Ethanol Booms, Farmers Bust (AlterNet)

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Ethanol Booms, Farmers Bust

By Lisa M. Hamilton, AlterNet. Posted May 25, 2007.



From the news these days you'd think farmers have never had a better friend than ethanol. But if you actually are a farmer, ethanol, with the high corn prices it brings, is looking less and less like a blessing -- and more like a curse.

From the news these days you'd think farmers have never had a better friend than ethanol. Headlines holler that corn prices are soaring and that at this moment farmers are planting more acres of corn than they have in the last 50 years. Reporters writing about the ethanol boom are throwing around words like gold rush, jackpot, and nirvana. But if you actually are a farmer, ethanol and the high corn prices it brings is looking less and less like a blessing -- and more like a curse.

In concept, corn ethanol could benefit American farmers. Anytime we as a country look to them to supply our daily needs, it's an opportunity for rural communities to win. The problem is that the boom is taking place in the same old agricultural economy, which works to the benefit of those on top: landlords, processors, and companies selling inputs like seeds and fertilizers. It's agribusiness as usual, and like always, farmers will finish last.

"Initially we all were excited by the high prices," said Troy Roush, a sixth-generation farmer who grows 2,600 acres of corn in central Indiana. "But the truth is that the farmers won't keep any of it. There's an old saying that expenses will always rise to meet revenue. It all gets built in."

And that's exactly what has happened: As the price of corn has gone up, so has the cost of growing it. In just two months, the price Roush paid for fertilizer doubled. And speculation has driven land prices through the roof. "It's insane," Roush said. "In the last four months our land values have increased 40 percent. We're all sitting around wondering if it's real."

While most farmers own some land, the vast majority rent part or all of their acreage. Rents already swelled in some areas for this season, and farmers are bracing themselves for an even greater increase in 2008. A study by the Illinois Society of Professional Farm Managers and Rural Appraisers forecast that if corn prices stay high, rent for prime farmland next year will rise by 19 percent -- to 218 dollars an acre. For young farmers, something rural America desperately needs, such inflation can make getting into the business impossible.

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To make matters worse, the boom is happening in a Farm Bill year. Congress is under tremendous pressure to peel back agricultural subsidies as they write the bill, and today's high corn prices and the promise of a bright, ethanol-powered future for farmers might give them the excuse to do so. Of course maintaining the subsidy system indefinitely isn't a solution, but the fact is that thousands of family farmers rely on those payments; to remove them without adequate replacement in such uncertain times could alone cause another farm crisis.

Despite all the problems it's causing, four-dollar corn itself is not the problem. In a sense it's actually a good thing, for it means farmers are getting closer to a fair price for their product. But a high price today doesn't ultimately benefit farmers if they remain in a system that allows the price to freefall tomorrow. What farmers need in order to rebuild their communities and secure their farm incomes is not an ethanol boom -- or any kind of boom for that matter. They need a system that offers a fair return for their product all the time, not just during a fuel crisis. .....(more)

The complete piece is at: http://www.alternet.org/environment/52073/?page=2