Aug 22, 2007

Farmers Worried by Ethanol Boom

Will the current ethanol boom buoyed by Flex Fuel cars turn into a bust? That's not just a worry for potential buyers of E85-capable cars; it's an even bigger worry for the nation's farmers. The ethanol boom has created uncertainty in the future of the corn market and that means anxiety in corn producers. The demand for corn-based ethanol has fueled one of the largest corn plantings since the 1940s. Now a company is bringing state-of-the-art financial and marketing tools to farmers to help them minimize the stress and find answers. 

"I believe ethanol is going to support higher grain prices over time, not only in the near future but also out here two to four years from now," said Darren Frye, president and founder of Agri-Business Solutions. "There is enormous demand and a need for ethanol as we're trying to supply enough energy to this large consumption that we have. Ultimately, it's going to help farmers stay profitable and give them opportunities to capitalize on it."

But gauging that market and deciding what and how much to plant is a trickier proposition than ever because of the use of ethanol in fuel. Today's farmers have to take a sophisticated approach if they hope to maximize their returns.

"I think it comes down to a three-part solution, and that's where the grower and the producer of today looks at his financial objectives and what he wants for his business, tying that into the crop insurance strategies that he's employing, and matching a marketing strategy that drives all that forward," Frye said.  "So he can earn as much money as he can to make his operation as healthy as he can."