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Can Iowa corn farmers keep up with ethanol demand?

The growth of the ethanol industry, in part, has domestic corn demand -- and prices -- soaring. Can growers produce enough corn to continue to feed this growing need?

It's entirely possible, say leaders of the Iowa Corn Growers Association (ICGA) and Iowa Corn Promotion Board (ICPB). Why? The answer can be summed up in one word: More.

Several conditions exist today that will continue to feed an ethanol industry that is in part responsible for today's bullish corn market, according to to ICPB president and Knoxville, Iowa, grower Kyle Phillips.

More bushels per acre
First, seed genetics that have been responsible for much of the yield gains in years past, will continue to gradually push yields higher. This pace -- around 2.5% per year, according to Phillips -- will help keep up with ethanol's grain needs.

"We have the good fortune to have much higher yield potential in the new corn hybrids we're currently employing," he says. "I had an extremely dry year last year...new genetics really came through for me. I ended up having a slightly above-average crop. Droughts aren't going to have as great an impact on yields.

"It's quite possible that the additional incremental yield will be enough to meet a fairly robust ethanol demand increase."

More acres
A bump in corn acres in coming years will contribute more to a corn crop large enough to meet growing demand. With 35 million acres currently enrolled in the Conservation Reserve Program (CRP), according to Phillips, a percentage of those acres could come out of CRP and be replanted to corn without an "adverse impact" on the environmental benefits of the program.

"We need to keep most of our CRP acres enrolled, but there are, we feel, 5 to 7 million acres that could come out without having an adverse impact," he says.

More storage
Producers may be able to grow enough corn to satisfy the growing ethanol needs, but recent bumper crops have created storage problems around Iowa. But Phillips and ICGA president Bob Bowman, a grower from DeWitt, Iowa, agree storage has been on the rise and all indications are that the construction of more grain storage will stay on pace with demand.

"Farmers in the past couple of years have ramped up storage, and right now, there's additional incentive for them to build more storage," Bowman says. "Obviously, the ethanol plants cannot warehouse the total product that they consume. Are we going to need some increase in infrastructure for the products they produce? Yes, that seems to be a continuing process."

Phillips says he expects the current trend of grain storage expansion in Iowa to continue parallel to ethanol's growth in the coming years. "Expansion in the ethanol industry will go on for three to five years, and we expect storage expansion to continue as well," he says.

More markets
Finally, Phillips says the advancement of using distillers' grains as a livestock feed source -- another potential revenue stream from ethanol production -- will be important to continuing a balance between ethanol and corn production.

"This is a high-quality, high-protein, high-fat feed that works well in many rations," he says of distillers' grains.

The marketing of distillers' grains, just like the product from which they're derived, doesn't end at the U.S. border. Craig Floss, ICGA CEO, says distillers' grains are beginning to be shipped to customers in places like Taiwan and the Philippines. It's still a relatively unknown new product surrounded by questions, just as it is in the U.S., but with the right education, distillers' grain can become a viable -- and valuable -- feedstock for overseas customers.

"We're shipping several hundred thousand metric tons to various parts of the world. It's just starting to get accepted," he says. "They're looking at the shipment process and how to handle it once it gets there. We're at the beginning of that process, so for me to put a value on that, I can't. A lot depends on our own domestic livestock industry and consumption. There's been a major educational effort underway."

The growth of the ethanol industry, in part, has domestic corn demand -- and prices -- soaring. Can growers produce enough corn to continue to feed this growing need?

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