Biofuel Trend’s Certainly Not Against the Grain

If grain prices remain near record highs, harvesting these two crops promises to be lucrative come fall — thanks in part to ethanol.

Some believe ethanol — also known as ethyl alcohol — and biofuels initiatives are the reason: An expanding biofuels industry has changed the demand for grains and affected commodity prices and land-use trends worldwide.

In Lebanon County, the effects of ethanol are subtle.

Gas stations such as Bahattin Alioglu’s Exxon station at Eighth and Walnut streets in Lebanon, which started selling 10 percent ethanol fuel on Friday, offer petrol that contains ethanol, and ethanol tankers are among some of the train cars that can be seen passing through the city.

In local agriculture, ethanol’s effects may be even less conspicuous.

Daryl Alger, president of Mark Hershey Farms, said the amount of corn and soybeans being processed or stored at the feed mill has increased about 25 percent since 2005, yet the effects of biofuels initiatives and increasing ethanol production have been minimal.

Increased dairy-feed sales have accounted for the increase in business and have yielded expansions at the West Cornwall Township facility, which Alger said can now store 1 million bushels of grain.

None of that grain is sold to ethanol processors, Alger said, adding that the perception that ethanol production is solely behind higher grain prices can be misleading. Wheat, for example, has nothing to do with the biofuels industry but has recently reached record-high prices.

Moreover, Alger explained, corn and soybeans processed into ethanol are not completely removed from the market. In the ethanol-production process, corn is ground up, and its starches are used to make alcohol. The grain’s proteins remain as a byproduct and are used in animal feeds, Alger said.

Soybeans used for biodiesel are not wholly removed from the market, which Alger said has been driven by private investment.

“When you take the oil out of the soybean (to make biodiesel), you still have the soybean meal that you feed,” he said. “It’s basically the same process that’s been used for 50 years. It’s just now they have a market for the oil that they didn’t have before.”

According to U.S. Department of Agriculture statistics, corn production increased nearly 25 percent in Lebanon County from 2006 to 2007.

In 2006, about 45,200 acres of corn were planted in the county. Of those, 29,700 acres were harvested for the corn grain, while the remainder was harvested for silage or forage. Farmers harvested 4.2 million bushels of corn, an average yield of 141.8 bushels per acre.

In 2007, about 49,400 acres of corn were planted, 33,000 of which were harvested for corn grain. A yield of 160 bushels per acre netted county farmers 5.2 million bushels of corn.

Those numbers represent a 13 percent increase in yield per acre and an 11 percent increase in acreage harvested for grain.

By way of contrast, in 1997 and 2002, respectively, 29,068 and 25,347 acres of corn were harvested countywide, according to Department of Agriculture census data.

While corn production rose in the county, soybean production remained steady at 950,000 bushels in 2006 and 2007. Some 22,600 acres of soybeans were harvested countywide in 2007, up 500 acres from the previous year.

The latter figures agree with the observations of Heagy, who said he expects to sell about the same volume of seeds this year as he did last.

View the LDNews story by clicking here.

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