The price of maize — called corn in the United States — is soaring on global markets, as the worst drought in decades parches the American Midwest. The prices of meat, milk and eggs are expected to climb, and the increasing proportion of maize used to produce ethanol for auto fuel has pushed prices higher. The situation has re-kindled the fight between food and fuel.
There has been a corn maize boom in rural Iowa, in America’s heartland. In corn-farming towns like Galva that had been shrinking for decades, new homes are being built.
A new 400-seat performing arts center opened at the local school.
And farmers like Alan Bennett are buying new equipment. “This is my new combine,” said Bennett.
One big factor boosting the local economy is just down the hill from Bennett’s corn and soybean fields. Quad County Corn Processors turns his harvest into ethanol fuel.
There are three ethanol plants within easy driving distance, he said. “And there is a lot of competition for corn now. And there was not before.”
In 2005, Congress passed a law requiring ethanol in U.S. gasoline. One reason was to produce more fuel at home, says Quad County manager Delayne Johnson.
“As we have domestically produced products, we have less dependency on the Middle East, where we have obviously spent money trying to defend that area,” said Johnson.
Use of domestically produced ethanol has grown as government requirements have increased. Now, at least a quarter of the U.S. corn crop is turned into fuel.
Economists say that is one reason the price of corn is triple what it was before 2005.
Bill Tentinger grows corn 100 kilometers away, in Le Mars, Iowa.
But he also feeds corn to his pigs. He supports ethanol to a point.
Cattle, pigs and chickens are competing with that corn-consuming animal, ethanol, like never before, as this year’s drought dramatically cuts the corn supply, he said. Corn prices have set a new record. The livestock industry is facing big cost increases, and some meat producers may go out of business.
So the industry is asking Congress to waive the law that requires ethanol in gasoline.
“If we do not waive that law and the ethanol industry is allowed to continue to make alcohol, the crop is going to get ate up, and it is not going to go into food,” said Tentinger.
Tentinger says the cost of food will go up, hurting consumers already struggling in a slow economy.
But farmer Alan Bennett says waiving the law would be a blow to his town, and to consumers as well.
“It could bankrupt the ethanol plant,” he said. “It is a huge deal. This country relies on ethanol for 10 percent of its fuel supply. Ethanol is good for America.”
Tentinger agrees. But he says this year’s drought has made him think differently.
“I have not been one of these that have really argued the food-versus-fuel argument, but yet, in the end, maybe it does come down to that,” he said.
With the ethanol industry now a fixture in the U.S. economy, that argument is likely to continue.