re still seeing better profits, margins and opportunities,” Shuter notes.

“We have to do a better job of marketing, now, though, because of the increased volatility,” he concludes.

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Ethanol enthusiast: Mike Shuter fought hard to get ethanol plants into Indiana. He believes Indiana agriculture has benefited, despite certain drawbacks.

This article published in the February, 2012 edition of INDIANA PRAIRIE FARMER.

All rights reserved. Copyright Farm Progress Cos. 2012.