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Minnesota farmers boost corn acres

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Grain bin
The grain bins on the Doug Albin farm still hold corn from last year's harvest. The value of the stored grain has risen steadily since it was picked last fall.
MPR Photo/Mark Steil

It doesn't look much like winter on the farmfields near Clarkfield in southwest Minnesota. There's snow on the ground, but it's patchy. In between the thin cover, chunky black soil pokes through.

This is the time of year farmers plan for their spring planting. The scant snow makes the crucial time seem closer than it really is. The high corn prices double the anticipation.

Doug Albin
Farmer Doug Albin says he's planning to plant more corn this spring to take advantage of higher prices -- spurred on by more ethanol production.
MPR Photo/Mark Steil

Doug Albin is still wrestling with the final number, but he says he'll definitely plant more corn when the weather warms.

"I will probably take and put in maybe a 15 to 20 percent increase in corn," says Albin. "I don't know if I'm typical of the rest of the farmers in the area, but I know a lot of them are looking at more corn."

It's all about money. Since last September, the price farmers can get for their corn has steadily increased, to where it's now close to $2 per bushel.

It's a bit like the stock market. It's as if a person's stock portfolio doubled in value in just six months. That's what corn's done.

Albin says that doesn't mean farmers are suddenly rich. As with stocks, no one sells everything at the market peak. Albin says he's been selling corn steadily as prices move up. He says the best news is it looks like high corn prices will last a while.

I know a lot of them are looking at more corn.

Sitting at his computer, he checks future prices on the Chicago Board of Trade. He says he can contract to sell a bushel of corn at a profitable price for years to come.

"In 2008, $3.75. In 2009, $3.58," says Albin. "That's exciting. Especially since I've been dealing with the idea of $1.50 corn, $1.75, $1.80 corn for many years here."

A rapid increase in corn-based ethanol production is the main reason for the high prices. Ethanol production increased 30 percent last year, and should make a similar jump this year. The increase is soaking up most of the nation's surplus corn.

Last September, the U.S. had more than two billion bushels of corn in storage. That figure is expected to drop precipitously, by 70 percent, by next September. The tight supply increases competition for corn and boosts its price.

Ethanol plant
Ethanol plants like this one are the main reason for the higher corn prices.
MPR Photo/Mark Steil

The effects spread far beyond Minnesota's prime corn production area in the southern part of the state. Marvin Zutz heads the state Barley Growers Association. He says corn acres in northwest Minnesota could increase as much as 20 percent this spring.

"This year because of the strong corn prices, more producers are going to switch their rotation and plant more corn," says Zutz. "So we will be seeing a shift of acres going out of wheat and barley, and perhaps soybeans, into more corn."

Not everyone is happy with the corn boom. Some environmental groups worry it means more corn fertilizers like nitrogen will end up in state water supplies.

University of Minnesota Regents professor G. Edward Schuh is concerned about something else. He thinks government subsidies for ethanol and corn are too generous. He says they've helped generate the corn price increase.

"There's already been some comment from the livestock sector about this big increase in grain prices, and the longer that spike persists I think there'll be more noise generated by it," says Schuh. "It's never too late to get a bit more rationality into these kinds of subsidies."

Schuh says it's likely increased corn prices will lead to higher food costs. The rush to grow more corn has already boosted land prices. One southern Minnesota real estate agent says the cost of farmland is up dramatically over last year.

He attributes the rise mainly to higher grain prices. He says when the land thaws and the tractors move, farmers will be seeding soil worth as much as 20 percent more than one year ago.