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. 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 forecasted that if corn prices stay high, rent for prime farmland in the state 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.

It is true that ethanol can offer farmers more control in the market through cooperative ownership of production plants. But thanks to the recent boom, corporate investors from around the world are now building plants that dwarf the farmer co-ops of the 1990s. And in the rush to meet the government's renewable fuel mandate, most incentives no longer favor farmer-owned plants.

In this new marketplace many farmer co-ops have cashed out, selling themselves partially or entirely to outside investors. According to the American Coalition for Ethanol, of the 75 plants slated for construction over the next two years only 25 percent are farmer-owned, and even those are often run in part by non-farmers from Des Moines and Chicago.

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Lisa M. Hamilton is a writer and photographer who focuses on food and farming. She's currently writing a book about the changing place of farmers and ranchers in American life, and a new movement to restore their leadership role in the food system. Read more about her.

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